UBCI, Cuscatlán’s holding company provides, through its subsidiaries and affiliated companies in El Salvador, Guatemala, Costa Rica and Panama, corporate banking, credit card, mortgages, factoring, stock brokerage, trade finance and asset management services to its clients across the region. After Banco del Istmo in Panama, it is the largest financial group in Central America with $3.2 billion in assets and $308 million in equity (as of June 30, 2003). UBCI was listed on the Costa Rican stock market through a $7.5 million IPO in July 2002, and in November 2003 UBCI’s shares were listed on the LATIBEX program in the Madrid Stock Exchange. It has a diversified shareholding structure; 78% of UBCI is owned by the Salvadoran vehicle, Corporación UBC S.A. de C.V., which, in turn, is owned by the 2,500 original shareholders of Banco Cuscatlan de El Salvador.

IFC’s proposed investment in Confia AFP will be an equity investment of up to $7.5 million for up to 25% of the share capital of the company.

7.50 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan
Equity	7.50

* These investment figures are indicative

Confia is headquartered in San Salvador and has 9 branches across El Salvador.

As has been demonstrated, in Chile, and to a lesser degree in Argentina and Peru, the development of a private pension system can have a strong development impact not only through improving old age security but also in capital market and private sector development. By adding to private savings, these systems can help finance growing levels of domestic investment in a country. In the case of Central America, and specifically in El Salvador, the pension funds stimulate demand for and issuance of equity and long-term fixed income instruments. And the fiscal benefits of the social security system reform encouraged the Salvadorian government to stay the course of economic reform and maintain the prudent policies that have produced stability over the past few years after a decade of economic, political and social unrest. The proposed project will: - help a local group acquire control of a leading player in a sector controlled by foreign companies; - enable Cuscatlan Group to grow its business thus providing more affordable and comprehensive banking solutions to clients through synergies generated from the integration of Confia into the Cuscatlan network; - continue supporting the development of the private pension funds market in El Salvador and thus improving the provision of old age security in the country; and - continue supporting the development of capital markets in Central America since the pension funds need long term investment vehicles to invest the assets under management. By participating in the transaction, IFC would be supporting the entry of a domestic player in the pension fund system in El Salvador, currently dominated by foreign banks. IFC will draw on its experiences with pension fund systems in Argentina, Colombia and El Salvador, and through its potential participation in the company’s board of directors, the Corporation will work with Cuscatlan to develop a sound business strategy and ensure a balanced decision making process.

This is a Category C project according to IFC''s environmental review procedure.
Location of environmental documents in locally affected community