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 will review the microfinance activities of several of large international banks covered in the study, starting with BNP Paribas.
This French bank is the 11th largest by market value as of mid 2007. Its banking network spans 85 countries and includes 162,700 employees. In 2007, its net banking income was Euro 31.0 billion, and it had total assets of Euro 1.7 trillion.
Regarding microfinance, BNP Paribas has provided microloans to microfinance institutions (MFIs) since 2002. Following the UN Year of Microfinance, the Executive Committee started a central unit for microfinance activities called “Microfi” in 2006. At the end of 2007, BNP Paribas had USD 101 million outstanding loans to 22 MFIs. In addition, the bank made a global line of USD 135 million available for financing the microfinance sector in May 2007.
The bank focuses its activities in Africa, Asia, and Latin America, providing loans in local currencies. With16 target countries, BNP Paribas has reached 410,000 end-users in 11 of these 16 countries. India has received a greater focus, with 8 MFIs involved. However, BNP Paribas hopes to finance 2 to 3 MFIs in each country.
BNP Paribas has been involved in the French microfinance market for 15 years. In 2006, the bank financed 1,400 French micro projects for USD 5 million through ADIE. ADIE is the Association pour le droit à l’initiative économique (Association for the right to financial initiative), a founding member of the European Microfinance Network, and a loan provider to the financially excluded in France and the French Overseas Territories.
Other work with AIDE includes BNP Paribas Foundation’s 3-year USD 2.5 million grant to Project Banlieue. The project promotes job creation via microcredit and coaches 700 new micro-entrepreneurs. In 2004, CETELEM, a BNP Paribas subsidiary and consumer financial company with 2006 pre-tax profits of USD 920 million, helped ADIE establish recovery procedures and decision tools. Also in 2006, CETELEM granted microloans in partnership with the CRESUS association, which combats over-indebtedness.
In the future, BNP Paribas looks to work with its Asset Management division to establish a microfinance fund. The bank also hopes to create projects on migrants’ remittances and micro-insurance to cover outstanding microcredits. Finally, the bank intends to mobilize retired employees as volunteers to support ADIE and train MFIs’ staff.
by Jennifer Lee
Additional Resources:
ING Microfinance: “A Billion to Gain? The Next Phase”, by Matthijs Boúúaert, March 2008.
BNP Paribas: ” 2006 Annual Report: Corporate Social Responsibility”, pg 13, 2006.
ADIE: Home
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