Cuscatlan CL and Equity

completed

Since 1998, Banco Cuscatlan has invested heavily in technology, has considerably expanded its delivery network and has taken controlling interests in banks in Costa Rica and Guatemala. In 2001, UBCI was incorporated in Panama as a financial holding company in order to consolidate the shares of the group''s three banking and financial enterprises in the region. UBCI''s shares will soon be listed in the Costa Rican stock market through a US$7.5 million IPO. With close to US$3 billion in consolidated assets, and over US$200 billion in consolidated book equity, the group is harnessing existing synergies in information technology, regional delivery, funding and sharing of best practices in order to position itself for rapid growth within the region.In a region where the average bank has less than US$20 million in equity and makes less than US$2 million in net income, the regional play deployed by Cuscatlan will generate considerable economies of scale and bring affordable banking solutions to Central American clients. Empirical evidence has firmly established a causal link running from financial system depth and soundness to economic growth, and from economic growth to poverty reduction; hence the strong developmental appeal of the Cuscatlan''s regional integration. Overall, by sharing best practices, the group will leverage the more advanced banking regulation in force in El Salvador, as well as the leading environmental practices that Banco Cuscatlan de El Salvador has developed with IFC''s assistance. Also, the UBCI listing will contribute to the deepening of the financial markets in the region. As IFC''s quasi-equity financing is expected to be counted as tier-2 capital, IFC would, by way of this investment, provide critical support to the conglomerate''s growth in the Central American region. IFC funds would enable the group to considerably improve capital ratios, reduce maturity mismatches and enhance environmental as well as financial management, everywhere in the group. Moreover, through its participation, IFC would be able to share with the group best practices and leading edge technology developed in the fields of corporate governance and compliance, contributing to the group''s reputation as a model in the region. In summary, IFC investment would be both a clear show of confidence for a deserving group and a sign of support for the region.