25236 - Banco Popular

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Summary of Proposed Investment

Project Number

25236

Company Name

Banco Popular, SA

Date SPI Disclosed

Dec 11, 2006

Country

Honduras

Industry

Financial Markets

Projected Board Date

Feb 28, 2007

Status

Completed

Sector

Commercial Banking - Microfinance and Small Business

Department

Global Industry, Financial Markets

Environmental Category

Previous Events

Approved : Jan 28, 2005
Signed : Dec 7, 2007
Invested : Jan 31, 2008

Project Description

The project consists of an equity investment of up to $1.5 million to Popular Asociación y Préstamo (Popular). Popular is a savings and loans association active in the Honduran microfinance sector. The purpose of the project is to provide funding in the form of equity in order to assist Popular in its transformation to a commercial bank as well as to expand its micro lending operations. The Team will explore the possibility of a partial credit guarantee (PCG), whereby Honduran commercial banks would provide up to $4 million equivalent in Lempiras with an IFC PCG at a currently unspecified percentage. The local currency funding in Lempiras would be used to partially match the currency of Popular’s funding with its lending activities. This, in turn, would allow Popular to expand and enhance its services to low-income population in Honduras. In addition, IFC will consider providing technical assistance (TA) in order to support the institution in its transformation to a regulated microfinance bank.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	10.0
Equity	5.0

Development Impact

The developmental impact of IFC’s investment in Popular is expected to be very high in terms of its economic support for productive microenterprises, stimulus for employment generation and deepening of the financial sector. Popular’s capital increase and transformation to a bank is expected to boost Popular’s credit and other financial services support for productive micro, small and medium enterprises. It is expected that Popular will be able to reach 22,000 clients through 17 branches in the principal centers of Honduras in the next five years.

The project aims to track the following development indicators:

- ROIC - Return on Invested Capital,
- EROIC – Economic Return on Invested Capital,
- Portfolio Size (number of loans and amount outstanding),
- Portfolio quality,
- Establishment and operation of environmental management system.

This project involves IFC support for the business of microfinance, and has been classified as a Category FI project according to IFC’s Environmental and Social Review Procedure. Considering the nature of activities supported, the project will be required to:

- Develop a procedure relevant to its business process, prior to disbursement, that is satisfactory to IFC, that ensures that all its investments are screened and processed to avoid supporting activities on the IFC Microfinance exclusion list;
- Identify qualified persons to manage and implement the procedure;
- Demonstrate commitment and resources to implementing the procedure, and take action to remedy any gaps in implementation on an ongoing basis;
- Submit a periodic report to IFC as per a format to be provided by IFC.

Contacts

For Inquiries About the Project, Contact

Mr. Manuel Torres, General Manager
Popular Asociación y Préstamo
Complejo IPM, 4th Floor Bulevard Centroamérica Tegucigalpa, Honduras
Fax: 504-239-0451

For Inquiries and Comments About IFC, Contact

General IFC Inquiries
IFC Corporate Relations
2121 Pennsylvania Avenue, NW
Washington DC 20433
Telephone: 202-473-3800
Fax: 202-974-4384
E Mail: Webmaster

This Summary of Proposed Investment is prepared and distributed to the public in advance of the IFC Board of Directors' consideration of the proposed transaction. It is not an offer of shares to the public and is intended solely to enhance the transparency of IFC’s activities. This document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only. The following SPI is disclosed in accordance with IFC’s Policy on Disclosure of Information that went into effect April 30, 2006.

The map is for illustrative purposes and does not imply the expression of any opinion on the part of the World Bank, concerning the legal status of any country or territory or concerning the delimitation of frontiers or boundaries. Country borders or names do not necessarily reflect the World Bank Group's official position. In some cases, available project location information is limited to the country of the project's activities. Locations are approximate.

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