International Microfinance Regulation and Supervision Meeting Salvador June 1st 2005

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International Microfinance Regulation and
Supervision MeetingSalvadorJune 1st 2005
Bob AnnibaleGlobal DirectorCitigroup
Microfinance Group
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How we define Microfinance?

• Microfinance is the provision of a broad range of
  financial services to poor and low-income people
  who do not have access to formal financial
  services such as
• - deposits
• - loans
• - payment services
• - money transfers
• - insurance
• Microfinance services are provided by three types
  of sources
• Regulated financial institutions, such as banks,
  credit unions, consumer finance companies, postal
  savings banks and cooperatives
• Nongovernmental organizations (NGOs)
• Informal sources such as money lenders,
  shopkeepers, and traditional savings groups

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Poverty and Microfinance
Poor people borrow some of the time but save all
of the time
Entrepreneurial Poor People who are slightly
below the poverty line.
Entrepreneurial Poor
credit
insurance
Self-Employed Poor Poor people who are meeting
their basic needs by running microbusinesses
Self Employed Poor
savings
Laboring Poor
Laboring Poor Farm laborers, domestics and
unemployed workers
Very Poor People who have few (if any) assets
very limited chances to earn money
Very Poor
The Poverty Pyramid
Source FINCAs Poverty Pyramid
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Citigroup Microfinance Group Expanding Access to
Financial Services


The Citigroup Microfinance Group works with MFIs
as clients and partners to expand access to
financial services and products to the unbanked
who are not currently reached by the formal
financial sector.
Remittances
Credit
Insurance
Savings

• The Citigroup Microfinance Group reports to the
  CEOs of Citigroups Global Consumer Group and its
  Corporate and Investment Bank
• Multi-Product/Multi-business and geographic
  coverage.

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Strategic Partners and Products

• Funding the Sector
• Lending products
• Bond Issues
• SBLC backed finances/Funds
• Securitizations

• Banking the sector
• Cash Management
• Treasury
• Investment Services
• Agencies

• Partnering with the sector
• and Individuals
• Loan partnerships
• Remittances
• Savings
• Insurance

• Working with Networks
• Womens World Banking
• Opportunity International
• Accion
• FINCA
• The Microfinance Network
• Grameen

• Multilaterals/Bilaterals
• Regulators
• International Finance Corp (IFC)
• Overseas Private Investment
• Corporation (OPIC)
• Inter-American Development Bank
• (IDB)
• Asian Development Bank (ADB)
• (CGAP
• Central Banks/Min. of Finance

• Rating Agencies
• Standard Poors
• Fitch
• Microrate
• M-CRIL
• Moodys

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Market Profile Mexico

• 14 Consumer Sofoles (Consumer Finance companies)
  such as Credito Familiar and Compartamos
• 71 MFIs Include Sociedades Financieras
  populares, Asociaciones Civiles and one Sofol.
  Approved by the Ministry of Economy
• 680 cajas and cooperatives Organized in
  Federations and Confederations

A B C 15 MM
BANKS
SOFOLES
C 10 MM
C- 5MM
MFIS
CAJAS AND COOPERATIVES
D,E 40 MM
Working Age Population
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Compartamos Banamex (Citigroup) Partnership
Compartamos is Mexicos leading MFI with over
330,000 clients, mostly rural self-employed
women, and a balance sheet of over 110MM

• Cash Management
• Over 45,000 women in rural communities cash loan
  checks in Banamex every 16 weeks
• Compartamos customers make over 33,000 deposits
  per month at Banamex branches to service debt.
  For most of them, it is the first experience in a
  bank.
• Savings
• 42,000 microsavers (Compartamos clients) are
  already saving in Banamex
• Financing
• Banamex arranged
• Two private placement bonds issued in 2002 and
  2003
• The first investment grade bond for an MFI in
  2004
• Banamex clean credit line enhanced by OPIC
• Insurance
• Microinsurance product with Seguros Banamex to be
  launched

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Working Womens Forum Citibank India
WWF is a cooperative bank with 700,00 women
members in 15 branches in three
states in India.

• Entered into a loan agency partnership
• WWF originates and services microloans to
  entrepreneurs
• Citi India funds and assumes all credit risk on
  loans
• Citi India reimburses WWF for agreed servicing
  expenses
• Results to date
• Disbursed over 10,000 loans with an average size
  of under 75 and tenure of 10 months
• Low NCLs to date and only arrears relate to
  tsunami-impacted clients
• All loan data is held within Citibank Indias
  credit MIS
• Program will be increased in number of loans and
  branches reached
• WWF program will be replicated with other partners

Working Womens Forum
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Scalable, ReplicablePartnerships

• Leverage Citigroup relationships and existing
  Corporate knowledge of the sector long history
  of working philanthropically in microfinance
• Citigroup to work with leading microfinance
  institutions and networks to pilot, partner and
  to gain experience collaboration
• Initiatives to be scalable and replicable
• Initiatives to be cost-effective and
  commercially sustainable
• Initiatives to have measurable results
  double bottom line
• Microfinance initiatives and activities in
  Mexico, India, Peru, Ecuador, Kenya, Uganda,
  Bangladesh, etc.Brazil

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Brazil Observations on expanding access to
microfinance

• Brazils microfinance institutions are relatively
  small NGOs operating in a large market and
  country
• The banking sector in Brazil has been
  consolidating--well capitalized and liquid,
  excellent technology, and with extensive branch
  networks
• Banco do Brasil and Caixa Economica networks -
  Banco do Nordeste experience
• Commercial banks have launched programs
  Unibanco, Bradesco (postal banking)
• Extensive consumer credit from banks, consumer
  finance companies, credit unions, stores, credit
  cards, post-dated checks----formal and informal
  installment financing
• Emergence of some niche players in microfinance
  and SME sectors, Lemon Bank
• Incentives to date to use reserves for
  micro-enterprise lending has resulted in modest
  expansion of access to financial services to
  micro-entrepreneurs and the unbanked
• Recent regulatory (reserves) incentives for banks
  to lend to micro-entrepreneurs
• Significant growth opportunities in Brazil for
  expanding access to financial services leveraging
  the banking sector (commercial, public and credit
  unions)
• Collaboration with the MFI and NGOs with
  specialized skills and community access and trust
  will broaden the scope and range of communities
  reached