IFC, a member of the World Bank Group, approved a loan to Republic Bank for US$75 million to help address Trinidad and Tobago’s affordable housing deficit. IFC’s funding will support Republic Bank’s strategic plans to increase exposure to residential mortgages from 20 percent of its total loan portfolio to 25 percent, helping thousands of middle-income families become homeowners.
The investment consists of a seven-year subordinated loan to grow the bank’s mortgage portfolio of middle-income borrowers. Additionally, the subordinated debt will qualify as Tier II capital under local regulations, hence strengthening Republic Bank’s capital base. As part of the transaction, IFC is offering technical assistance in key areas such as reporting, monitoring and risk management of the residential mortgage portfolio.
“Owning a home is a dream for many families and Republic Bank continues to look at innovative ways to provide affordable housing in Trinidad and Tobago as this partnership with IFC demonstrates,” said Nigel Baptiste, Managing Director of Republic Bank Limited. Mr. Baptiste also added that the confidence shown in Republic Bank by IFC in providing Tier II capital to further strengthen the bank’s already robust capital level comes at an opportune time as the Republic Group is embarking on a wider expansion in the region.
The investment is also well aligned with wider efforts to close Trinidad and Tobago’s affordable housing gap which is estimated at more than 100,000 units, in a population of less than 1.4 million people. The bank’s partnership with IFC is expected to improve the country’s relatively low mortgage finance penetration rate, which is one of the most critical factors contributing to the housing gap.
The initiative also supports the government’s efforts to manage its subsidised housing costs. Housing development—as part of the construction sector—is key for job creation. However, one of the largest expenditures incurred by the country is the sale of subsidised housing. To reduce these expenditures, the government is adopting new incentives such as land grants, tax exemptions and cash bonuses to developers who build homes for lower income families.
“The private sector has a key role in providing financing for affordable housing, especially in the tightening fiscal context of Trinidad and Tobago,” said Luc Grillet, IFC senior manager for Central America and the Caribbean. “Private financing for affordable housing saves public resources and benefits families and the economy as a whole—long after the homes are built and occupied, the ripple effect from residents support jobs in a wide array of industries, including retail, healthcare and hospitality.”
IFC—a sister organization of the World Bank and member of the World Bank Group—is the largest global development institution focused on the private sector in emerging markets. We work with more than 2,000 businesses worldwide, using our capital, expertise, and influence to create markets and opportunities in the toughest areas of the world. In fiscal year 2018, we delivered more than $23 billion in long-term financing for developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity. For more information, visit www.ifc.org
About Republic Bank Limited
Established in the Caribbean in 1837 as the Colonial Bank before becoming Barclays Bank of Trinidad and Tobago, Republic Bank has a long track record of stability and financial strength with vast experience and success in the areas of commercial, retail, merchant and corporate banking. As the largest bank in Trinidad and Tobago, Republic Bank plays a critical role in boosting financial inclusion and pioneering underserved segments of the market, such as housing finance for middle-income borrowers.
Republic Bank is a subsidiary of Republic Financial Holdings Limited—one of the region’s most successful financial groups. Now a global player with assets, as at December 31, 2018, in excess of US$10.8 billion and equity attributable to shareholders of US$1.4 billion, Republic Financial Holdings offers an extensive range of banking services through its 16 subsidiaries across the Caribbean and Ghana. Learn more about the Republic Bank at www.republictt.com
Related Article in Sustainable Business Magazine
Click here to read the Q&A with Ethiopis Tafara, IFC VP and General Counsel (Sustainable Business Magazine, Africa 1/2018).
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