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Fitch: CABEI bolsters capital position with rise in contribution, new members

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Fitch: CABEI bolsters capital position with rise in contribution, new members

Banco Centroamericano de Integración Económica, or CABEI, has bolstered its capital position through recent contribution increases and the inclusion of South Korea and Cuba as nonregional members, Fitch Ratings said.

The measures also emphasize the importance of the multi-lateral development bank for Central America as it expands its financial profile and growth, the rating agency said. The changes were brought about by amendments in CABEI's constitutive agreement, a development that has aided in its growth and the execution of its long-term strategy.

CABEI recently gained approval for its eighth global capital hike, an increase to $7 billion, which reflects the bank's push to reach its diversification and growth strategies, Fitch said. In addition, the rating agency expects the approval of the consolidation of the so-called Special Fund for the Social Transformation of Central America to ordinary capital to expand CABEI's capital by $97 million and increase its buffer above Fitch's 25% threshold to be considered excellent.

Fitch expects a 17% increase in the bank's equity and an 11.4% rise in its callable capital by the end of 2018, following the said consolidation and the rise in subscriptions by Panama and Dominican Republic in 2017 and the inclusion of South Korea and Cuba. The rating agency also expects a sustained flow of paid-in capital contributions over the next four years.