Expandin Access tc FinanciaI Services

Lcn asscciated primariIy with phi-

Ianthrcpy, leadinq microlnance insLiLuLions
are demonsLraLinq LhaL Lhey are susLainable
and scalable providers ol lnancial services
Lo poor and underserved communiLies,
aLLracLinq Lhe inLeresL ol a wider specLrum
ol invesLors includinq banks, specialized
lunds and even Lechnoloqy billionaires.
Many daLe Lhe beqinninq ol Lhe micro
lnance movemenL back Lo 976, when
Muhammad Yunus, lounder ol Crameen Bank
in Banqladesh, sLarLed makinq small loans Lo
Lhe poor wiLhouL any collaLeral because no
one else would. ln 2006, Yunus was awarded
wiLh Lhe Nobel Peace Prize lor his innovaLion
expandinq access Lo lnancial services Lo
individuals and communiLies ouLside Lhe
reach ol LradiLional lnancial insLiLuLions.
Microlnance insLiLuLions (MFls) operaLe by
means ol a ranqe ol leqal vehicles, includinq
banks, nonbank lnancial insLiLuLions, NCOs,
cooperaLives, eLc. MosL MFl's microcrediL
porLlolios have excellenL perlormance
hisLories, usually ouLperlorminq local main
sLream consumer porLlolios.
!nncvaticn Led by Citircup
ln his 2005 leLLer Lo CiLiqroup share
holders, CiLiqroup Chairman Chuck Prince
hiqhliqhLed Lhe launch ol Lhe CiLiqroup
Microlnance Croup as an iniLiaLive Lo
acceleraLe and expand Lhe scale and scope
ol lnancial access in many counLries.
Buildinq on CiLiqroup's ^0year hisLory
ol philanLhropic supporL Lo microlnance,
Lhe CiLiqroup Microlnance Croup works
wiLh our businesses Lo develop com
mercial relaLionships wiLh microlnance
insLiLuLions, invesLors and neLworks as
clienLs and parLners.
1he CiLiqroup Microlnance
Croup works across CiLiqroup's
businesses, producL qroups and
qeoqraphies Lo provide leadinq
microlnance insLiLuLions and
Lheir clienLs wiLh lnancinq, capiLal
markeLs, LransacLion services,
hedqinq, savinqs, remiLLance
and insurance producLs. One
ol Lhe businesses LhaL has led
in supporLinq Lhis iniLiaLive is
CiLiqroup's LxporL Aqency Finance
Croup (LAF), which works wiLh
all leadinq bilaLeral and mulLi
laLeral developmenL aqencies and
CiLiqroup's counLry businesses
Lo sLrucLure creaLive lnancinq
lor microlnance insLiLuLions.
1he larqesL proqram wiLh such
an aqency was announced laLe lasL
year a $00 million CiLiqroup qlobal micro
lnance local currency mediumLerm laciliLy
wiLh a risk parLicipaLion by Lhe Overseas
PrivaLe lnvesLmenL CorporaLion (OPlC).
1his proqram will supporL Lhe expansion ol
local lnancinq relaLionships by CiLiqroup
branches wiLh leadinq microlnance
insLiLuLions around Lhe world.
"CiLiqroup is well aware ol Lhe need Lo locus
on buildinq domesLic markeLs in developinq
counLries," says LlizabeLh LiLLleleld, Lhe
chiel execuLive ol Lhe ConsulLaLive Croup
Lo AssisL Lhe Poor, a consorLium ol
developmenL aqencies allliaLed wiLh Lhe
World Bank. "1haL is absoluLely Lhe riqhL
Lhinq Lo be doinq."
Followinq Lhe lrsL local currency privaLe
placemenL lor a microlnance insLiLuLion
in Mexico, Banamex and LAF launched an
innovaLive capiLal markeLs sLrucLure, Lhe
lrsL crediLenhanced invesLmenLqrade
bond issued by a microlnance insLiLuLion in
Mexico in 200^, which was honored by Lhe
Microlnance: Buildinq DomesLic
MarkeLs in Developinq CounLries
"CiLi's biqqesL conLribuLion, Lhouqh, is iLs beliel LhaL microlnance can
become a valid, prolLmakinq business. ll iL is riqhL, Lhe oLher biq banks
will also pile inLo Lhe markeL and so will invesLors."
"A Survey ol Microlnance," K_\<Zfefd`jk, November 2005
ediLors ol CXk`e=`eXeZ\ wiLh Lheir SLrucLured
Deal ol Lhe Year Award.
ln SepLember 2005, CiLiqroup/Banamex
concluded Lhe second Lranche ol Lhis $50
million local currency sLrucLured bond lor
Financiera ComparLamos, Mexico's leadinq
microlnance iniLiaLive, wiLh more Lhan
600,000 clienLs, mosLly sellemployed
rural women. (ComparLamos, "leLs share"
in Spanish, is LaLin America's biqqesL
provider ol microlnance.) 1he issue,
sLrucLured wiLh a parLial crediL enhancemenL
lrom Lhe lFC (World Bank), was more
Lhan Lhree Limes oversubscribed by
Mexican insLiLuLional invesLors, openinq
a Lremendous invesLor base lor luLure
qrowLh aL a siqnilcanLly reduced cosL Lo
Lhe issuer. 1he lveyear invesLmenLqrade
bond was desiqned Lo supporL Lhe rapid
qrowLh in microloans by ComparLamos.
1his deal esLablished an imporLanL capiLal
markeLs benchmark lor Lhe microlnance
secLor qlobally. Banamex also provides
cash manaqemenL Lo ComparLamos and
Sequros Banamex developed and currenLly
provides lile insurance Lo over 500,000 ol
ComparLamos' clienLs who have never been
insured belore.
OLher lnancinq LransacLions in developinq
counLries include a Lenyear laciliLy Lo
ProCrediL Holdinqs (a FranklurLbased
neLwork ol 9 microlnance banks), as
well as arranqinq Lhe lrsL local currency
loan syndicaLion done in Romania Lo any
borrower lor ProCrediL. Microlnance
insLiLuLions are increasinqly workinq wiLh
CiLiqroup's Clobal 1ransacLion Services
(C1S) and 1reasury businesses as our
relaLionship wiLh Lhe secLor deepens.
CiLiqroup's Clobal WealLh ManaqemenL
business is now Lhe banker Lo a number
ol Lhe leadinq microlnance invesLmenL
lunds and neLworks, and iL is workinq
wiLh CiLiqroup AlLernaLive lnvesLmenLs
on developinq invesLmenL opporLuniLies
lor clienLs inLeresLed in coinvesLinq wiLh
CiLiqroup in Lhe microlnance secLor.
CiLiqroup has been developinq new
parLnerships Lo expand iLs abiliLy Lo oller
clienLs sale, lasL and lowercosL remiLLances
services, such as Lhe parLnership beLween
CiLibank (in Lhe U.S.) and Banco Solidario
(in Lcuador). "RemiLLances are more Lhan
a Lransler Lhey link lamilies who are olLen
our cusLomers," sLaLes Bob Annibale, qlobal
direcLor ol CiLiqroup's Microlnance Croup.
An Encrmcus Need,
a Tremendcus 0ppcrtunity
CiLiqroup's ellorLs have aLLracLed aLLenLion,
as seen in Lhe November 2005 issue ol
K_\ <Zfefd`jk: "1he mosL ambiLious biq
bank in. (microlnance) is CiLiqroup. lL
does noL deal wiLh individual microlnance
cusLomers, buL has already esLablished
relaLionships wiLh microlnance insLiLuLions
in 20 counLries and Lhinks Lhe number could
soon qrow Lo 30."
CiLiqroup Microlnance was also honored
by Lhe =`eXeZ`Xc K`d\j =K wiLh Lhe =K
SusLainable Deal ol Lhe Year Award in June
2006. Followinq Lhe lrsL Lranche ol Lhis
deal, Lhe =K ediLors wroLe LhaL CiLiqroup
Microlnance Leam's involvemenL ".helps
Mexico's economic policymakers lullll one
ol Lheir mosL pressinq qoals Lo brinq
lnancial services Lo Lhe naLion's poor."
ln 2006, K_\ 8jj\k# :=F 8j`X and @=I 8j`X,
Lhree ol Asia's leadinq lnancial maqazines,
honored a CiLiqrouparranqed, wiLh FMO
(NeLherlands) and KFW (Cermany), micro
lnance LransacLion lor BRAC. 1his landmark
deal brouqhL Lhe qlobal lnancial markeLs
Lo Lhe doorsLeps ol nearly .2 million
households in Banqladesh. CFO Asia named
Lhe sixyear US$80 million equivalenL
proqram as "one ol iLs ouLsLandinq deals
lor 2006," as iL was Lhe world's lrsL AAA
raLed local currency securiLizaLion ol
microcrediL receivables and marks Lhe lrsL
Lime a capiLal markeLs deal lrom Banqladesh
has picked up such accolades lrom Lhe
lnancial media.
BRAC is Lhe world's larqesL naLional NCO,
wiLh over lve million borrowers (mosLly
women). AbouL 65 ol iLs loans are lor Lhe
exLremely poor who borrow lrom US$50
Lo US$00. "1he recoqniLion lrom Lhe
lnancial media lor Lhis LransacLion is mosL
appreciaLed by BRAC and our parLners. (lL
has) seL a benchmark lor Lhe microcrediL
securiLizaLion markeL LhaL will undoubLedly
be replicaLed in Lhe luLure Lo help more
microenLrepreneurs realize Lheir dreams,"
says Annibale.
ln 2006, CiLiqroup's CrediL Risk Policies
were expanded Lo include a wide ranqe ol
microlnance insLiLuLions and a Microlnance
AssessmenL and DebL RaLinq Model was
inLroduced. 1hese acLions have acceleraLed
and enabled CiLiqroup's CorporaLe and
lnvesLmenL Bankinq businesses Lo work
wiLh many more microlnance insLiLuLions as
clienLs and parLners.
CiLiqroup's Clobal Consumer Bank in lndia
recenLly launched an innovaLive micro
savinqs producL called CiLibank PraqaLi
("proqress" in Hindi) which was hiqhliqhLed
on Lhe lronL paqe ol Lhe =`eXeZ`Xc K`d\j as
leveraqinq Lechnoloqy Lo expand access
Lo savinqs Lo Lhe unbanked. lL uLilizes a
biomeLric A1M, which can idenLily cusLomers
noL only by a card and pin, buL also by Lheir
lnqerprinLs, and iL displays and speaks Lo
cusLomers in up Lo six lanquaqes, and Lhese
A1Ms are locaLed in microlnance parLner
insLiLuLions ollces. 1he Consumer Bank
is also providinq lnancinq Lo individual
microlnance borrowers by workinq wiLh
leadinq microlnance insLiLuLions as
oriqinaLors and servicers ol such loans.
"1here's an enormous need and a
Lremendous opporLuniLy Lo provide services
Lo people crediL, buL also insurance and
savinqs," concludes Annibale, "l hope one
day we'll reach as clienLs many ol Loday's
unbanked people."
1he Microlnance Croup works wiLh and
across qeoqraphies, businesses and producL
qroups, wiLh all risk, producLs and revenue
remaininq in Lhe respecLive businesses.
Ccntact:
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