Case Study
Experienced Consortium Deepens Bulgarian Financial System by Creating ProCredit Bank, a Commercial Bank for Microenterprises
Learning from the experience of creating ProCredit Bank Bulgaria
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This case study describes how a consortium of international development organizations, a commercial bank, and a microfinance technical-service company worked closely to establish ProCredit Bank Bulgaria (PCBB), a full-service commercial bank for micro and small enterprises. The study describes:
- The various phases that the consortium went through in the establishment of PCBB;
- The contribution of each member of the consortium;
- PCBB's rapid expansion that included the following contributory factors: external financial investment, ability to tap local capital, wide range of products and services for micro and small enterprises (MSEs);
- The following keys to investor success:
- Common investor vision;
- Shared aversion to competing projects;
- Qualified management;
- Learning from the 'ProCredit Holding AG Network';
- Commercial reporting and governance.
The paper identifies the following future challenges for the consortium:
- Obtaining sufficient financing for growth;
- Balancing shareholder goals;
- Creating an exit strategy that ensures the continuation of the bank's social mission.
The study concludes with the lessons learnt by the consortium of donors and investors that established PCBB:
- Changing a financial system to serve microentrepreneurs and low income clients requires bold decisions and a wide range of skills, experience, and instruments;
- This is best addressed within the context of profitable, dynamic financial institutions committed to changing the lives of the poor.
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