Banco Montevideo

completed

BM was founded in 1941 by a group of Argentine investors. In 1951, ABN (Algemene Bank Nederland) Amro bought a third of the bank’s shares which were in turn sold to Deutsche Bank in 1978. During the financial turmoil of the early 1980’s, BM benefited from the strong support of Deutsche Bank who ended up acquiring full control of the institution. The Velox group bought in 1992 a 35% interest in BM. A year later it assumed responsibility for the management of the institution and in 1997 it ended up owning 99% of the bank''s shares. BM has more than 1,600 corporate customers, 40% of which are small and medium-sized companies (SMEs). Most of the credit lines offered by the bank are for one-year term or less. The bank offers a broad range of retail banking products to approximately 34,000 individuals. The purpose of the IFC investment is to fund Banco Montevideo''s expansion strategy through the acquisition of Banco Caja Obrera, currently being privatized by the Central Bank. Through this investment, IFC will assist in the revitalization of the Uruguayan banking sector by enhancing the competitive capabilities of one of the most active banks in the country. It will also support a greater role for the private banking sector, in a market still crowded out by the public sector, and it will service the largely overlooked consumer and SME segments. The IFC venture will also improve service to the retail market, currently disregarded by the banking sector, by enabling Banco Montevideo to acquire a privatized bank with a portfolio concentrated in this segment. Currently, in the retail segment, only 35% of the Uruguayan population has access to bank credits. Existing retail financing takes place mainly through retailers and credit cards at very high interest rates. The proposed investment will give Uruguayan lower-middle and middle-segments of the population greater access to bank credit. Financial support of Banco Montevideo''s acquisition might result in a demonstration effect that could pave the way for more commercial lending to these segments.