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The Co-Operative Bank Creates US$50m Fund for World’s Poor 13.09.07
The Co-operative Bank has created a special US$50m (GBP25m) fund in order to support the development of small businesses in some of the world’s poorest countries.
The Bank has created an innovative line of credit in association with several major international banks that will be used to provide microfinance, or small loans, to the working poor around the world.
The Co-operative Bank is already part of the Global Commercial Microfinance Consortium (GCMC) that brings together institutional investors and development agencies in order to provide finance to poor people And is now looking to build on that commitment with other similar organisations. In 2005, The Co-operative Bank committed $5million (£2.6 million) to the $80 million GCMC. At its launch the Consortium represented the largest public-private microfinance partnership. The Consortium lends to MFIs either directly or in partnership with commercial banks, subject to a maximum loan size of US$3million. The fund has provided loans having committed to MFIs across the globe in places such as Russia, Kosovo, Peru, Nicaragua, Colombia, Pakistan, Mozambique, Mongolia and Azerbaijan.
Microfinance is defined as the provision of financial services to the working poor, usually in the form of small loans that can be as little as US$100, which are provided through Microfinance Institutions (MFI’s). MFI’s are locally based specialised, formal and semi-formal institutions e.g. commercial banks, co-operative rural banks, credit unions and Non Governmental Organisations (NGOs) who provide financial services to third world micro-enterprises such as small farmers, fishermen, street vendors, cobblers etc. Currently there are over 10,000 MFI’s worldwide, providing financial services to 100 million individuals.
Richard Wilcox, Head of Structured and Asset Finance said: "As a member of the GCMC executive board, I’ve seen at first hand the valuable role microfinance can play in allowing people to trade their way out of poverty.
"The Co-operative Bank’s ethical policy clearly states what we will and will not do with our customers’ money whilst it is in the bank. Our involvement in microfinance clearly demonstrates to our customers the mechanics of how our ethical stance really works and shows how their money, when invested with the bank, can make a real difference in tackling global poverty."
"This structured approach will establish The Co-operative Bank as a credible supporter of microfinance and reinforces our reputation as a leading exponent of corporate responsibility."
Alongside their participation in the GCMC, the bank also recently committed US$2mmillion to the Blue Orchard Loans for Development Fund launched by Morgan Stanley and managed by global microfinance investment manager Blue Orchard Finance SA. The securitised fund comprises loans to 21 Microfinance Institutions in 13 countries in Latin America, Eastern Europe, Asia and Africa and is the first microfinance transaction to receive investment grade rating from a major ratings agency.
For more information about the Co-operative Bank:
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