BBVA earmarks €200m for the world’s first private microfinance network

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Feb 2007
Spain, February, 13 2007 - The Bank creates the BBVA Microfinance Foundation Francisco González says, “BBVA wants to make microfinance accessible to the poorest levels of society. It is therefore launching a revolutionary project in international banking”

  • BBVA becomes the first private international banking group to wholeheartedly embrace micro-finance with direct investment via a non-profit foundation
  • Our goal is to set up a grand microfinance network for Latin America and other emerging markets. We will make it accessible to the poorest levels of the population, thus boosting comprehensive development in those countries
  • The BBVA Microfinance Foundation will set up a network in conjunction with specialist organisations, boosting their development and growth
  • The BBVA Microfinance Foundation will initially include four organisations in its network: Caja Nor Perú, Caja Sur (also in Peru) and Corporación Mundial de la Mujer in Bogotá and Medellín (Colombia)
  • The project, with funds of €200m, will be part of the Group’s investments in its social action programme. These have doubled in the last four years (in 2006 they came to €55m)

BBVA today announced the launch of a global microfinance network, via the BBVA Microfinance Foundation. It will start with funds of €200m and will incorporate organisations specialising in this business. BBVA thus becomes the first private bank at international level to embrace the microfinance sector – one of great potential – through a non-profit organisation.

“We want to make finance available to the poorest levels of society and therefore we are launching a revolutionary project in international banking”, Francisco González, BBVA’s chairman, said today at a press conference announcing the project. Initially the project will target Latin America, where the Group enjoys a leadership position in traditional banking business. It will later extend to other emerging markets.

Launch of the BBVA Microfinance Foundation must be approved by BBVA’s AGM, which will be held on 16th March. It already received the endorsement of the bank’s board of directors in a meeting yesterday. The scheme coincides with the Group’s 150th anniversary and is part of its corporate culture, whose slogan is “we are working on a better future for people”, said Mr González.

This is a completely innovative project in international banking. The BBVA Microfinance Foundation will promote access to this type of finance and to other financial services for the poor. The aim is to facilitate development of small-scale productive activities, thus contributing to an improvement in the standard of living of poor families and the sustainable development of society in the areas where he bank operates.

This is the first time a multinational bank wholeheartedly embraces the microfinance revolution via the incorporation of specialist organisations. BBVA is doing this through a non-profit organisation whose goal will be to develop a global microfinance network.

“The goal is extremely ambitious”, said Mr González, “because we are laying the foundation of the world’s first microfinance banking network. And we will employ two top sources of expertise in this endeavour: the first-hand experience of specialist organisations and BBVA’s know-how in risk management”.

“This is far more than an isolated action. It is a strategic initiative for BBVA, forming part of our vision on what a 21st century bank should be: a bank of people for people, aligned with society. A century in which we must be capable of providing many more people with access to financial services”, he added.

A social development project

In recent years, microfinance has become one of the biggest drivers of development in emerging economies. It provides the poor with access to finance.

At the present time, in Latin America and the Caribbean alone, there are more than 67 million people who depend on micro-firms but only 6.4% have access to formal financial services, said Manuel Méndez, director of the BBVA Microfinance Foundation and, until last December, BBVA’s General Manager for Risk Management.

He said, “This is the first time that a large international banking group commits itself to microfinance in such a clear, direct and distinctive manner.

“Microfinance business requires a radically different approach compared to conventional banking. Therefore, we are going to enter the microfinance world via a purpose-specific institution which will acquire significant holdings in specialist organisations, developing a range of services and unique policies for risk approval and management.

“The microfinance industry is extremely fragmented but it services the poorest, under-banked levels of society. Therefore, to make an effective impact in this area we need a specialised microfinance banking network that will provide the economies of scope and scale, needed to make it competitive”, said Mr Méndez.

First operations in Colombia and Peru

BBVA is one of the top financial groups in Latin America, providing banking, pension and insurance services to most countries in the region. The Group is the leader in Mexico, Colombia, Peru, Argentina, Chile, Venezuela, Puerto Rico, Paraguay, Uruguay and Panama. It has more than 20 million customers in the region.

In recent months, BBVA has conducted a profound study of microfinance activity, reaching agreement for future integration in the Latin-American networks of four organisations in two countries:

Colombia

  • Corporación Mundial de la Mujer in Bogotá
  • Corporación Mundial de la Mujer in Medellín

Peru

  • Caja Nor Perú
  • Caja Sur

This programme is a new endeavour by BBVA in its commitment to all Latin-American countries. The operations in Colombia and Peru are only the first step in the creation of the global network.

The investment of €200m for the launch of the BBVA Microfinance Foundation is the biggest outlay by a private company in this area so far.

This is a very important, forward-looking move by BBVA.

The BBVA Group is reaffirming its commitment to support the development of society in the regions where it operates and to bring banking services to a greater number of people.

Furthermore, it is making a considerable increase in its investments in activities related to social responsibility. In the last four years, the BBVA Group has doubled its investment in social responsibility, which in 2006 accounted for €55m. In 2007, apart from a larger amount earmarked for social action, BBVA will multiply its efforts, setting aside an additional €200m to launch the BBVA Microfinance Foundation.

The project is a pioneer initiative in the international sector by a private bank. This is a completely innovative approach to the microfinnace sector that will help to multiply the results of this activity and its positive effects on the development of society in the areas where the network operates.



Source : BBVA website
 

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