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Banco BHD of Dominican Republic to receive $17.5 million in IDB funding

The Inter-American Development Bank (IDB) and Banco BHD of the Dominican Republic signed the contracts for $17.5 million financing facility that will strengthen Banco BHD’s capital to further expand its long-term lending to the corporate sector, including small and medium enterprises (SMEs). The facility consists of a seniorfive-year loan of up to $5 million and aneight-year subordinated loan of up to $12.5 million from the IDB’s Ordinary Capital.

The transaction will provide long-term financing to Banco BHD, which will in turn on-lend to corporate and SME clients – key market segments that drive sustainable economic development in the Dominican Republic. The subordinated loan will strengthen Banco BHD’s capitalization, further promoting lending activities as the loan will meet Tier II capital criteria according to the country’s banking regulator.

IDB President Luis Alberto Moreno and Banco BHD President Luis Molina Achecar signed the loan agreements in a ceremony held Wednesday at the IDB headquarters in Washington, DC.

At the signing, Moreno reiterated the IDB’s support for initiatives that strengthen the private sector, especially in smaller economies such as the Dominican Republic. “With this facility, we will support the economic growth of the SME sector in the Dominican Republic through Banco BHD, while at the same time strengthening the bank’s capitalization, which will have a multiplier effect in its ability to provide long-term financing in the country.”

Molina Achecar commented: “Signing this agreement gives us great satisfaction because it not only affirms that the Inter-American Development Bank has confidence in Banco BHD, a business relationship of which we are very proud, but it also reaffirms our commitment to well-functioning corporate governance, respect for the environment and a pursuit of best practices in the region.”

This project is a strategic component of the beyondBanking program carried out by the Financial Markets Division of the IDB’s Structured and Corporate Finance Department. Through its program pillars, beyondBanking recognizes the catalytic role of banks in promoting economic growth and corporate change and in deepening capital markets. It seeks to contribute to the Bank of the Future – a banking business model that balances financial with social returns in order to foster an inclusive, environmentally friendly and transparent financial sector. This project is specifically aligned with the program’s accessBanking pillar, which targets financial deepening strategies for those traditionally under-served by the financial system.

About IDB

The Inter-American Development Bank is the principal source of financing for economic and social development projects in Latin America and the Caribbean.The IDB offers its financial products and technical resources to reduce poverty and inequality in a sustainable way. The Structured and Corporate Finance Department is responsible for non-sovereign guarantee operations, including loans and partial credit guarantees. The department’s financial markets strategy incorporates the beyondBanking program,which seeks to encourage financial intermediaries in the region to adopt socially and environmentally sustainable, and governance practices through loans, risk mitigation products and technical assistance.

About Banco BHD

Banco BHD is the third largest bank in the Dominican Republic, and the second largest private sector bank. Its majority shareholder is Grupo BHD, a Dominican holding company with interests in financial services, through Centro Financiero BHD (CFBHD). Banco Sabadell of Spain, Banco Popular of Puerto Rico and the IFC are the other shareholders of CFBHD. BHD also participates in IDB’s Trade Finance Facilitation Program (TFFP).

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