MICROCAPITAL BRIEF: Banco Santander, DEG, IDB Invest, Itaú BBA Loan $150m to Banco Pan to Boost Digital Financing of Vehicles, Microenterprise, Consumption in Brazil

IDB Invest, a member of the US-based Inter-American Development Bank (IDB) Group, is leading a loan package totaling USD 150 million for Banco Pan SA, a Brazilian commercial bank, with the aim of increasing access to digital financial services for people with low incomes. The loan funding includes USD 50 million from IDB Invest, USD 25 million from Germany’s Deutsche Investitions-und Entwicklungsgesellschaft (DEG), and USD 75 million as a B loan funded in unspecified portions by Spain’s Banco Santander and Brazil’s Itaú BBA. Banco Pan plans to use the funding, which has a term of up to four years, to on-lend to low-income retirees, microentrepreneurs and motorcycle buyers.

Founded in 1969 and headquartered in São Paulo, Banco Pan provides digital financial services such as consumer loans, credit card services, vehicle financing and insurance products. As of the third quarter of 2019, it reports total assets of BRL 32 billion (USD 6.1 billion) and annualized return on average equity of 11.9 percent from services provided to 4.7 million customers. The bank is controlled by BTG Pactual, a Brazil-based investment bank with operations in the UK and seven countries in the Americas. BTG Pactual reports BRL 542 billion (USD 104 billion) in assets under management or administration as of September 2021.

Banco Santander is a commercial bank that was founded in 1857. As of 2022, it has 600 locations in 15 countries, mainly in Europe and the Americas. As of 2020, the bank reports total assets of EUR 1.51 trillion (USD 1.72 trillion), loans and advances to customers of EUR 916 billion (USD 1.05 trillion) and customer deposits of EUR 849 billion (USD 971 billion).

Founded and headquartered in Cologne, Germany, DEG is a member of the KfW Group, a development finance institution formerly known as Kreditanstalt für Wiederaufbau. KfW, which deployed funds totaling EUR 107 billion (USD 122 billion) during 2021, was founded in 1948 and is owned by the federal and local governments of Germany. DEG reported 2020 income of EUR 547 million (USD 625 million) on assets totaling EUR 6.34 billion (USD 7.24 billion).

Itaú BBA is a corporate finance unit of Itaú Unibanco, which is controlled by the Brazilian conglomerate Itaúsa. Itaú Unibanco serves 60 million consumers in nine countries. As of the third quarter of 2019, it reports net income of BRL 7.2 billion (USD 1.4 billion) on total assets of BRL 1.74 trillion (USD 333 billion).

IDB Invest promotes economic development through projects in agriculture, financial inclusion, sustainable energy and transportation. As of 2020, IDB Invest had USD 16.1 billion in development-related assets, deployed via approximately 400 clients in 47 countries. Established in 1959, IDB Group seeks to promote “environmentally friendly” economic development via improved health, education and infrastructure in Latin America and the Caribbean. During 2020, it reports having issued USD 14 billion in loans and grants, ending the year with assets of USD 152 billion.

By Sheen Gupta, Research Associate

Sources and Additional Resources

IDB Invest press release
https://www.idbinvest.org/en/news-media/idb-invest-promotes-brazils-financial-inclusion-through-banco-pan-deal

IDB Invest profile of Banco Pan deal
https://www.idbinvest.org/en/projects/banco-pan-microfinance-long-term-financing

Banco Pan homepage
https://www.bancopan.com.br/

Banco Pan 2019 annual report
https://apicatalog.mziq.com/filemanager/v2/d/28190a7d-6f60-4e49-9363-ec436a414ddd/fecd7ff9-33c9-7ed3-5b5b-9514621fdf4c?origin=1

Banco Pan 2021 earnings release
https://api.mziq.com/mzfilemanager/v2/d/28190a7d-6f60-4e49-9363-ec436a414ddd/512a0d81-4220-9f68-51e1-e9910380da85?origin=2

BTG Pactual homepage
https://www.btgpactual.com/home

Banco Santander homepage
https://www.santander.com/en/home

Banco Santander 2020 annual report
https://www.santander.com/en/shareholders-and-investors/financial-and-economic-information/annual-report/memoria-online-2020#2020-at-the-bank

DEG homepage
https://www.deginvest.de/

DEG 2020 annual report
https://www.deginvest.de/DEG-Documents-in-English/Download-Center/DEG_JAB_2020_EN.pdf