The International Finance Corporation (IFC), the private sector arm of the World Bank Group, has signed an agreement to provide US$5mn in loans to Financiera Nicaragense de Desarrollo (Findesa), one of Central America’s leading regulated microfinance institutions. IFC will also provide technical assistance.

IFC’s investment will support Findesa’s transformation to a commercial bank, a more sustainable and effective model for microfinance institutions in Latin America, which will enable Findesa to offer a broader range of financial services to more clients, in particular micro and smaller enterprises in need of loans. The financing is in two parts:  a senior loan of US$2mn and a subordinated convertible loan of US$3mn.

The IFC LAC Technical Assistance Facility will help Findesa in a variety of areas including credit risk assessment and management – in particular for small and medium enterprises – and measuring performance by branch office, business line, and products.  IFC’s assistance will also enable Findesa to reinforce its strong corporate governance structures by training senior management and board members.

Gabriel Solorzano, Findesa’s president, says, “As a bank, Findesa hopes to continue its strong performance and expand services to micro, small, and medium enterprises.  As client businesses grow and become more successful, Findesa will grow to serve their changing needs.”

Findesa is a privately-owned, deposit taking, non-bank financial institution regulated by the Nicaraguan Superintendence of Banks. It was licensed in April 2002 following its transformation from a non-governmental organization led by La Asociacin del Fondo del Instituto Nicaragense de Desarrollo (Finde). Through the use of the individual lending methodology, Findesa manages a micro loan portfolio of US$56mn equivalent at December 31, 2005.  The institution serves its clients through 19 branches, 17 of which are located throughout the more populous western and central areas of Nicaragua.  Findesa focuses its lending activities on rural micro enterprises, a niche in which it plans to further increase its presence by expanding to the Atlantic region of the country.