March 27 (Bloomberg) -- The Corporacion Andina de Fomento, the Andean development fund, will ask its 18 member nations for $2 billion in fresh capital so it can expand lending in Latin America, the bank’s President Enrique Garcia said.

The decision to seek a capital increase was approved by the bank’s board last week, Garcia said in an interview at the Inter-American Development Bank’s annual meeting in Medellin, Colombia.

“The money is needed so we can meet our goal of increasing our net worth to $10 billion in the next five years,” Garcia said. “Right now, with projected income, we have about $7 billion.”

CAF, as the Caracas-based development lender is known, aims to increase loan approvals this year to $9 billion, as Latin American countries battered by the global credit crisis demand more trade financing and emergency liquidity, Garcia said.

Last year, the bank approved about $7 billion in loans, Garcia said.

CAF, whose biggest shareholders are Venezuela, Colombia and Peru, had net income last year of $314 million, representing a return on equity of about 7.2 percent, Garcia said.

The capital increase is independent of a new commitment by Argentina, Brazil, Uruguay, Paraguay and Panama to contribute a total of $1.6 billion, Garcia said.

To contact the reporters on this story: Joshua Goodman in Rio de Janeiro jgoodman19@bloomberg.net

Last Updated: March 27, 2009 15:41 EDT