MICROCAPITAL STORY: ING Review of Crédit Agricole’s Microfinance Activities and Its Partnerships with Grameen, ACBA, and Trade Associations in Madagascar

The Dutch Bank ING published its updated 2008 study on commercial bank microfinance activity, called “A Billion to Gain? The Next Phase”. A MicroCapital summary of the paper can be read here. MicroCapital is reviewing the microfinance activities of several of large international banks covered in the study, such as Crédit Agricole SA (CA).

Although not one of the 20 largest global finance institutions by market value, CA is the largest bank in France with 25 percent of the market share in banking and is the country’s second largest life-insurer. With 41 million customers around the world, CA operates in over 70 countries, employing 157,000 people. In 2007, CA reported a net income of EUR 4.5 billion and ROE of 12.2 percent.

Currently, CA does not have a centralized microfinance group, but a 5-person team is in the process of establishing a coordination center, which would overview all activities. To date, the microfinance activities in developing countries have been conducted by Crédit Agricole Consultants, the consultancy arm, or on a voluntary basis by regional banks.

One venture of CA Consultants is assistance to ACBA Bank, a full-service Armenian microfinance bank. This partnership includes transferring technical assistance, financial banking, joint venture, and equity stake. For instance, CA Group acquired 28 percent of ACBA Bank, while CA Leasing owns 28 percent of ACBA leasing. Founded in 1996, ACBA had total assets of USD 143 million, earned USD 4 million in net profits, and served 694 village association farmers by 2006.

In Madagascar, a consortium of 8 CA regional banks known as ICAR supports 3 trade associations of microfinance institutions (MFIs): CECAM, TIAVO, and FIVOY. ICAR owns a minority stake in these associations and committed USD 1.46 million in grants or technical assistance for 2007 to 2009. These associations are agricultural cooperatives which offer micro loans to farmers in the country. CA subsidiary and local bank, BNI Madagascar, also supplies special loan facilities to CECAM members and has 15 percent ownership in SIPEM, an MFI servicing Madagascar’s urban areas. By the end of 2006, SIPEM had given loans to 1,384 borrowers for an average loan size of USD 1,135.

Other microfinance activities include a Technical Assistance Contract with the IFC through CA Consultants. The IFC is a member of the World Bank Group. CA Solidarité et Dévelopment funded microfinance projects focused on restoring the local economy in Southeast Asian regions hit by the tsunami on Christmas 2004.

In Bangladesh, CA Asset Management, Danone, and the Grameen Group manage the EUR 100 million Danone Communities fund, to which CA entities gave EUR 20 million. The fund is dedicated to supporting social businesses. While in 2008, CA announced it would contribute EUR 50 million to establish a non-profit foundation with Grameen Bank. For more details on this partnership, please see the following MicroCapital story.

In France, CA is a founder of the French Foundation FARM, committing almost EUR 1 million per year to support agricultural development in developing countries. CA also supports French microcredit initiatives such as the NGOs ADIE and France-Active.

Going forward, CA intends to solidify its interest in microfinance with a dedicated central team. The group also looks to give special attention to rural and agricultural sectors of microfinance.

by Jennifer Lee

Additional Resources:

ING Microfinance: “A Billion to Gain? The Next Phase”, by Matthijs Boúúaert, March 2008.

Crédit Agricole: Home, Financial Snapshot, Consultants

MicroCapital: “Crédit Agricole Contributes €50m for the Creation of a Non-Profit Foundation in Cooperation with Grameen Bank of Bangladesh”, by Anthony Busch, February 20, 2008.