29604 - CF Banco GyT

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Summary of Proposed Investment

Project Number

29604

Company Name

BANCO G AND T CONTINENTAL S.A.

Date SPI Disclosed

Sep 15, 2010

Country

Guatemala

Industry

Financial Markets

Projected Board Date

Nov 25, 2010

Status

Active

Sector

Commercial Banking - General

Department

Global Industry, Financial Markets

Environmental Category

Previous Events

Approved : Nov 26, 2012
Signed : Dec 13, 2012
Invested : Dec 27, 2012

Project Description

The proposed transaction would qualify as an investment for the IFC Capitalization Fund (the “CapFund”) as GyT Continental is one of five systemic banks in Guatemala and has a 20.55% and 19.31% market share in terms of total assets and total deposits, respectively as of July 2010. This second investment in GyT Continental would consist of (i) common or preferred shares for up to $32.1 million (Tier I capital), and (ii) subordinated debt for up to $42.9 million (Tier II capital) and would be sourced from the CapFund. IFC committed its first transaction with GyT Continental in a 9.722% equity stake through a $70 million investment in preferred convertible shares in July 2008, which buttressed GyT Continental’s capital at a crucial time and allowed the Bank to weather the economic slowdown in Guatemala.

Sponsor / Cost / Location

Development Impact

The proposed transaction is expected to have a high impact as it will (i) recapitalize one of Guatemala's leading banks and improve the banking systems' solvency; (ii) enable south-to-south investments as part of GyT Continental's strategic plan to expand in the region; (iii) help overcome the low banking penetration still prevalent in Guatemala; and (iv) potentially reduce fragmentation as weaker players may become targets for stronger market participants.

IFC's additionality stems from IFC's ability to strategically engage with the Client and would (i) enhance competitiveness by strengthening GyT Continental's capital base; (ii) maintain independence of a locally-owned bank as capital cannot be easily obtained in the market these days without giving up a controlling stake; and (iii) support the Client's downscaling strategy and facilitate reaching an underserved market segment.

This project has been classified as a Category FI project. Under an existing project (#26634), the client has developed a Social & Environmental Management System (SEMS) and appointed an SEMS Officer. For this project, the client is required to: (i) continue to implement an SEMS to ensure that its investments/activities are in compliance with the IFC FI Exclusion List, the applicable National Social and Environmental Laws and regulations and the IFC Performance Standards; (ii) demonstrate commitment to applying the labor standards established by the IFC Performance Standard 2: Labor and Working Conditions; and (iii) submit a periodic report to IFC as per a format to be provided by IFC.

Contacts

For Inquiries About the Project, Contact

Ing. Julio César Ordóñez Montenegro Gerente Corporativo Planeación y Control Financiero Grupo Financiero G&T Continental 6ta. Avenida 9-08 Zona 9, Edificio Plaza Continental Ciudad de Guatemala, Guatemala, Centroamérica Telephone: (+502) 2338-1590 Fax: (+502) 2338-1501

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: 202-974-4384E Mail: Webmaster

Local Access of Project Documentation

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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