Dhaka, February 11, 2007- IFC, a
member of the World Bank Group, and Citi, the leading global financial
services institution will support BRAC’s microlending in Bangladesh with
a local currency facility to benefit BRAC’s microcredit and small and
medium enterprise customers.
The $22 million term facility will be made available in local currency
(Bangladeshi taka), with a five-year tenor and an amortizing structure.
BRAC, one of the largest microfinance institutions in the world, continues
to invest in portfolio expansion. In supporting BRAC’s move to manage
its balance sheet, diversify its sources of funding, and access longer-tenor
financing, this innovatively structured transaction will benefit BRAC’s
microcredit and small and medium enterprise customers.
The loan is part of a wider Citi-led financing for BRAC that was mandated
last year. Of the $55 million equivalent in term financing, Citi is providing
$42 million. The $22 million IFC-Citi tranche, which closed recently, includes
an $18 million partial credit guarantee from IFC. This risk-sharing partnership
with IFC will enable Citibank in Bangladesh to extend additional long-term
local currency funds to BRAC.
Fazle Hasan Abed, Chairperson of BRAC, present at the signing with IFC
and Citi, said, “To finance the growth of our microfinance operations,
we need local currency financing. Support from IFC and Citibank, as well
as our partnership over the years, has been invaluable.”
“With this guarantee, BRAC will be able to reduce its dependence on grants
for growth and expand its outreach to people, particularly women borrowers,”
said Lars Thunell, IFC Executive Vice President and CEO.
“Citi is honored to support BRAC again in their microlending expansion
plans in Bangladesh. Citi has a track record of several groundbreaking
deals for BRAC, and IFC is also an important partner of Citi in various
markets globally. We look forward to working with BRAC in the future. I
would like to thank all our partners who helped make this such a successful
transaction,” said Mamun Rashid, Managing Director & Citi Country
Officer – Bangladesh.
Citi and BRAC have a long relationship that included issuing the world’s
first triple A-rated local currency securitization of microcredit receivables
in 2006. This was followed by innovative remittance distribution arrangement
and the first-ever backstopped facility for a microfinance institution
This is IFC’s first investment in BRAC, but the two institutions have
a long-standing relationship, having jointly pioneered projects in housing
finance and SME lending in Bangladesh.
BRAC’s microfinance and development programs cover all 64 districts in
Bangladesh. It also offers microloans to women through its group-lending
methodology. Nearly 1,200 nongovernmental organizations provide microcredit
services in more than 40,000 Bangladeshi villages, where half the population
lives below the poverty line. The country’s microfinance sector has been
financed typically through contributions from donors and subsidized government
funds, particularly for smaller microfinance institutions. As this funding
diminishes, the sector increasingly borrows from commercial banks and taps
into voluntary savings by members.
IFC, a member of the World Bank Group, fosters sustainable economic growth
in developing countries by financing private sector investment, mobilizing
private capital in local and international financial markets, and providing
advisory and risk mitigation services to businesses and governments. IFC’s
vision is that people should have the opportunity to escape poverty and
improve their lives. In FY07, IFC committed $8.2 billion and mobilized
an additional $3.9 billion through syndications and structured finance
for 299 investments in 69 developing countries. IFC also provided advisory
services in 97 countries. For more information, visit www.ifc.org.
BRAC is the largest NGO in the world, with more than 100,000 employees.
Diagnosing poverty in human terms and recognizing its multidimensional
nature, BRAC takes a holistic approach in striving to fulfil its twin objectives
of poverty alleviation and empowerment of the poor. This approach
combines economic development and livelihood-generation enterprises with
health, education, and other social programs. BRAC’s outreach covers Bangladesh’s
64 districts and it has been asked to assist a number of countries, including
Afghanistan, Pakistan, Sri Lanka, Sudan, Tanzania, and Uganda. It also
offers microloans to women through its group-lending methodology. For more
information, visit www.brac.net.
About Citigroup Inc.
Citi, the leading global financial services company, has some 200 million
customer accounts and does business in more than 100 countries, providing
consumers, corporations, governments and institutions with a broad range
of financial products and services, including consumer banking and credit,
corporate and investment banking, securities brokerage, and wealth management.
Citi's major brands include Citibank, CitiFinancial, Primerica, Citi Smith
Barney and Banamex. Additional information may be found at www.citigroup.com
Citi Microfinance Group works with microfinance institutions as partners
and clients to expand access to financial services and products to the
“unbanked” who are not currently reached by the formal banking sector
in a commercially viable way. With a worldwide presence, Citi Microfinance
Group aims to provide the sector with varied products and services, including
capital markets, wholesale finance, individual credit, savings, remittances,
insurance, as well as technical assistance.