The International Finance Corporation (IFC), a member of the World Bank Group, and the IFC Capitalization Fund, a USD 3 billion global equity and subordinated debt fund, have signed an agreement to invest USD 140 million in Bank South Pacific (BSP), one of the largest commercial banks in Papua New Guinea, in an effort to expand financial services across the Pacific Islands. To support BSP’s long-term growth plans, IFC is buying a five-percent stake in BSP for USD 55 million from the Independent Public Business Corporation of Papua New Guinea, a government-owned investment body. Meanwhile the IFC Capitalization Fund is buying another five-percent stake for the same price in the form of newly issued shares. Additionally, IFC is providing a long-term USD 30 million senior loan for on-lending to small and medium-sized enterprises (SMEs). The investment package will allow BSP to expand services to small and medium-sized businesses and to rural clients through the development of new technologies such as mobile phone banking. Karin Finkelston, IFC’s Director for East Asia Pacific, was quoted as saying, “IFC is pleased to partner with BSP to help extend financial services to customers who may otherwise not be able to obtain the financing needed to do business and improve living standards.”
By Conner Brannen, Research Assistant
About International Finance Corporation (IFC):
A member of the World Bank Group, the International Finance Corporation (IFC) uses loan and debt securities, equity investments and guarantees with the intent of alleviating poverty. It invests in financial institutions and other companies in emerging markets as well as providing technical assistance. The IFC has 182 member countries that “collectively determine its policies, and approve investments.” In fiscal year 2009, its new investments totaled USD 14.5 billion.
About IFC Capitalization Fund:
Founded in February 2009, the USD 3 billion IFC Capitalization Fund is a global equity and subordinated debt fund that aims to speed up economic recovery and boost job creation while reducing the impact of the financial crisis of 2007 to 2010 by supporting banks considered vital to the financial markets of individual developing countries. IFC has put up USD 1 billion for the IFC Capitalization Fund, while the Japanese government has invested USD 2 billion, bringing the total to USD 3 billion. IFC estimates that the fund will have a total leveraged impact of around USD 75 billion as others co-invest with the fund.
About Bank South Pacific:
Established in 1974 in Port Moresby, Bank South Pacific (BSP) is one of Papua New Guinea?s largest private commercial banks with 35 branches throughout the country. BSP also operates in Fiji, Niue and the Solomon Islands. BSP currently reports holding approximately 50 percent of the market share of both deposits and loans in Papua New Guinea, 30 percent of the market in the Solomon Islands and nearly 20 percent of the market in Fiji as of 2008. BSP is publicly listed company on the Port Moresby Stock Exchange. As of December 31, 2008, BSP had PGK 9 billion (USD 2.9 billion) in total assets.
Sources and Additional Resources:
International Finance Corporation: “IFC and IFC Capitalization Fund Invest $140 Million in Bank South Pacific to Extend Financial Services Across the Pacific Region,” June 24, 2010: http://www.ifc.org/IFCExt/pressroom/IFCPressRoom.nsf/0/B0C9B19B441EC0D68525774C00532F60?OpenDocument
MicroCapital Universe Profile: International Finance Corporation (IFC): https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=International+Finance+Corporation+%28IFC%29
MICROCAPITAL BRIEF: Australia Supports Microfinance with $1.8m Pledge to the Pacific Financial Inclusion Program (PFIP), February 2, 2010: https://www.microcapital.org/microcapital-brief-australia-supports-microfinance-with-18m-pledge-to-the-pacific-financial-inclusion-program-pfip/
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