Lead Editor Business
First Citizens will not be able to lend any of its $1.2 billion facility from the IDB Invest to the government, assures its Chief Executive Officer Karen Darbasie.
Darbasie told Guardian Media that the bank will have to account to the IDB for the use of the funds, reporting annually on the drawdowns.
First Citizens revealed to the market on Tuesday that it was seeking to borrow close to $1.2 billion from IDB Invest or up to US $175 million.
In a notice to the Trinidad and Tobago Stock Exchange (TTSE), the bank said its Board of Directors had on Monday approved the transaction with a tenor of seven years. She could not say what the interest rate will be.
First Citizens said the money will be used for three things.
(1) To grow its low and middle income household mortgage portfolio
(2) Implement its digital transformation and investment in digital and electronic products and services
(3) Expand its lending capabilities to the Small and Medium enterprise sector.
According to First Citizens it also entered an agreement with IDB Invest for technical advisory service for the development of a comprehensive sustainable finance strategy to fund Environmental Social and Governance Initiatives.
Darbasie said the three areas identified for use of the funds were in keeping with the country’s objectives.
She explained, “We think it’s aligned with the needs of the country. Housing stock is a need, SME development is a need, and the country has committed to a carbon reduction future that we want to be a part of.”
The First Citizens CEO noted that a major reason it is seeking the loan from IDB Invest is for the technical assistance that it will get in assessing green projects and financing them.
“We are really building out our loan portfolio in renewable projects and green energy type financing. We’ve been doing some of those, but aligned with this loan we also engaged with the IDB to come in and act as an advisor to us, to help us build out our product-line in the green space, to advise us on upskilling our staff on credit adjudication, what do we need to look for when we look at these kinds of projects and to really help build out that portion of our balance sheet,” she said yesterday.
Darbasie noted that there there are substantial solar and other projects taking place in Barbados and Jamaica.
“Part of the reason for the trip I made to Jamaica with Jason, the deputy CEO…Jamaica has declared a very clear goal for the percentage of renewables for their total energy on their grid and their projects are not huge farms like we are looking at in Trinidad here, they are smaller plants, solar and wind across the country.”
She added, “The large renewable projects in T&T are unlikely to be financed in the domestic market because of who those parties are, those projects that are outside, what we are seeing, especially Barbados, we are seeing a lot of companies investing in small projects that they are putting onto their own properties but also selling to the grid, those we think are going to be quite attractive for us to take a look.”
Darbasie revealed that part of the loan will be in TT dollars, like those for mortgages and some of the SME loans while most of the renewable projects will be in other currencies.