CABEI Increases its Authorized Capital by 40% (US$2 Billion) Amidst the COVID-19 Pandemic

Tegucigalpa, April 20, 2020.– Amidst the ongoing COVID-19 Pandemic, the Central American Bank for Economic Integration (CABEI) has today officially increased its Authorized Capital by US$2 billion, from US$5 billion to US$7 billion. This 40% increase in CABEI’s Authorized Capital guarantees new paid-in capital installments for at least US$255 million by the Institution’s founding member countries.

It also the Bank’s 8th General Capital Increase and the second one in less than ten (10) years, confirming CABEI’s high franchise value and shareholder support, as well as its relevance for the region as the main provider of financial resources, disbursing almost US$30.0 billion since its foundation in 1960.

For his part, CABEI’s Executive President, Dr. Dante Mossi, highlighted that the implementation of this capital increase is a historic achievement considering the economic stress countries are currently facing under the COVID-19 pandemic, and consolidates CABEI as the cornerstone of development in the Central American region. Consequently, Dr. Mossi labeled this capitalization exercise an indisputable and unprecedented sign of the support by member countries, considering it as unique within the Multilateral Development Bank industry, given the challenges other banks are facing on this particular issue. As such, Dr. Mossi singled out CABEI as first and only Multilateral Development Bank thus far to implement a capitalization process in response to the current COVID-19 pandemic and related economic crisis.

In addition, Dr. Mossi underlined his expectation that this capital subscription by the founding members will be followed by a decisive response from the rest of the Bank’s member countries. Dr. Mossi also stressed that this new capitalization exercise will enhance CABEI’s financial profile by freeing up the necessary capital to promote the incorporation of new members, which is pivotal in the Bank’s pursuit of a “AAA” rating, in order to enhance the financial conditions offered to its borrowing countries.

In light of CABEI’s recently launched five-year strategy (2020-2024), he highlighted that the implementation of the capital increase will boost institutional credit capacity by approximately 45%, which results in increased loan approvals for approximately US$1 billion per year; whereby, the average loan approvals per year will exceed US$3.0 billion.

As such, President Mossi concluded that this increase in the Institution’s credit capacity considers the implementation of its “Emergency Support and Preparedness Program for COVID-19 and Economic Reactivation” for US$1.96 billion launched earlier this month; which among other components, includes US$600 million in emergency sovereign loans to member countries, US$1 billion to support Central Bank liquidity and US$350 million to strengthen the region’s financial system.