CECV-Credit Line

completed

Caixa Económica de Cabo Verde (CECV or the company) was established in 1928 as a postal savings bank. In August 1993 it changed to a universal bank and, in December 1998 changed the name to the current denomination. CECV was privatized in December 1999 through an international biding process. The Montepio Geral Group from Portugal has a total of 27.4% of the share capital of CECV and is the provider of know-how and experienced management. The project consists of a credit line of up to EUR5 million to be extended to CECV, the second largest bank in Cape Verde. The credit line will have a tenor of 5-7 years and will provide much needed foreign exchange denominated term finance to CECV and the private sector. This project is the first IFC investment in Cape Verde’s financial markets. With total assets of $122.3 million at the end of FY02, CECV increased its balance sheet by 13.9% when compared with the previous year, thereby consolidating its expansion strategy constructed on three different pillars: the expansion of the branch network, the diversification of distribution channels and a more personalized approach to its client base. As of December 31st, 2002, CECV had a CAR of 16.0%. Despite a lower return on equity in 2002, CECV remains a profitable institution and should be able to maintain at least the FY02 profitability level. Its cash flows can sustain without any difficulty a $5 million loan from the IFC, especially as the loan will allow the bank to leverage its strong capital base to increase business.