ING Advisory Services Nigeria MSME Project Roundtable MSME financial Services Lagos, 28 June 2006 Ma

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ING Advisory ServicesNigeria MSME
ProjectRoundtable MSME financial Services
Lagos, 28 June 2006 Mark Schneiders, Managing
Director
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5 financial institution in Europe
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ING Group - Global presence

• 60 million customers
• Banking, insurance and asset management in over
  50 countries
• 114,000 employees

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Advisory concept
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Performance scan Six drivers of excellence
The Basis for Effective Change Management...
Audit Scans Self Assessment
Training and ING Products Expertise
Marketing Excellence
Reputation Excellence
Mission and Strategy
Performance Excellence
Portfolio Excellence
Organizational Excellence
RiskControl Excellence
Operational Excellence
Budget / MTP process Project Management
Business units / Branch Balanced Scorecard
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Proprietary Performance Scan
DIAGNOSTICS AND IMPLEMENTATION
ENHANCED PERFORMANCE / RESTRUCTURED ENTITY
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ING Advisory - Value Proposition

• Excellent track record over 150 assignments,
  executed since inception in 1989
• More than 100 employees in 15 countries
• 20 operational projects globally
• Offering short term (3-6 months) change programs
  as well as interim and transition management
• Unique in its industry We are bankers supporting
  fellow bankers
• Focus on implementation we will stay with the
  client to make the changes happen

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ING Advisory recent assignments in Africa

• Nigeria Retail Banking development
• Nigeria Greenfield pension fund
• Tanzania and Uganda SME access to finance
• Mauritania Greenfield Commercial Bank

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ING and SME banking

• Home markets in Netherlands, Belgium, Luxembourg,
  Poland All products
• Developing markets India, Romania
• Not one solution
• Different segmentations of SMEs depending on
  market structure and our own organisation.
• Different product approach depending on markets.
• In all markets we provide savings and lending
  products
• Balance between costs and revenues more
  standardized, automatized retail approach or
  personalized face to face approach Mix of
  both

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ING SME Financial Services Dutch Market

• ING Bank 250 branches, higher segment of market,
  18 SME banking market share
• Postbank mostly direct channel, 22 SME banking
  market share
• Origin of ING Bank NMB Bank, SME bank

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ING Bank - Netherlands

• SME segment companies 5-50 employees
• Distribution channels via ING Bank 250 branches
• Top clients Personal Business Banking 270
  Sales teams serve 60.000 clients
• Standard, start ups and potential clients
  Direct Business Banking

• 13 Business Teams serve 90.000 clients
• Face to face contact in an efficient, low
  cost way
• Standard products, standard prices, clean
  process
• Direct Marketing approach with personal touch!

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ING Bank SME lending the Netherlands

• Loans in the SME Market 72 Overdraft-facility
  on current account, 34 Loans and Mortgages

• Standard Products (for all clients)
• Max 500.000, depending on product
• SME Current Account
• SME Working Capital Current Account
• SME Investment Loan
• SME Finance Lease
• SME Mortgage
• Product standard terms, standard prices -gt easy
  accessible, easy to apply, quote within 1 minute!
  

• Custom made (for Top clients only)
• Standard Products
• Different types of investment loans
• Subordinated loans
• Factoring
• Government-guaranteed Loans
• Adviser translates customer needs in a custom
  made proposal which can consist of a combination
  of products.

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Postbank SME Financial Services

• Focus on SMEs 0-5 employees
• Direct distribution channels internet,
  telephone mail
• Real estate morgages are sold face-to-face
• Standard products for payments/savings/lending
• Focus on lending products (limit up to 500.000)
  
• Keywords Self, Smart and Simple

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ING Poland

• ING Poland
• Nationwide coverage 300 branches
• SME segment Companies with Revenue between 0.8
  MM 15 MM p.a.
• Market share SME segment 30
• Service model
• - Distribution through branch network
• - Standardised product offer, with
  assigned RM
• - Full credit risk assessment
• - Mid-sized clients flexible
  negotiable prices, long term relationship
• - Small business competitive standard
  prices
• - Personal advice, mixed with direct
  channels approach
• SME Banking products
• - standard products for payments/savings/lending
• - lending products mortgages,
  leasing, factoring, e-banking, 1/5 years working
  capital loans

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ING Vyaysa Bangalore - India

• Retail network, nationwide 240 branches, further
  expansion taking place
• SME Banking products have existed for a number
  of years
• Core target companies with annual turnover lt
  0,5 MM Euro

• SME Strategy
• Both saving and lending products, also combined
  products
• Business loans 1-4 years
• Trade Finance facilities
• Standardization, automation, scoring
• Distribution branch management / relationship
  management
• Simplified products and competitive pricing

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ING Romania Launch of SME Business Line

• ING Romania
• Fourth bank in terms of asset, 6.3 market
  share,
• Retail network of 95 branches, expansion to 250
  branches by 2008
• SME Banking products launched in 2006
• SME segmentation companies with annual turnover
  lt 1 million EUR

• SME Strategy
• SMEs Portfolio approach rather than one-to-one
  relationship
• Standardization, automation, scoring
• Product offer covering both lending as savings
• Distribution empowerment of branches for
  managing client relationships

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ING Romania Launch of SME Business Line (2)

• SME Products
• Lead product hybrid current account
• functionality of a current acct deposit
  interest rate 4 types of cards
• Supporting products
• - operational C/A
• - FCY C/A
• Lending solutions
• - MT investment loan for start-ups
• - Multipurpose loan facility, mortgage secured
• - Overdraft
• - Letters of guarantee line
• Uncollateralized overdraft, based on track-record

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MSME banking in Nigeria - Challenges

• Financial institutions are now mainly lending to
  larger corporates, and are not geared to lending
  to SME s
• No development of product range and delivery
  mechanisms
• lack of skills for MSME credit appraisal and
  credit management
• general perception that servicing MSMEs cannot
  be done in a profitable way.
• Perceived High MSME risk profile
• High informality of the SME sector, dubious debt
  repayment culture, poor corporate governance,
  poor financial management
• Limited information and inadequate collateral
  from the MSMEs
• Limitations in the legal and regulatory framework
  
• gaps in the land law, property rights, red tape,
  bureaucratic judicial systems, still limited role
  of credit bureaus

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MSME banking in Nigeria - Opportunities

• Banks are forced to look up new markets in view
  of high capitalisation and increased competition
  in traditional markets
• SME sector is large and under serviced but will
  offer interesting margins, if properly approached

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SME banking Technical Assistance

• 1st PHASE ING Advisory Performance Scan
  methodology
• 2nd PHASE Implementation of Plan/Program
  designed
• 1 SME Definition Employees, total assets,
  turnover
• 2. Market, Products and Services Development
• Market segmentation
• Product definition (standarisation) what does
  the SME customer require?
• Lending, PCM, Factoring, Savings, Deposits,
  Guarantees, Forex, etc.
• concept of relationship management, reliable
  financial service provider
• 3. Sales and Distribution
• Sales strategy and organisation (sales culture)
• Branch network Direct distribution channels
  (telephone, e-banking) cost effective
• Cross-selling opportunities
• 4. Define lending philosophy business strategy
• 5. MSME Credit Policy detailed MSME lending
  manual
• 6. Simple and efficient Credit Technology
• Credit Appraisal credit scoring models,
  efficient software
• Loan Processing Procedures
  Standardization
• Loan Monitoring timely monitoring of
  clients
• MIS and IT systems

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Tanzania and Uganda SME access to finance

• General Objective stimulate access to finance
  for SMEs in Uganda and Tanzania
• Specific objective assist 6 commercial banks in
  strengthening their expertise and tools to
  service SMEs in their respective countries
• Duration 18 months, 4 phases
• 1. Performance Scan health check overall
  condition per bank
• 2. Training on-site/off-site, coaching clinics,
  workshops
• 3. Technical Assistance knowledge transfer,
  hands-on advice, restructuring
• 4. Follow up T.A to further implement
  recommendations
• MAJOR CONSTRAINTS IDENTIFIED

• Organizational Structure of banks
• Balance Sheet Limitations
• Limited Market Product Management knowledge
• Lack of Project Management Skills

• Branch Network and channels Management
• Role of Risk Management
• Information Technology Platforms

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Tanzania and Uganda SME access to finance (2)

• ING Advisory delivered training to the banks in
• SME CLIENTS
• Risk Management in SME lending
• Risk management organisation
• Product Management
• Cards products merchant acquisition (SME
  sector)
• RETAIL CLIENTS
• Product Management
• Other
• Balance sheet management (ALM)
• Balance Score cards
• Next steps Technical Assistance

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Nigeria Retail Banking development

• ING Advisory is providing two interim managers to
  a large commercial bank in Nigeria to develop the
  Banks retail business line
• Retail Banking Strategic and Tactical Plan
  design and development
• Retail Banking Organisational Structure
  development and implementation
• Products and Services, both for individual
  clients and SMEs
• Development of Sales and Marketing areas
• Development of a (multi-channel) distribution
  strategy
• Retail Banking Operations Front Office and Back
  Office processes design and documentation of
  procedures and manuals
• Risk Management framework, processes and systems
  
• Training of personnel
• Treasury and asset management advise

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Nigeria Greenfield pension fund
Establishment and management of a Greenfield
pension fund by ING Advisory
ING ADVISORY SERVICES
ING PRODUCTS
BANK INSURANCE REAL ESTATE INVESTMENT MNGT

• RESULTS
• License received January 2006 (5th month)
• First Sales in February 2006 (6th month)
• First actual contributions in May 2006
• end of May gt30.000 members
• 5 in contribution market share
• highest process quality
• 1) asked by PENCOM to chair the operational
  market committee 2) highest of approved pins

• DONE
• Software selection implementation
• Process descriptions and trainings
• Compliance manuals/trainings
• Financial process implementations
• Agent recruiting set-up
• Sales training set-up

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Mauritania Greenfield Commercial Bank

• ING Advisory is providing interim management (CEO
  COO) and technical assistance for the
  establishment of a new Commercial Bank
• Phase I business plan (basis of bank license
  application)
• Phase II Bank operational, implementation of
  action plan 3-5 years
• CLIENTS
• - corporate client base (including SMEs)
• - higher margin retail services to a selected
  group
• PRODUCTS
• - near term trade finance and payment related
  services
• - medium-term medium-term finance to local
  companies advise in foreign investment
• DISTRIBUTION/GEOGRAPHICAL AREA (near term)
• - operations from the capital, no expansion
  through branches, focus on e-banking services
• ORGANISATION
• - flat and transparent organisational structure
  

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Annex

• ING Advisory Track Record

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Banking Advisory
Afghanistan
Ongoing
SETTING UP A NEW COMMERCIAL BANK
ING is providing Technical Assistance in the
creation of a liquid, secure and profitable
commercial bank in Afghanistan that provides the
private sector with financial services with the
purpose of developing the financial sector and
stimulating economic growth in the country. ING
is supporting the management with Strategic
Advice in the further development of the bank.
Project sponsored by various multilateral
agencies.
Technical Assistance, Strategic Advice and Bank
Management
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Banking Advisory

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Banking Advisory
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Banking Advisory
12/03-03/04
Ukraine
ADVISORY ON ESTABLISHMENT OF UKRAINIAN
PROMOTIONAL BANK
Assessment on the basis of relevant material on
the German-Ukrainian Funds (GUF) operation and
the establishment plans for UPB. IGA advised
Kreditanstalt für Wiederaufbau (KfW) with regard
to the design and implementation of the UPBs
framework.
Technical Assistance
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Banking Advisory
2002
Uruguay
BANCO CENTRAL Y MINISTERIO DE FINANZAS
ING conducted a Strategic Operational Review of
3 (suspended) Uruguayan commercial banks (Banco
Comercial, Banco de Montevideo and Banco La Caja
Obrera), and studied the viability of these
banks, either on their own or after a merger. The
review addressed all operational areas of the
banks, with particular focus on the evaluation of
the loan portfolio and the financial
restructuring options.
Montenegro
2003
MONTENEGRIN COMMERCIAL BANK
IGA advised the bank in the areas of Management
Development Planning, Human Resources Management,
Internal Audit, Finance (incl. MIS and budgeting)
and Reorganisation of the Bank. Building upon the
recommendations as made under the previous
contract.
Project sponsored by FMO.
Management Technical Assistance
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Banking Advisory

El Salvador
Ongoing
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Banking Advisory
Thailand
03/03-12/03
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Pension Insurance Advisory
Ongoing






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Contact Details

• WWW.INGADVISORY.COM
• Postal address
• P.O. Box 1800, Location code NA 02.42
• 1000 BV Amsterdam
• The Netherlands
• Mark Schneiders
• Managing Director
• Head Africa Region
• tel. [phone]
• fax [phone]
• e-mail mark.schneiders_at_ingbank.com