Regional bank bolsters trade and financial links

The Central American Bank for Economic Integration (CABEI) is the largest financial organization in Central America, with some $3.4bn in assets. It has a leading role to play in the future prosperity of the CAFTA region, helping to bolster trade and financial links between member states and the rest of the world. The Honduras-based bank has an agenda to back regional development initiatives through carefully targeted project loans and assistance, both in the private and public sectors. Resources are channeled through a network of over 100 banking and non-banking institutions throughout Honduras, El Salvador, Guatemala, Nicaragua, and Costa Rica.
Founded in 1960, CABEI focuses on three core areas – poverty reduction, regional integration and international competitiveness. Its portfolio includes several critical infrastructure projects. Last year, it disbursed a record $1.1bn to projects across the region including the modernization of El Salvador’s roads and Costa Rica’s mobile telephone network.

HARRY E. BRAUTIGAM President of CABEI

CABEI’s President, Harry E. Brautigam, believes it is essential that the countries of the Central American region adopt a long-term co-operative approach through initiatives like CAFTA. Indeed, in December 2002, it approved $2.5m in support for the CAFTA negotiations with America. “CAFTA, as well as other trade agreements, will allow our countries to access new markets, consolidate their positions in old markets, harness new foreign investment, and introduce new technologies and knowledge,” Mr. Brautigam says.

CABEI’s regional presence, financial soundness, professionalism, transparent policies, and diverse product mix, are helping to restore investor confidence in the Central American region. The bank’s international profile is growing. In addition to regional members, extra-regional partners include Mexico, the Republic of China (Taiwan), Argentina, and Colombia. Spain and Korea have expressed their interest in joining. Talks are also progressing with Belize, the Dominican Republic, and Panama to become beneficiary non-founding members.

Investment-grade credit ratings from all three agencies, Moody’s, Fitch and Standard & Poor’s, highlight the bank’s financial credibility. In June 2003, a leading financial markets magazine recognized CABEI’s achievements with the Best Financial Borrower of the Year Award in Latin America. It followed the bank’s debut issue, a 10-year $200m bond, that proved hugely popular with investors from the U.S., Latin America, and Europe.

Mr. Brautigam now sees real momentum in the Central American region for integration into the world economy. CABEI is an example of what can be achieved through regional co-operation efforts. “Unity is essential in today’s complex and competitive world.”

Indeed, it is important to recognize just how far the region has come in recent years. Dr. Marvin Taylor-Dormond, CABEI’s Chief Economist, describes CAFTA as a “catalyst for integration” with improvements evident in countless different areas. One major progress area is in the harmonization of tariff structures. “I think we have made tremendous progress now in that respect.”

The advancement of CAFTA in re-defining relations with the outside world is essential.

Jaime Chávez Almendares, CABEI’s Executive Vice President, believes the trade agreement, and the foreign investment it will bring, will raise the profile of the development bank further. “With our correspondent network of banks throughout the region, CABEI will be seen in a much stronger light by the international financial community.”