Citigroup will make microcredit payment

Citigroup, the world's biggest financial services group by market value, is making the latest installment in its more than $13 million program to grant money to Asia's poor.
The New York-based bank said it will give $570,000 to the Foundation for Development Cooperation and the Banking With the Poor Network to expand microcredit services in 10 countries, including India, Indonesia, the Philippines, Sri Lanka and Vietnam.

Microfinance is increasingly on the agendas of financial-services companies, partly driven by a need to burnish philanthropic credentials. Banks such as Citigroup are also offering assistance to develop more sophisticated products, such as insurance, remittance or corporate finance services.

The approach "is to encourage microfinance institutions, the majority of which are really quite small, to seek partnerships to deliver better services and information," said Craig Wilson, executive director of the Brisbane, Australia-based Foundation for Development Cooperation.
Bankers are also coming alive to the idea that lending to the poor can turn a profit. While administrative expenses may account for 19 percent of microcredit portfolios in Asia, lenders get an average return of 32 percent a year, according to the World Bank. In India, Kenya and the Philippines, the average annual return on investments by microbusinesses ranges from 117 percent to 847 percent, the World Bank estimates.

Last year, Citigroup helped securitize receivables from microcredit projects in a six-year, $180 million-equivalent offering. The bank picked up awards from The Asset, CFO Asia and IFR Asia in the process. Investment banks use such recognition from trade publications to attract future business.

"Our collective efforts will increase access to basic financial services, such as credit savings, insurance and remittances, which can help lift entire communities out of poverty," said Robert Morse, Citigroup's Asia chief executive officer for corporate and investment banking.
Partnerships between microfinance organizations and the banks could develop that, for example, allow banks to extend their credit card range, Wilson said. Over time, microfinance providers' clients are likely to include small and medium-sized businesses, he said.

The entire article here
Lien vers l'article dans son intégarlité ici