International Finance Corporation (IFC), a member of the World Bank Group, is considering a proposal to extend funding of up to $100 million to state-owned lender Bank of Maldives.
The proposed investment will consist of a senior secured loan of up to $50 million and a potential mobilisation of up to $50 million, plus an optional greenshoe, IFC said in a disclosure. The loan will have a tenor of up to three years.
The proposed IFC funding will be on-lent by the bank through working capital loans to support companies and SMEs in the tourism and services sectors in the Maldives, which have been impacted due to COVID-19.
“The investment is in response to the crisis caused by the coronavirus global pandemic which has adversely impacted the tourism industry, resulting in a liquidity crunch in related sectors,” IFC said.
IFC said the bank has designed a working capital financing program to support the tourism sector in the wake of the COVID-19 crisis, and the funding will extend its effort to this critical sector, which would, in turn, have a positive cascade to related value chains.
“The project will provide the financing required to support the tourism-related businesses, including those SMEs in the tourism value chain, with their working capital requirements, and to expedite their post-crisis recovery,” it added.
Bank of Maldives was established in 1982 as a joint venture, with a 60 per cent stake held by the government of the Maldives and 40 per cent by Bangladesh-based International Finance Investment Company Limited (IFIC Bank Limited).
Following the divestment by IFIC Bank Limited in 1992, the Maldives government assumed a majority shareholding. The bank is now listed on the Maldives Stock Exchange with the government owning approximately 66 per cent, including a 51 per cent stake held by the finance ministry.
The bank has the largest network of branches (38) in Maldives. As of March 31, 2020, Bank of Maldives had a customer base of around 285,000, representing around 53 per cent of the total population.
IFC said on its website that it is providing $8 billion in fast-track financial support to existing clients to help sustain economies and preserve jobs during this global crisis, which will likely hit the poorest and most vulnerable countries the hardest.
