MICROCAPITAL STORY: Citibank Bangladesh Provides Microfinance Institution ASA of Bangladesh with $10m in Financing

Citibank Bangladesh (Citi Bangladesh), the Bangladeshi banking arm of Citigroup (Citi), a global financial services firm, has signed a credit facility agreement with ASA, a Bangladeshi microfinance institution (MFI), which provides ASA with USD 10 million.  This financing will allow ASA to expand its microfinance portfolio and to disburse its funds to a larger number of micro-entrepreneurs.  Citi Bangladesh has agreed to provide the USD 10 million in the local currency, Taka (BDT).

First established in 1987 in Dhaka, Citi Bangladesh provides corporate and investment banking services under the umbrella of Citigroup, an American bank engaged in commercial and retail banking, private banking, asset management and investment banking.  2007 financial statements show that Citi Bangladesh had total assets of BDT 31.9 billion (approximately USD 475.1 million).  Citi Bangladesh also reported a return on assets of 2.13 percent.

Citi’s microfinance division, Citi Microfinance, was established in 2005 as a London-based business unit to increase access to financial services in numerous countries.  Citi Microfinance is working with various MFIs to provide services such as financial products, financing, individual lending, access to local capital markets, foreign exchange and interest rate hedging, remittances and insurance.  In 2006, Citi Bangladesh worked with Boston-based investment firm RSA Capital and development banks KfW Entwicklungsbank (KfW) of Germany and The Netherlands Development Finance Company (FMO) to provide the Bangladesh Rural Advancement Committee (BRAC), the world’s largest “national non-governmental organization” (NGO), with BDT 12.6 billion (approximately USD 180 million) in financing.  MicroCapital reported on the transaction in its monitor.

ASA is an MFI based in Dhaka, Bangladesh and established in 1979, with its microfinance division starting in 1991.  ASA provides microfinance services by extending loans to micro-entrepreneurs and by providing technical and financial assistance to numerous MFIs and financial services institutions in Bangladesh.  The 2006 financial data provided by the Microfinance Information Exchange (MIX) shows that ASA had total assets of USD 355.3 million and a gross loan portfolio of USD 305.3 million.  At the end of 2006, ASA’s return on assets was 14.4 percent, and its return on equity was 26.08 percent.  ASA has 5.2 million active borrowers with 79.3 percent of these borrowers being women.  MicroCapital recently reported on ASA’s historic equity offering of USD 150 million, which ASA will use to target funds at MFIs outside of Bangladesh.

Additional Resources:

All Headline News: “Citibank Provides $10 Million To Bangladesh Microfinance” by Siddique Islam

ASA: Home, Global Micro Finance, Profile

Bangladesh Rural Advancement Committee (BRAC): Home

Bangladesh Rural Advancement Committee (BRAC) Press Release: “BRAC Launches World’s First Micro-credit Securitisation”

Citigroup: Home, Citibank Bangladesh, About Citibank Bangladesh, 2007 Citibank Bangladesh Financial Statements, Citi Microfinance, About Citi Microfinance, Citi Microfinance Initatives

Citigroup Press Release: “Bangladesh: Citibank Provides USD10 Million Credit Facility to ASA”

KfW Entwicklungsbank: Home

MicroCapital.org Article: World’s First Microcredit Securitization: $180 Million Deal Between Bangladesh Rural Advancement Committee, RSA Capital, Citigroup, Netherlands Development Finance Company, and KfW Entwicklungsbank

MicroCapital.org Article: Bangladesh-based ASA to Allocate Funds from Historic $150m Equity Deal Toward Microlending Outside Bangladesh

MicroCapital.org Article: ING Review of Citigroup’s Microfinance Activities and Its Syndicated Loan Securitizations for Compartamos, SKS Microfinance, and BRAC

MIX Market: Profile for ASA

RSA Capital: Home

The Netherlands Development Finance Company (FMO): Home

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