Posts Tagged ‘banks’

Posted on June 12, 2009 - by Gavin

MICROCAPITAL STORY: Global Partnerships Microfinance Fund 2008 Invests $1.75m in South American MFIs FODEMI, Fundacion D-MIRO and Prisma…

Microcapital

The Global Partnerships Microfinance Fund 2008 (GP MFF 2008), a member of the Global Partnerships family of funds, reported three investments in April 2009 to the CGAP Microfinance Dealbook, the monthly report on microfinance market transactions. Equadorian microfinance institutions (MFIs) FODEMI and Fundacion D-MIRO each received USD 500,000 in debt while Peruvian MFI Asociacion Benefica PRISMA received USD 750,000 in debt. MicroCapital previously reported on the launch of the GP MFF 2008 in November 2008.

FODEMI was founded in 1995 as a non-profit organization authorized by the Ecuadorian Ministry of Labor. Based in Ibarra, Ecuador and maintaining a network of seven branches, FODEMI is affliated with World Vision, a Christian international development organization. According to the MIX Market, the microfinance information clearinghouse, FODEMI serves 13,969 active borrowers and maintains a gross loan portfolio of USD 6 million as of December 2007. Total assets were reported as USD 6.2 million with a return on assets of 4.1 percent and a debt/equity ratio of 110.76 percent.

Services offered by FODEMI offers technical assistance to clients as well as short-term loans in the form of individual loans, community banks consisting of 10 to 20 people, and solidarity groups consisting of 3 to 6 people. FODEMI launched two projects in 2004 with funding from AusAID, the Australian government’s overseas aid program. The Cotopaxi Banca Mujer Project focuses on providing credit to women in the Cotopaxi area while the Poverty Reduction Project promotes the formation of community banks in Cotopaxi and Chimborazo. (more…)

Posted on May 8, 2009 - by Gavin

Banking on an economic crisis…

The Phnom Penh Post

While Cambodia was not directly hit by the domino effect that caused financial institutions like Lehman Brothers to crumble, a domestic crisis has exposed the undeveloped banking sector.

EXACTLY one year after the subprime mortgage crisis first hit in the United States in July 2007, Cambodia’s central bank took measures to reduce liquidity in its undeveloped financial system by doubling reserve requirements from 8 percent to 16 percent.

This move showed Phnom Penh was clearly out of sync with the world’s major financial centres and impervious to the credit crunch that had forced New York, London, Paris and Tokyo into unprecedented crisis.

In a clear sign of Cambodia’s lack of integration into the global financial community, the National Bank of Cambodia (NBC) was taking measures to rein in a rapidly increasing money supply even as much of the developed world was trying desperately to increase liquidity. (more…)

Posted on May 5, 2009 - by Gavin

Banks take a hard look at lending to microfinance firms…

DNA India

Mumbai: The microfinance sector, which was considered to be recession proof, has also become a victim of the economic slowdown. The flow of bank funds into the sector is down to just a fraction of what it was just a couple of years back.

Microfinance provides banking facilities, especially credit, to the poor. Banks lend to micro finance institutions (MFIs), who pass on the credit to the unbanked.

It was a win-win situation for both parties. The MFIs got cheap funding and the banks, by indirectly lending to the poor, fulfilled a part of their priority lending obligation. (According to RBI norms, local banks must lend 40% of their credit portfolio to the priority sector, which includes rural customers).

But financial horror stories from the US and uncertainties over future funding have forced banks to check their exposure with a magnifying glass. Doubting whether the runaway growth in the microfinance sector over the last couple of years can be sustained, banks are now refusing to provide finance to MFIs without analysing the balance sheet.

So, MFIs that don’t have the systems to maintain their balance sheets can forget about getting any kind of finance. Currently only the big MFIs have the wherewithal to audit accounts and maintain balance sheets. (more…)

Posted on April 6, 2009 - by Gavin

Nigeria: Impact of Global Crisis On Banks…

All Africa.com

Lagos — Though I had expected that no sector of the Nigerian economy will be completely shielded from the impact of the unprecedented crisis ravaging the world financial system but I had thought that the impact on the banking sector will be to the extent that some aspects of their operations would be negatively affected but most certainly not of a systemic proportion.

I hold this view rather advisedly as someone who had not only followed the progress of the Consolidation program but someone who was infected with the passion for the program ab initio and was therefore in the trenches in defence of the program when the general trend was to doubt its feasibility and have come to expect that the banking sector is so robust as a result that I was not expecting any of the banks to be in danger as a result of the global financial crisis. But was I rather surprised when one of my brother knights on our way back from Agenobode to attend the burial ceremony of the mother of Egbert Imomoh our Sub-Council Grand Knight came to me to ask after the health of Intercontinental Bank. (more…)

Posted on March 31, 2009 - by Gavin

RCBC continues to eye banks for acquisition…

Business World Online

YUCHENGCO-LED Rizal Commercial Banking Corporation (RCBC) is keeping its eye on two mid-sized banks for acquisition while revving up its microfinance business.

Cesar E.A. Virata, RCBC director, said the bank is still trying to work out acquisition deals with Export and Industry Bank, Inc. (Exportbank) and Asiatrust Development Bank, Inc., in line with its goal of growing its distribution network.

“We continue to discuss things with [the two] banks. Right now [the banking system is] in consolidation mode, considering the stricter capital requirements [of the Basel 2 accord],” Mr. Virata told BusinessWorld last week.

He said a deal is yet to be drawn with Exportbank as talks continue.

RCBC has submitted a bid for Asiatrust but the latter has not yet replied, he added.

Asiatrust earlier denied receiving a bid from RCBC as well as reports it is for sale. (more…)

Posted on March 24, 2009 - by Gavin

Mexico’s Microfinance Industry Undergoes Shake-Up On Crisis…

Wall Street Journal

Of DOW JONES NEWSWIRES

MEXICO CITY (Dow Jones)–Mexico’s microfinance industry is undergoing a major shake-up as the global financial crisis spurs banks that had dabbled in the sector in recent years to pull out altogether, at the same time making funding scarce for specialized lenders.

Mexico’s fifth-biggest bank Grupo Financiero Banorte SAB (GFNORTE.MX) is shutting its microfinance arm Creditos Pronegocio, which it launched in 2005, after its losses widened to 120 million pesos ($8.4 million) last year from MXN30 million in 2007.

“Pronegocio has been in liquidation since last year,” said Alejandro Valenzuela, the bank’s chief executive, in an interview. “We feel that right now it is a major distraction from the big challenges we face.”

HSBC Holdings PLC (HBC), which owns Mexico’s fourth-largest bank, sold its 18.7% stake in consumer loan and microfinance institution Financiera Independencia SAB (FINDEP.MX) to the company’s controlling shareholders for about $145 million last November, in order to focus on its banking business. (more…)

Posted on March 23, 2009 - by Gavin

Games That Banks Play…

The Gaurdian

SINCE August 2008, when the credit crunch – which later evolved into full-blown global economic crisis – began in the United States of America, the Nigerian financial sector has been in a frenzy over the health, or otherwise, of the banks. Managers of the country’s monetary policy had boldly reassured the banking public that all would be well with the sector, as necessary shock absorbers had been put in place. But that was to change, as the realities of the global malaise soon emerged. At a time global financial institutions are asking for bailouts, their counterparts in Nigeria are in an ironic jamboree of demonstrating their liquidity.

Until recently, when the Central Bank of Nigeria (CBN) read riot acts to defaulting banks, the public has been inundated with reports of intimidating turnover and profit recorded by the banks, all in a bid to show themselves as oasis of plenty in the desert of need.

Most of the so-called balance sheet growths were in surprising variance with the country’s Gross Domestic Product (GDP) growth, a situation economic analysts describe as paradoxical.

The purpose of the balance-sheet growth publicity is mainly to show existing and potential customers that the global economic meltdown would have little or no impact on Nigerian banks. (more…)

Posted on March 23, 2009 - by Gavin

Banks, regulator clash over new lending rules…

The Standard Online

Central Bank of Kenya (CBK) and commercial banks are on a collision course following a move by the regulator to introduce new rules that would require banks to disclose all their costs before giving credit to a customer.

Commercial banks have insisted that these loan disclosure requirements should cover all credit providers, including microfinance institutions, savings and credit societies and other non-banking financial institutions and retailers.

The banking industry also wants that a single financial regulator, which oversees all credit providers, be established to enforce the new disclosure regime.

Although countries such as Ghana and South Africa have a regulatory framework, which either protects consumers or makes disclosures mandatory for all credit providers, Kenya is yet to have any form of a disclosure regime.

Discussions between CBK and Kenya Bankers Association (KBA) is, therefore, expected to take at least a year before any form of disclosure rules are formulated and agreed upon by all the players in the credit business. (more…)

Posted on March 17, 2009 - by Gavin

What commercial banks entering the microfinance market must consider…

Ghana Business News

Commercial banks in Ghana are gradually expanding their operations to the microfinance market as the opportunities in the traditional banking sector dwindles. Traditionally, commercial banks have shunned the microfinance sector, allowing it to be dominated by the “Alternative Financial Institutions” which consist of small savings and loans companies and Susu collectors.

The reason for neglecting the microfinance market is simply that the low-income earners, the main clientele for microfinance services, are not “bankable”. They are too risky to be served because they present high default risk and high cost of service due to their low amounts of savings or loans, hence commercial banks serving this market obtain too little from doing too much.

However, the emergence of large scale and well-organised microfinance institutions has made the commercial banks realise the opportunities they are missing by neglecting the microfinance market.

The benefits of banking with the “unbankable” has been advocated for over twenty years in Asia and Latin America where microfinance has gained a strong foothold. (more…)

Posted on March 4, 2009 - by Gavin

Kenya in need of sector based banks…

Capital Business

NAIROBI, Kenya – The establishment of sector based banks maybe the best solution to stimulating more local investment in the country, experts said on Tuesday.

Kenya Investment Authority General Manager, Kennedy Manyalla, said lack of banks that focus on growing particular sectors in the country is impeding Kenya’s economic growth.

He said such banks would focus on providing finance for particular areas of interest or business initiatives thus financing packages would be tailored to particularly suit them.

“Its clients would simply be people who are particularly engaged in that sector, who have needs to finance development in those sectors, the sectors are profiled and it’s known that this is the kind of population that such a bank will support,” Mr Manyalla explained.

He observed that for such an initiative to work well the government must be involved.

“People are saying that government needs to come out of such aspects of services but in a country like Kenya that requires to take off, the government must be involved,” he said,

Speaking to Capital Business, Mr Manyalla said initiatives like the Venture Capital had worked well in economies like India, which has on average been registering a seven percent growth per quarter. (more…)

Posted on February 18, 2009 - by Gavin

Hasal Microfinance Bank Grants N200m Loan In Four Months…

(more…)

Posted on February 11, 2009 - by Gavin

MICROCAPITAL STORY: Increase Competition for Kenyan Low-Income Financial Market Banks…

The East African reported that just as the Microfinance Act has granted particular Kenyan microfinance institutions legal status as deposit taking institutions, they are feeling squeezed from commercial banks which have begun to attract a larger share of what has traditionally been the microfinance market. This trend is occuring as commercial banks are offering more attractive financial products to the best performing microfinance clients, with better terms and more easily met conditions. Particularly at stake are the savings deposits from hundreds of thousands of small businessmen, artisans, and women groups, worth an estimated USD 126.2 million. According to Benjamin Nkungi, the chief executive of the Association of Microfinance Institutions (AMFI), “Banks are able to identify the very best clients of the MFIs, whom they then proceed to poach.”

The Microfinance Act 2006, became operational in May 2008, and creates the legal framework for qualified MFIs to accept deposits and mobilize them as loan funds, providing a valuable source of capital for expansion and financial self-sufficiency. The act also opens up the possibility of MFIs tapping into other sources of capital, including equity capital. The regulations for deposit-taking MFIs are strict and include, among other things, operating nationwide throughout Kenya and retaining core capital amounting to between Sh20 million (USD 252 thousand) and Sh60 million (USD 770 thousand)… [click here to read the rest of this article...]   

Posted on February 11, 2009 - by Gavin

South Africans Turn to Microlenders as Banks Deny Loans…

Local microlenders and loan sharks are mushrooming as banks and other financial institutions become wary of granting loans to ordinary South Africans. Even the middle class are joining the microlending queues as they find it difficult to pay their debts. The announcement was made by Eddie Stoop, chief executive of the Elite Group, a major player in the South African microfinance industry.

He cautions against the flourishing loan sharks who are charging up to 60% a month interest, accusing them of still using illegal methods to obtain security against money borrowed, even though the national credit act strictly forbids such practices. According to Stoop the past 6 months has seen record numbers of individuals who previously borrowed from banks turning to the microlending industry because they were being turned away by the banks.

One expert has estimated that up to 80% of smaller loan applications are being turned away by the four big banks. Stoop says some banks were reporting a 50% increase in bad debt. The latest figures from the Bureau of Market Research (BMR) at Unisa shows that more people are unable pay and are sliding down a steep slope into financial despair… [click here to read the rest of this article...]

Posted on February 10, 2009 - by Gavin

Can we manage this crisis differently? Bailing out the poor, not just the banks…

In every economic crisis, it is the poor that suffer the most. Whether it is individuals or countries, they are the most vulnerable and lack the savings and the institutions to support them during difficult times.

In past crises, we have focused too late on adverse effects on poor people. Can we do it differently this time?

The current economic downturn, unlike the East Asia crisis, started in the richest countries and has now affected the major emerging markets. The effects on low income countries are being felt, not mainly through financial markets, but through the volatility of commodity prices, the decline in export volumes and remittances. Reporting from DFID’s offices (Ethiopia, Bangladesh, India, Pakistan) indicate that in some cases poor households are taking children out of school to save money, and families, especially women and girls, are eating less or lower quality food, leading to concerns about malnutrition. Estimates are that the economic crisis has already put 100 million people back into poverty… [click here to read the rest of this article...]