Itaú Unibanco, Brazil’s largest lender in the private sector, has taken a loan of $400m from the International Finance Corp and a group of commercial banks in order to help finance renewable power projects in the country, which have been experiencing severe power shortages.
Itaú has been focusing on financing projects that would cut down the energy generation costs, implement efficient water treatment, and reduce carbon emissions, reports Reuters.
This is considered to be the largest amount to be ever raised by a bank in Latin America for financing initiatives to address climate change in the region.
In the last three years, Itaú BBA, which is Itaú’s wholesale and investment banking unit, has been involved in the funding of approximately 40 renewable power projects.
Brazil, which is already grappling with the worst drought in more than 80 years, is facing severe power shortage especially in the south-eastern region.
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It has been purchasing power from Argentina to ease the blackouts.
The country is also concerned that its utilities will be compelled to depend on more fossil fuel, which would in turn increase costs as well as emit more greenhouse gas.
Itaú BBA international financial institutions head Carolina Camargo was quoted by Reuters as saying: "The deal has a clear focus of bringing energy efficiency to the forefront, as more of our clients are increasingly conscious of the importance of using their resources in the best way possible."
The Latin American bank has borrowed $100m from the IFC for a five-year period, while the remaining $300m has been borrowed from a group of banks for a three-year period. These are Japan’s Mizuho Financial Group, Bank of America Corp’s BofA Merrill Lynch unit, and Germany’s Commerzbank AG.
Image: Itaú Unibanco has taken a loan to finance renewable power projects in Brazil. Photo: courtesy of Freedigitalphotos.net.
