World Bank unit investing $745 mln in ComBank
View(s):IFC, a member of the World Bank Group, is investing $75 million (about Rs 9.6 billion) in the Commercial Bank of Ceylon to expand the local bank’s operations and increase access to finance for small and medium enterprises (SMEs).
This investment, through a fund managed by IFC’s Asset Management Company (AMC), is the global agency’s largest investment in Sri Lanka’s financial markets to date, and is expected to increase access to finance for up to 16,000 small businesses and generate about 170,000 direct and indirect jobs by 2017 through lending to small and medium enterprises, according to an offical statement from the institutions involved.
“It is also IFC Asset Management Company’s first funding in South Asia, and the largest subordinated debt issued for any bank in Sri Lanka. This investment will qualify as capital to help Commercial Bank expand its operations, allowing for small businesses across the country to gain better access to credit,” the statement added.
The IFC Capitalization Fund was established in 2009 by IFC and the Japan Bank for International Cooperation. It invests in banks considered vital to the financial system of emerging-market countries.
The investment will be via a 10-year subordinated loan to the Commercial Bank that will also help bring in new foreign currency funding, and provide the bank with capital to strengthen and expand its operations.
Ravi Dias, Commercial Bank Managing Director and CEO, said the investment would be a noteworthy infusion into the national economy, given the significance of the SME sector.
“This investment will help Commercial Bank expand financing options to the underserved – a key focus of IFC’s work in South Asia,” said Jin-Yong Cai, IFC Executive Vice President and CEO.
“The agreement also demonstrates Sri Lanka’s long-term potential as a destination for investment and should serve as a positive signal for international investors,” said Marcos Brujis, Head of the IFC Capitalisation Fund.
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