Project detail - Banco de America Central, S.A

Who is our prospective customer?

BAC Guatemala (BAC GT) is a privately owned universal bank and the 4th largest bank in the country with a market share of 8% in terms of total assets. It is part of the BAC-Credomatic group, one of the largest financial groups in the region, with operations in El Salvador, Honduras, Nicaragua, Costa Rica and Guatemala. BAC GT’s loan book (USD 4.02bln) is divided on enterprise loans (53%) and consumer loans (47%). Among its enterprise loan portfolio, 82% are allocated to corporate loans, 14% to SME loans and the remaining 4% to microloans. Its consumer loan portfolio has leading positions among the credit cards business (originated through Credomatic) and mortgage loans (30% of market share).

What is our funding objective?

The USD 90 million senior unsecured term facility will fund 100% eligible green projects in Guatemala and will follow FMO’s green lending criteria. The proposed transaction is part of a syndicate facility for a total loan amount of up to USD 180mln.

Why do we want to fund this investment?

The BAC group’s strategy is based on three pillars i) Economic, ii) Environmental and iii) Social. The bank aims to maximize its economic value by providing efficient, simple, and digital solutions with an environmental and social impact. They have become a net positive emissions bank in 2023 by reducing their carbon footprint and compensating the remaining with the purchase of carbon credits. Strategically, BAC target is to achieve a net positive loan portfolio by 2040, which implies a focus on originating green loans. The launch of sustainable credits products in 2023, which provides financial solutions for corporate and SMEs aiming to invest in equipment or systems that help manage energy efficiency management, efficient water consumption and waste management aligns with the strategic priority of the bank. FMO aims to continue supporting BAC GT’s ambitious net positive strategy and contributing to the reduction of greenhouse gas emissions in Guatemala and the development of green finance solutions.

What is the Environmental and Social categorization rationale?

BAC GT is E&S risk category A. Although the Bank's exposure to high-risk sectors is below 20% and the exposure to FMO’s permitted exclusion list categories is below 1%, there are 3 IFC Performance Standards-triggered transactions in the portfolio (which account for more than USD 300mln). Contextual risks are high in Guatemala and next steps for their Environment and Social Management System (ESMS) will be the inclusion of tools and procedures to mitigate these risks. As part of the 2022 transaction with FMO, BAC GT has made significant progress in the design and implementation of the ESMS for assessing E&S risks and are now fully integrated in the credit appraisal process.

More investments

Date	Total FMO financing
11/29/2024	USD 0.02 MLN
11/24/2022	USD 200.00 MLN