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Caja de Ahorros de Panama

$250 million
Financial Services
Project Brief

Project description

On June 30, 2020, MIGA issued a guarantee covering a US$250 million non-shareholder loan provided by Kairos Global Solutions S.A. (Kairos) to Caja de Ahorros (CA) of Panama for a period of 15 years against the risk of Non-Honoring of Financial Obligations by a State-Owned Enterprise (NHFO-SOE).

The MIGA-guaranteed loan from Kairos, which is being arranged by Citi and funded in large part by institutional investors, will expand CA’s mortgage lending to low- and middle-income households in Panama, increasing access to affordable housing.

CA was established by the Government of Panama in 1934 with a social mission to encourage good savings habits, offer financial education programs, and contribute to solving the country’s housing deficit by providing mortgages to lower and middle-income households in Panama. Its extensive network, with over 50 branches and over 250 ATMs spread across the country, including in areas with little private bank presence, allows CA to fulfill this important social function by fostering financial inclusion. These efforts have earned CA national recognition as the “Bank of the Panamanian Family” (El Banco de la Familia Panameña). CA has over 2,000 employees, of whom 56 percent are women.

Environmental Categorization
This project is Category FI-3 according to MIGA’s Policy on Environmental and Social Sustainability. The proceeds of the MIGA guaranteed loan will be used exclusively for retail mortgages, which are expected to have no to low adverse environmental and social (E&S) risks and/or impacts. MIGA also reviewed the complete portfolio of CA, and determined that the existing and expected future portfolio exposure includes business activities that predominately have minimal or no adverse environmental and social impacts. The project will be required to comply with MIGA’s E&S requirements that include the applicable aspects of Performance Standard 1: Assessment and Management of Environmental and Social Risks and Impacts and Performance Standard 2: Labor and Working Conditions. CA will also be required to inform MIGA if there are any changes in the scope of its operations that affect the E&S risk of its portfolio.

Development Impact
The project provides CA access to international long-term financing for the very first time, helping the bank lower their funding cost and better match the tenor of assets and liabilities. The funds will support the bank’s current mortgage portfolio and pipeline, as well as provide balance sheet capacity for future growth.

The proceeds from this project will be exclusively used to issue mortgages on newly constructed homes with values of up to US$120,000. These mortgages are supported by the Ley Preferencial, a government program which subsidizes interest rates to make purchasing a home more affordable and increases demand for new home construction, thereby reducing the country’s housing deficit.

The project will play an important role in supporting equitable and inclusive economic growth and reducing the housing deficit that disproportionally impacts the low- and middle-income segment by increasing access to affordable mortgages. Roughly half of the mortgages to be financed by the project will go to women and women-headed households.