This is another story coming courtesy from the latest issue of the Microfinance Capital Markets Newsletter of the Consultative Group to Assist the Poor (CGAP) and the MIX, the microfinance information clearinghouse. ACBA-Credit Agricole Bank (ACBA), an Armenian microfinance institution (MFI), has received two loan investments totaling over USD 16.4 million. The European Bank for Reconstruction and Development (EBRD), a UK-based international financial institution, provided half of the investment in a USD 8.2 million loan. Citigroup has matched EBRD’s USD 8.2 million loan, however lent ACBA the finances through EBRD’s A/B loan structure. According to the EBRD website, the A/B loan structure allows EBRD to sign off as the official lender of record, while Citigroup receives the lender’s benefits that would have otherwise gone to EBRD. The combined loans add to ACBA’s gross loan portfolio of 90.4 million, an increase of 18.1 percent. ACBA now has over USD 158.5 million in total assets (see “Financial Data”).
Founded in 1996, ACBA has 61 to 70 percent of its business devoted to microfinance, according to the MIX. The Armenian MFI provides micro loans to 61,955 active borrowers, with average loan balances of USD 1,460 (see “Outreach & Impact”). ACBA has a greater number of active clients for its microfinance savings product, 88,020 customers with average savings’ balances of USD 315 (see “Outreach & Impact”). The customers’ average savings balance is much lower than it was in 2005, at USD 505 (see “Outreach & Impact”). Across the board, ACBA has a 3.5 percent return on assets and an 11.8 percent return on equity (see “Financial Data”).
EBRD, founded in 1991, invests in microfinance through its Group for Small Business, as it seeks to finance micro and small enterprises (MSEs) by investing in MFIs and other institutions that provide micro loans. Since the institution’s founding, EBRD has provided over USD 1.6 billion for loan or equity investments to organizations financing micro loans to MSEs.
Citigroup invests in microfinance through its Citi Microfinance Group. Citi Microfinance was launched in 2005. In 2006, Citi Microfinance served as the financial advisor of the USD 180 million securitization of the Bangladesh Rural Advancement Committee (BRAC) and purchased USD 5 million of the securitized capital. This year, Citi Microfinance’s operations have included the creation the Microfinance Donor Fund for private investors, the provision of a USD 44 million loan to SKS Microfinance, an Indian MFI, and loaning USD 1 million to Lift Above Poverty Organization (LAPO), a Nigerian MFI. All of these stories available here at MicroCaptial.org.
By Quentin Ruiz-Esparza, Research Associate
Additional Resources:
CGAP: “List of Recent Transactions.”
EBRD: “EBRD Syndicates First Loan in Armenia.”
EBRD: “About Syndications.”
EBRD: “Small Business.”
MIX Market: “Profile for ACBA.”
MIX Market: “Profile for EBRD.”
MicroCapital.org article, December 21, 2006: “BRAC’s USD 180mn Microfinance Securitization wins Recognition from International Financing Review Asia and CFO magazine.”
MicroCapital.org news wire, June 13, 2007: “NEWS WIRE: Citi to Open Microfinance Donor Fund.”
MicroCapital.org article, May 16, 2007: “SKS Microfinance, India, and Citibank Announce USD 44mm Financing Programme with Support from Grameen Foundation.”
MicroCapital.org article, May 11, 2007: “Grameen Foundation Supports Citibank’s USD 1mm Financing of Nigerian Microfinance Institution LAPO.”
Bloomberg: “Currency Calculator.”
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