MICROCAPITAL STORY: Banco Pichincha of Ecuador Receives $75m from Inter-American Development Bank for Microfinance Endeavors

The Inter-American Development Bank (IDB) recently approved two loans worth a total of USD 75 million to Banco Pichincha of Ecuador. The IDB cites that the loan will be directed towards expanding housing finance and lending to micro, small and medium enterprises.

The two new loans are an extension of the IDB’s existing relationship with Pichincha. Within the IDB’s Trade Financing Facilitation Program (TFFP), Pichincha received approval for a USD 30 million line of credit in 2007 while later in 2007 it became an “Issuing and Confirming Bank”, which expanded Pichincha’s access to IDB guarantees, bonds and instruments used in international trade transactions.

Banco Pichincha was founded in 1906, and today it is the largest bank in Ecuador. Ecuador, with 327,065 borrowers, has the seventh highest number of microfinance clients in Latin America as ranked by the IDB in its 2006 publication Microfinance in Latin America and the Carribbean: How Large is the Market? (p 5). Banco Pichincha’s microfinance subsidiary, launched in 1999, represents 12 percent of Pichincha’s total profits as of March 2007. Pichincha as a whole operates in 279 branches throughout Ecuador as well as in Colombia, Peru, Panama and Miami. Pichincha’s financial services extend to corporations, the retail market and micro, small and medium enterprises. Pichincha reports its total assets, as of December 2007, to be USD 3.5 billion. In rating its “global qualification,” Bank Watch Ratings gave Pichincha an AA+ in both 2006 and 2007.

Incepted in 1959, the IDB is a multilateral financial institution with 47 member states that provides loans, grants, guarantees, policy advice and technical assistance to fund development programs in Latin America. According to their 2007 Annual Report, the IDB’s total assets sum USD 69.9 billion (p 104). The IDB also approved USD 7.7 billion in total loans for the year (p 79).

By Sarah Knapp, Research Assistant

Additional Resources

Banco Pichincha: Home

Bank Watch Ratings: Private Banks

Inter-American Development Bank: Home, 2007 Annual Report, Banco Pichincha Lending Facility, Press Release, Microfinance in Latin America and the Carribbean: How Large is the Market?, by Sergio Navajas and Luis Tejerina, November 2006