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IDB approves green facility for Banco General of Panama

A $20 million non-sovereign guaranteed loan from the Inter-American Development Bank will support Banco General, Panama’s second largest commercial bank, in growing a portfolio of green projects. The facility will support investments involving energy efficiency, renewable energy, water and wastewater treatment, waste management and other carbon-mitigating projects.

“This agreement is an endorsement of Banco General’s partnership with IDB, as well as of our commitment to support environmentally and socially responsible businesses in Panama,” said Banco General Executive Vice President, Finance, Francisco Sierra.

The operation reflects a key priority of beyondBanking, a new IDB program that promotes sustainable banking principles in Latin America and the Caribbean. The program’s planetBanking projects seek to help financial institutions reduce their direct and indirect environmental footprints.

“Through planetBanking we aim to build up a track record of climate change-related initiatives with financial institutions in the region. In this case, the IDB will provide Banco General both technical and financial support to develop and implement innovative financial products to promote climate change investments in Panama,” said IDB Financial Markets Division Chief Daniela Carrera-Marquis.

Long a leader in mortgage lending, Banco General is strengthening its commercial and retail banking operations and expanding its activities in Central America. As part of its business strategy, it seeks to position itself as Panama’s green bank.

The IDB loan will provide Banco General long-term funding to finance projects that result in energy savings or greater energy efficiency. The Panamanian bank plans to focus on small and medium-size businesses involved in projects requiring cleaner energy or industrial technologies, integrated waste management, water and wastewater treatment and small-scale renewable energy projects.

Under the project, the IDB will assist Banco General in the development of procedures and tools to identify and assess potentially eligible green projects, such as auditing their environmental footprint and their ability to qualify for carbon emission reduction credits.

“This facility should have a demonstration effect for other financial institutions in the region to follow and raise awareness within the financial community of the environmental, social and economic benefits of sustainable banking practices,” said IDB project team leader Karina Azzinnari.

The IDB loan to Banco General may be complemented with additional financing in the form of a “B” loan from other sources, subject to market conditions.

The IDB is the leading source of long-term financing for economic, social and institutional development in Latin America and the Caribbean. Its Structured and Corporate Department is responsible for non-sovereign guaranteed operations, which include loans and credit guarantees for private sector companies and banks, as well as for state-owned enterprises.

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