Banco GyT

completed

_x000C_The proposed investment consists of the subscription of Tier I capital in a locally-owned Guatemalan bank through an IFC injection of up to $68 million in preferred shares to be issued by Banco GyT Continental S.A. (Banco GyT or the client). Like all other Guatemalan banks, Banco GyT has a portion of subordinated debt, which the client and the regulatory authorities consider as Tier II capital and include it in the calculation of regulatory capital ratios. However, when rating agencies assess a bank’s adjusted risk capital, this subordinated debt is currently not being included as Tier I capital, leading to substantial undercapitalized ratios and excessive penalization of the client’s credit rating. Based on preliminary discussions between the client, IFC and the rating agencies, preferred shares can be considered as Tier I capital and, consequently, improve capitalization ratios. Currently, the client’s Tier I/Total Assets ratio, is 6% (as of October 2007). With the proposed investment, Banco GyT’s ratio would increase to above 8.35%. Given its closed shareholding structure and its centralized decision making, the client does not prefer to open up its common shareholding to external investors at this stage and prefers to materialize this capital injection through preferred shares.