The total authorized capital of NADB is $3 billion with equal commitments from the United States and Mexico. Each country authorized the subscription of 150,000 shares of the bank’s capital stock with a par value of $10,000 per share. Fifteen percent of the authorized capital is in the form of paid-in capital and the remaining 85 percent is in the form of callable capital.

Country
Paid-In Capital
Callable Capital
Total
 United States
$ 225,000,000
$ 1,275,000,000
$ 1,500,000,000
 Mexico
$ 225,000,000
$ 1,275,000,000
$ 1,500,000,000
 Total
$ 450,000,000
$ 2,550,000,000
$ 3,000,000,000

Paid-in capital consists of cash funds contributed to NADB by the two governments and is invested in short- to medium-term, high quality, fixed-income securities. It acts as the bank’s cash reserves, which, in addition to providing loan loss reserves, can be used for a limited amount of direct lending. The paid-in capital must be maintained at adequate levels to protect the bank’s creditors and ensure its operational integrity.

Callable capital does not represent actual cash funds contributed to NADB by the two governments.  It is composed of funds that are pledged to be provided to NADB from the two countries only if required to meet the bank’s obligations on borrowings of funds for inclusion in its capital resources as specified in the Charter. In other words, callable capital is essentially a guaranty for any bonds issued by the bank to raise funds in the capital markets for its lending program. Because no actual cash funds are received, callable capital may not be used to make loans directly.

As set forth in its charter, 90 percent of NADB’s authorized capital is used to finance environmental infrastructure projects in the border region, and 10 percent of the capital subscribed by each country went to finance community adjustment and investment throughout the United States and Mexico in support of the purposes of the North American Free Trade Agreement (NAFTA). Consequently, of the US$450 million in paid-in capital, US$405 million relates to the environmental infrastructure program, while the remaining US$45 million was evenly divided between the two countries with each receiving US$22.5 million for their respective domestic program.

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Photo 3 by Alicia Wagner Calzada