Case Study

Banco Solidario, S.A. - Recovery Strategy 2000-2004

How did BancoSol resurrect itself?
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This paper examines the recovery of Banco Solidario, S.A. (BancoSol), Bolivia under the leadership of Kurt Koenigsfest.The paper explains that:

  • Since its beginning in 1992, BancoSol had achieved excellent results and had become an international reference point in the microcredit area;
  • Its performance declined due to external and internal factors in mid-2000;
  • However, Mr. Koenigsfest set a strategy into motion that led to the bank being rated as the best institution in the Bolivian financial system in 2004.

The paper examines:

  • The political, economic and social situation in Bolivia that led to the decline of BancoSol;
  • The microfinance sector in Bolivia, including credit methodologies and primary microfinance institutions;
  • The origins of BancoSol and internal reasons for its failure, such as:
    • Distortions in the solidarity loans;
    • Repayment problems;
    • Independent functioning of branches;
    • Lack of a uniform rate schedule;
    • Informal bank culture.

The paper then describes the successful strategic plan that the management implemented and that focused on:

  • Development of new products and services;
  • Improvement in portfolio quality;
  • Standardization of operations;
  • Achievement of cost-efficiency;
  • Making long-term solvency a priority;
  • Regular monitoring and evaluation.

These changes took place in all departments of the bank, including the commercial department, information systems, administration and human resources, finance and control and social responsibility.

The paper concludes that in the future, the bank faces the challenge of achieving leadership in the microcredit segment and continuing to balance growth and social mission.

About this Publication

By Caballero, K., Melgarejo, M. & Melgarejo, E.
Published