Experienced Consortium Deepens Bulgarian Financial System by Creating ProCredit Bank, a Commercial Bank for Microenterprises

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.