A revolving credit line from IDB Invest is enabling a Panamanian bank not only to expand access to finance for small and medium-sized businesses but also to help them operate more sustainably.
In Panama, as in most other countries, micro, small and medium-sized enterprises (MSMEs) struggle to obtain access to finance—especially to medium- or long-term loans for working capital or investments in fixed assets such as buildings or equipment.
Banistmo, the country’s second-largest private bank, turned to IDB Invest for support in expanding its portfolio of loans to MSMEs. A $40 million revolving line of credit from IDB Invest will allow Banistmo to provide more than 120 sub-loans with tenors of up to three years. At least half of the credit line is earmarked for loans of $150,000 or less. The bank can reuse the line of credit as it repays the amounts disbursed.
Banistmo wanted to provide its MSME clients not just with loans but with solutions that would allow them to become more competitive. IDB Invest was able to offer technical assistance, based on its experience of working with small and medium-sized businesses to lower their energy costs, become more energy-efficient and help mitigate the effects of climate change.
With development assistance funds provided by Korea, IDB Invest facilitated a workshop for Banistmo employees and two other workshops, in Panama City and Santiago, attended by dozens of the bank’s MSME customers. Energy efficiency audits were also made available to 20 MSMEs; these consisted of an initial assessment and two follow-ups to see how recommendations were being implemented.
Banistmo is an entity domiciled in Panama. It began operating in 1973 and was acquired in October 2013 by Bancolombia S.A., a financial entity that is Colombian in origin and has a net worth of US$8 billion, making it the eighth largest private bank in Latin America. Banistmo is a full-service bank regulated by Panama’s banking regulator (Superintendencia de Bancos de Panamá). It provides a wide variety of financial services both directly and through its affiliates, mainly to institutions and natural persons. In addition to consumer banking and services to corporate clients, Banistmo provides financial leasing, trust asset management and services like payment, registry, brokerage, and trading of securities.
Banistmo is the second largest private bank in Panama. It had a market share of 12 percent as of March 2015 by deposits and a 14 percent market share by loan portfolio. It is a diversified bank, with 17 percent of its portfolio in the consumer sector, 27 percent in residential mortgage lending, and 56 percent in corporate lending. Banistmo has 455,000 customers, 55 branches, and more than 300 ATMs. Micro, small, and medium sized enterprises account for 63% of the total number of enterprises financed by the Bank. The rest are large corporate clients.
The objective of this financing is to support small and medium-sized companies, in Panama mainly but also in Barbados, Belize, Costa Rica, the Dominican Republic, El Salvador, Guatemala, Guyana, Honduras, Jamaica, Nicaragua, Peru, Suriname, The Bahamas, and Trinidad and Tobago, where the Bank has an opportunity to grow through credit transactions to finance working capital or the purchase of fixed assets.