MICROCAPITAL.ORG STORY: Credit Guarantee Corporation of Malaysia Agrees to Guarantee $29.6m of Standard Chartered´s Loans to Small and Medium-Sized Enterprises (SMEs)

Standard Chartered Bank Malaysia Bhd, in collaboration with the Credit Guarantee Corporation of Malaysia (CGC), has launched the “Portfolio Guarantee Scheme.” The plan calls for the CGC to act as a partial guarantor for the USD 29.6 million in loans that Standard Chartered plans to disburse to small and medium enterprises (SMEs) over the next 18 months [1].

The “Portfolio Guarantee Scheme” will guarantee up to 80 percent of loans provided by Standard Chartered [2]. The loans will be provided exclusively to women entrepreneurs who have been running a business for a minimum of five years and are seeking capital for expansion. The scheme also calls for a term-financing facility of up to about USD 150,000 for working capital and financing of SME asset acquisitions.

Standard Chartered’s Country Head of Consumer Banking, Ms. Tiew Siew Chuen, said, “Our SMEs´ business momentum has increased significantly in spite of the challenging external environment. We have seen our portfolio grow by more than 50 percent this year,” amounting to USD 177.4 million [1]. Over the next year, Standard Chartered aims to increase its loans to SMEs from 25 percent to 30 percent of its total consumer banking loans. Tiew added that the bank would maintain a 20 percent compounded annual growth rate for SME loans over the next few years. To accommodate this growth, the bank has increased its sales staff and relationship managers from 150 to 250 and plans for an additional increase of 50 people by the end of next year [3].

Standard Chartered Bank, headquartered in London, has branches in over 70 countries across the world. Its total assets, as of June 30, 2009, were USD 411 billion, with an operating profit of USD 2.84 billion and an ROE of 17 percent. As of the end of 2008, it had extended USD 385 million in credit to 52 microfinance institutions in 14 countries. (View Standard Chartered´s 2009 Interim Report and 2008 Sustainability Report) [4, 5].

The CGC, a development financial institution, was established in 1972 to aid SMEs without collateral to access credit facilities. Its role is to formulate and manage credit guarantee schemes with the participation of lending institutions. CGC managing director, Mr. Datuk Wan Azhar Wan Ahmad, said that to date, CGC has guaranteed an equivalent of USD 1.09 billion to about 9,500 women in SMEs [3]. Bank Negara Malaysia, the Central Bank of Malaysia, is the largest shareholder of the CGC, owning 79.3 percent of total shares.

Previously covered MicroCapital stories relating to microfinance in Malaysia in particular and credit guarantees in general have been listed in the bibliography, [6]-[10] and [11]-[13], respectively.

By: Stefanie Rubin, Research Assistant

Bibliography:

[1] BERNAMA: “Standchart To Disburse RM100 Million To Help Women Entrepreneurs” by Wan Nor Azura Mior Abdul Aziz, October 22, 2009, http://www.bernama.com/bernama/v5/newsindex.php?id=448758

[2] Credit Guarantee Corporation: iGuarantee: https://www.iguarantee.com.my/iguarantee/sags.htm

[3] TheStar Online: “StanChart Aims Further Increase SME Loans” by Daljit Dhesi, October 23, 2009, http://biz.thestar.com.my/news/story.asp?file=/2009/10/23/business/4957467&sec=business

[4] Standard Chartered 2009 Interim Report: http://files.shareholder.com/downloads/stanchar/756345495x0x317251/859E322E-E361-4977-B8E6-4CCBE808DCE6/ST098_FINAL_HY_Report_2009.pdf

[5] Standard Chartered 2008 Sustainability Report: http://www.standardchartered.com/sustainability/pdf/sustainability_review_2008_large.pdf

[6] MICROCAPITAL.ORG STORY: Former Founding Member Of Amanah Ihktiar Malaysia And Current Professor At Universiti Sains Malaysia Professor Sukor Kasim Appointed As Government Adviser To Northern Malaysian State Of Perak to Help Address Problems Related To Poverty And Income Disparity

[7] MICROCAPITAL.ORG STORY: As Part of Malaysian Government Initiative, BMB Group and Organization of The Islamic Conference’s (OIC) International Zakat Organization (IZO) Will Launch The World Zakat Fund (WZF) in 2010 With Plans to Raise $750m in First Year

[8] MICROCAPITAL.ORG STORY: Introduction Of Microfinance Scheme In Northern Malaysian State Of Penang – To Help The Poor Or Gain Political Mileage?

[9] MICROCAPITAL.ORG STORY: Exclusive Interview On The Current State Of Microfinance In Malaysia And Challenges Facing The Sector: Observations From The Assistant Governor Of Bank Negara Malaysia

[10] MICROCAPITAL STORY: Malaysia Allows International Banks To Provide Microfinance

[11] MICROCAPITAL.ORG STORY: Philippines-Based MFI CARD Raises $10.4 Million In A 5-Year Privately Placed Bond Issue Supported By Grameen Growth Guarantee Program And ‘A(-)’ Rating By Planet Rating To Expand Its Microfinance Business

[12] MICROCAPITAL.ORG STORY: Guarantors of Microloans In The Balkans Struggle To Meet Demands By Microfinance Lenders As A Result Of Financial Crisis

[13] MICROCAPITAL.ORG STORY: South Africa’s Blue Financial Services Obtains USAID $10 Million Loan Portfolio Guarantee And Expands Microfinance Services In Africa