The bank, which is said to command close to 15 per cent of industry assets, is indirectly co-owned by interests in Spain, Puerto Rico and Washington.

"We are very pleased with this approval, which demonstrates the IDB's commitment with the future of the Dominican Republic and the confidence in its financial system," said Luis Molina Achecar, president of Banco BHD.

The bank is a subsidiary of Grupo BHD, a Dominican holding company with interests in the financial services through Centro Financiero BHD or CFBHD.

Investors in CFBHD said the IDB includes Banco Sabadell of Spain, Banco Popular of Puerto Rico and the International Finance Corporation.

The IDB financing, approved December 7 by the board of executive directors of the IDB, consists of a senior five-year unsecured loan of up to US$5 million and an eight-year subordinated loan for up to US$12.5 million from IDB's ordinary capital.

The IDB loan is expected to be complemented by additional borrowing from commercial banks.

The subordinated loan, to be made in partnership with another unnamed bilateral organisation, will be structured for treatment as Tier II capital by the country's banking regulator.

"This facility fulfils many of our key priorities in working with Banco BHD, contributing towards a more robust capitalisation of the institution through the subordinated loan, while at the same time, pursuing more targeted objectives of development and sustainable practices at the bank with the senior loan," said Daniela Carrera Marquis, chief of the financial markets division of the IDB's Structured and Corporate Finance Department.

A portion of the senior loan is expected to finance the conversion of BHD's electrical back-up system to a clean energy source, with a technical assistance from IDB's Sustainable Energy and Climate Change Initiative.

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