Citigroup in microfinance programme

Sep 2006
United States , September, 22 2006 - Citigroup, the US bank, will on Friday announce plans to lend an initial $100m to microfinance institutions in the developing world, underlining the increasing interest in microfinance by mainstream business.

The funding will help capitalise hundreds of micro-finance institutions, which provide very small loans to individuals in developing countries, and will be particularly focused on smaller institutions that have not traditionally received finance.

The programme, which involves a $70m guarantee from the Overseas Private Investment Corporation, a US government agency, is due to be formally announced by Hillary Clinton at a session of the Clinton Global Initiative on Friday.

Ajay Banga, who heads Citigroup's consumer businesses outside the US, said such initiatives would help make microfinance "sustainable as a business".

"Hopefully, it will inspire similar moves in other countries."

Citigroup is one of many financial institutions heavily involved in microfinance, which is increasingly seen as a profitable activity as well as a powerful tool of development.

Citigroup recently completed one of the first securitisations of microfinance loans, which are helping to attract mainstream investors.

This week, TIAA-Cref, one of the biggest money managers in the US, said it had earmarked $100m for investment in microfinance projects, the first big allocation by a US manager.

Robert Mosbacher, chief executive of OPIC, which provides political risk insurance for US businesses in emerging markets, said the programme would "help diversify support for microfinance institutions".

Working from a preliminary list of 132 micro-finance institutions in 39 countries, Citigroup will make medium-term loans of up to $5m.

Source : MSNBC

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