IFC and EIB Invest in Central Africa’s First Financial Holding Company to Boot Lending to SMEs and Strengthen Banking in the Region
The European Investment Bank (EIB) and the International Finance Corporation (IFC), a member of the World Bank Group, today announced that they would invest up to EUR 10 million (approximately USD 15 million) in the equity of Capital Financial Holdings SA, the first financial holding company in the Central Africa region. This investment in CFH, a company that brings together Commercial Bank Cameroon, Commercial Bank Chad and Commercial Bank Centrafrique, aims to develop the banks’ small and medium-sized enterprise lending capacity, benefiting local entrepreneurs and investors while contributing to the development of the region’s banking system.
The capital of CFH will be set at around EUR 26.3 million (USD 39 million), with IFC and the EIB each subscribing 19% of the equity. IFC and the EIB will provide technical assistance and advisory services to the three banks and IFC also plans to extend to them trade finance lines totalling USD 15 million.
Yves Michel Fotso, Chairman of CFH’s Board of Directors, said: “We are delighted to welcome IFC and the EIB as shareholders of our Group. This equity investment will strengthen the operations of the network banks and drive forward our strategy of expanding and developing the Group. More importantly, the Group will benefit from the expertise of IFC and the EIB in the areas of corporate governance, risk management and SME banking, as we work towards adopting international best practice. All this will enable us to better respond to the needs of our clients, offer a quality service, and deliver the best value for shareholders.”
Jyrki Koskelo, IFC Vice-President for Africa, Global Financial Markets and Funds, said: “IFC’s investment in CFH provides an opportunity to play a significant role in the development of Central Africa. By providing funding and bringing international best practice to this frontier region, IFC will help CFH implement a network-wide strategy that will help it to develop into a significant regional player.”
Flavia Palanza, EIB Associate Director for Central and East Africa, said: “A modern and efficient banking system is a prerequisite for sustained economic growth, and the EIB is very committed to supporting its development. As one of the few all-African banking groups with a regional scope, CFH is well positioned to play an important role on the Central African financial scene. The EIB’s management considers that by participating in CFH’s capital and making its long experience available to the group, the EIB will send an important signal to the financial community.”
Working with IFC and the EIB, CFH will continue a process of consolidation and integration within the network of banks and will reinforce their management by creating centralised group policies and functions. The company will help the banks expand into under-served SME segments of the market and explore the possibility of regional expansion into the Republic of Congo and Gabon. CFH will also continue to implement best international banking practices such as risk management, internal controls, and corporate governance.
IFC’s USD 1 billion Global Trade Finance Program extends and complements the capacity of banks to deliver trade financing by providing risk mitigation on a per-transaction basis in challenging markets where trade lines may be limited. Around 50% of the program’s over 1300 transactions have taken place in Africa and more than a third of the program’s guarantees have been issued for “south-south” trade, reflecting IFC’s strong support for trade between emerging markets.
About the EIB
The European Investment Bank (EIB) has been an active development partner in many African, Caribbean and Pacific (ACP) countries since 1963. EIB lending in these regions is an integral element of the European financial support package provided under the ACP-EU Cotonou Partnership Agreement. The Bank’s operations in the ACPs contribute to sustainable social and economic development and poverty alleviation. As well as providing loans from EIB own resources, the Bank manages the Investment Facility (IF), a revolving fund financed by the EU Member States. The IF provides various forms of risk-sharing financing instruments for investment projects in most economic sectors. EIB loans to the ACP region amounted to EUR 745 million in 2006 and a total of EUR 538 to date in 2007.
IFC, a member of the World Bank Group, fosters sustainable economic growth in developing countries by financing private sector investment, mobilising private capital in local and international financial markets and providing advisory and risk mitigation services to businesses and governments. IFC’s vision is that poor people should have the opportunity to escape poverty and improve their lives. In financial year 2007, IFC committed USD 8.2 billion and mobilised an additional USD 3.9 billion through loan participations and structured finance for 299 investments in 69 developing countries. It also provided advisory services in 97 countries. For more information, visit www.ifc.org.
About Capital Financial Holdings (CFH)
The idea of a financial holding company is a product of the commitment of the Group’s main shareholders to strengthen and rationalize its management. This resulted in the creation of Capital Financial Holdings Luxembourg SA (CFH) in January 2005 and the opening-up of its capital to selected strategic partners of international repute.
CFH Luxembourg has a Cameroon-based subsidiary, CFH Cameroon, which has established itself as a true service centre for improving and reinforcing the quality of the management of Group entities, as well as of other financial institutions belonging to the Group, by introducing a centralised organisational structure.
Preparation of a global strategy, inspection and audit, development of group projects, risk management, advanced IT systems and technologies, finance, accounting and treasury, administration, human and other resources, and legal assistance are all areas covered by CFH’s strategy. The changes initiated will raise the profile, both internally and externally, of the Group’s ambitious development strategy.
About Commercial Bank Cameroon (CBC), Commercial Bank Chad (CBT), Commercial Bank Centrafrique (CBCA)
Commercial Bank Cameroon (CBC), Commercial Bank Centrafrique (CBCA) and Commercial Bank Chad (CBT) are three subsidiaries of the Commercial Bank Group. They were set up in 1997, 1999, and 2001 respectively to underpin the economic development of the Central African sub-region by providing high quality banking and financial services tailored to the requirements and expectations of both companies and individuals.
In addition to supporting the economic operators, these banks contribute to the fight against poverty and to economic development by financing wealth and job creation projects. Convinced that high-potential SMEs are the key driving force behind all sustainable development, they aim to increase their activity in support of SMEs over the years. In 2006, these subsidiaries participated in the financing of many projects through off-balance-sheet customer loans, calculated at CFAF 126 billion, of which CFAF 26 billion came from Commercial Bank Chad, CFAF 23 billion from Commercial Bank Centrafrique and CFAF 77 billion from CBC, which ranked third in Cameroon’s banking sector in terms of lending to SMEs.
These three subsidiaries currently have 11 branches located in the main economic centres: seven for CBC, two for CBT and two for CBCA.
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