Workshop: New Insights on how MFIs and commercial banks can cooperate to provide effective financial

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Cooperation potentials for MFIs and commercial
banks - New Insights from a practical viewpoint
Facilitator Dr. Jan Evers

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Microfinance and commercial banks in Eastern
Europe
microfinance
commercial banks

• well established
• partly profitable
• large scale/outreach

• in change
• internationalizing
• downscaling efforts

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Microfinance and commercial banks in Western
Europe
commercial banks
microfinance

• stable
• well established
• problems with
• micro-credit clients

• quite new
• heavily subsidised
• small scale/outreach

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Outline of the workshop

• Opportunities for Eastern European MFIs
• The view of Western European commercial banks
• Models of co-operation
• Examples of co-operation
• Collecting good and bad examples

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The view of Western European commercial banks on
small loans
Problems
Opportunities

• Potential for market-building
• Early relationships with high-potential
  enterprises reduces later marketing costs
• Fulfilment of social obligations (corporate
  citizenship, governmental initiatives)

• Small credit sums (lt100 TEUR) dont pay off
• Dealing with Start-ups does not cover costs
• Difficult risk assessment (no figures, )
• ? How to make Retail Banking work in lending?
  Cross selling, Upgrading and Creaming, CRMs,

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Bank options to deal with microfinance
? promising, but no examples available yet
In theory design of loan products, risk
assessment and managing, business/customer
support, client acquiring/selecting
In practice no examples available yet
In practise, the most dynamic so far
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Models for banks to co-operate with MFIs
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Practical examples from West Europe
Bad Examples ?

• Leverage funding model (Developing
  Strathcycle/Scotland)
• Bank representatives membership of MFIs loan
  committees (ADIE, First Step)

Cultural clash of bankers and client
Not sustainable top down approach

• Bank partner issues loans, MFI packages (Siebte
  Säule, Germany, WWB, Spain)

• Mentoring / Advice Service (First Step/Ireland)
• Bank accounts (ACCION New York)

Cultural clash of bankers and client

• Bank to MFI referral ensure follow up finance
  (ADIE/France)
• MFI as guarantor for formal bank clients
  (Finnvera/Finland)

go away instead of proper referral
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Practical examples from the Workshop
Bad Examples ?
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Thank you.
jan.evers_at_eversjung.de 0049-40-32082833 www.eversj
ung.de
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