The Inter-American Development Bank announced today the approval of a US$40 million financing to Banco Schahin, a commercial bank in Brazil, to increase its consumer financing and corporate credit portfolio to expand access to the international financial markets.
The IDB financing will include an “A-loan” of up to US$20 million from the Bank’s ordinary capital and a syndicated “B-loan” of approximately US$20 million, consisting of resources from financial institutions that subscribe participation agreements with the IDB.
“The loan will enable Schahin to expand its activity in the fastest growing consumer finance sector in Brazil, the paycheck deductible lending, particularly to public employees and the Brazilian National Institute for Social Security retirees, while at the same time support its corporate credit portfolio primarily composed of small and medium-sized enterprises,” said IDB team leader Edson Mori. “This project will help build a more competitive middle banking market.”
The volume of consumer finance has increased substantially in Brazil over the last two years due to improvements in the macroeconomic environment such as lower inflation, lower unemployment since 2004 and a reduction in interest rates. The consumer finance sector has grown 25 percent in the last year with remarkable growth in the personal loan and vehicle financing modalities
Banco Schahin is a privately owned commercial bank specialized in consumer and commercial financing. It was established in 1989 with headquarters in Sao Paulo. Schahin maintains an extensive network of bank correspondents and sales points, which have enabled it to become a significant player in the payroll deductible lending to public sector employees and consumer financing.