MICROCAPITAL STORY: International Finance Corporation (IFC), a Member of the World Bank Group, Supports Creation of Banco Popular Covelo (Bancovelo), a Microfinance Institution in Honduras

In a press release, the International Finance Corporation (IFC), a member of the World Bank Group, announced that it has completed a package to provide up to USD 2 million (11.8 percent of total new capital) of financing and over USD 400,000 of advisory services to create Banco Popular Covelo (Bancovelo), a microfinance institution (MFI) in Honduras. The announcement of the package last year, enabled Bancovelo, the creation of a 2007 merger of Grupo Microfinanciero Covelo’s (GMC’s) Popular Covelo, and its two sister organizations, Fundacion Covelo and Popular Asociacion de Ahorro y Prestamo AAP, to receive its banking license in December of 2007. Other funders and advisers of the newly created bank include ACCION International, the Belgian Investment Company for Developing Countries (BIO), the Netherlands Development Finance Company (FMO) and Banco Centroamericano de Integracion Economica (CABEI), all with equal equity shares of 11.8 percent.

Bancovelo was founded in Honduras in early 2007 by the merging of Grupo Microfinanciero Covelo’s (GMC’s) financial institutions. GMC’s first microfinance work began in 1991, through Fundacion Covelo, which served small and micro-businesses using a solidarity group lending model. Since then, Bancovelo has become Honduras’s leading MFI with a gross loan portfolio of over USD 11 million, a Debt-to-Equity ratio of slightly over 165 percent and a Return-on-Assets of 2.2 percent (all numbers current as of March 2006).

The IFC was founded with 31 members in 1956 as the first inter-governmental organization with the goal of promoting private enterprise. At of the end of 2005, it had a committed portfolio of USD 19.3 billion and 178 member countries.

By Jacob Keller

Other Resources:

Bancovelo: Home

International Finance Corporation (IFC): Home, press release, USD 19.3 billion

Grupo Microfinanciero Covelo: Home, Fundacion Covelo

Fundacion Covelo: Home

Mix Market: Home, USD 11 million, 165 percent, 2.2 percent

ACCION International: Home

Belgian Investment Company for Developing Countries: Home

Netherlands Development Finance Company: Home

Banco Centroamericano de Integracion Economica: Home