MicroBank granted more than 5,000 micro-credits in 2008 with support from the European Investment Fund

Autor: Bancherul.ro
2009-03-14 18:45

MicroBank, the social bank of “la Caixa”, granted 5,013 micro-credits totalling €60 million in 2008 under the agreement it has with the European Investment Fund (EIF), which seeks to support the provision of micro-credits and ends this year. The current agreement is part of the European Union Competitiveness & Innovation Programme (CIP) guarantees agreement.

A work meeting was held yesterday in Barcelona between the CEO of “la Caixa”, Juan María Nin, the chairman of MicroBank, José Francisco de Conrado, and the chief executive of EIF, Richard Pelly. At the meeting, the attendees looked on the implementation of the current agreement favourably and discussed its renewal when it lapses at the end of this year.

The loans were granted to individuals who faced difficulties in accessing conventional bank financing and were divided up between social micro-credits, which averaged at €13,277 each, and financial micro-credits, which averaged at €11,661 each. The aim of these credits is to promote production, job creation and personal and family development.

With its plans to broaden the current agreement, EIF shows its support for MicroBank in the provision of micro-credits intended to promote self-employment and the creation or expansion of micro-enterprises.

MicroBank’s efforts are the result of “la Caixa” and “la Caixa” Foundation Chairman Isidro Fainé’s promotion of micro-financing in Spain since 2000, through the social micro-credits programme, and since June 2007, with the creation of MicroBank. Since that time through this past February, a total of 29,876 projects have been financed with €228 million, €165 million of which remain in the bank’s portfolio. According to Mr. Fainé, “this type of agreement will help MicroBank become a benchmark for European social banking”.

In order to access these micro-credits, an entrepreneur must present a viable business project that will generate enough income to service the loan and provide job stability for the applicant.

The total sum of a micro-credit may not exceed €25,000 and must be used for the investments to be made. These loans have a repayment period from one to 5 years and an optional grace period of up to 12 months.

MicroBank’s Business Lines

The aim of MicroBank is to promote production, job creation and personal development. Its business lines include:

• Financial micro-credits, for starting up or expanding businesses and micro-enterprises, intended for individuals who have a viable self-employment or micro-enterprise project and demonstrate an ability to start up and maintain the project.

• Social micro-credits, intended for financially excluded individuals who have been directed to MicroBank by various co-operative institutions (city halls, government bodies, universities and social institutions), which also assist in the development of the self-employment project and oversee its launch.

• Family Assistance Loans, which aim to cover household needs by allowing families to overcome temporary difficulties and facilitating personal development. This business line is not included in the framework of the agreement signed with EIF.

“la Caixa”

Founded in 1904, “la Caixa” has assets worth €414.507 billion, 10.7 million customers, more than 5,500 branches and 27,000 employees. In 2008, it reported a recurring profit of €2.052 billion, up 2% on the prior year. In addition, “la Caixa” controls 79.45% of Criteria CaixaCorp, a financial company which owns the largest portfolio of investees in Spain.

The “la Caixa” welfare projects foundation, the leading private foundation in Spain, ranking second in Europe and fifth in the world by budget volume, assigned €500 million to social, environmental, educational and cultural programmes in 2008. (Figures at year-end 2008).

MicroBank

MicroBank, the social bank of “la Caixa” specialised in micro-financing, has financed 29,876 projects with €228 million since its inception in June 2007.

MicroBank, which is beginning its operations right at a time of economic hardship in a bid to promote social unity, hopes to consolidate its position as the benchmark for “social banking” using a model that will allow it to sustainably meet the growing demand for micro-credits expected over the next few years.

European Investment Fund (EIF)

The European Investment Fund (EIF), a European Union institution focused on financing small- and medium-sized enterprises (SMEs), plays an important role in supporting the objectives of the European Union, such as innovation, research, regional development, entrepreneurship, growth and job creation.

Its primary objective is to support SMEs by increasing their ability to access financing. EIF helps by providing venture capital and guarantee instruments. As of late November 2008, EIF guarantees issued in approximately 190 operations totalled €12.4 billion, which makes it one of Europe’s foremost institutions in the provision of guarantees and underwriting for SME operations and a prominent micro-finance guarantor.

Since its operations began, EIF has indirectly supported some 810,000 SMEs and in doing so, has significantly contributed to economic growth and development in Europe.

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