Banque Internationale Arabe de Tunisie

completed

The project comprises of up to $50.0 million subordinated loan to Banque Internationale Arabe de Tunisie (BIAT or the bank). BIAT is the largest private bank and the third largest bank in Tunisia in terms of asset size ($2.3 billion) and equity ($186 million). BIAT operates as a full-service bank, offering corporate/SME banking services as well as consumer banking through a network of 100 branches and 72 ATM’s. Founded through the merger in April 1976 of the local branch operations of the British Bank of the Middle East and of the French bank Société Marseillaise de Crédit, it is listed on the Tunis and London (through GDRs). BIAT is characterized by a widely diversified ownership. European and Arab banks together hold about 28% of BIAT's shares, Tunisian institutions almost 26%, and private Tunisian investors the remainder. BIAT's capitalization-- although adequate by Tunisian standards, with a BIS solvency ratio of 9%, exceeding the minimum Tunisian regulatory requirement of 8%--is on a declining trend. With loan growth expected to continue at over 10%, in line with BIAT's market-share objectives, there is a critical need for BIAT to enhance its equity to meet its growing volume of activity. IFC’s loan will partially meet this need. IFC’s proposed subordinated loan is expected to count as Tier II capital and will bolster BIAT’s capital base and facilitate its growth particularly in the consumer and SME segments. More importantly, the proposed transaction is expected to serve as an enabling element for Tunisian banks as it will represent the first Tier II capital instrument to be introduced in the sector.