Microcredit in Europe - Experiences of Savings Banks

This paper provides an overview of the current practice of microcredit within the savings banks community. The paper states that savings banks have been the main providers of small-scale credit and have contributed to various targeted social schemes across Europe, including a microcredit component. It then presents case studies that exhibit the types of interventions that savings banks have provided. It groups these interventions under the following four models: The microcredit subsidiary model, such as La Caixas microbank that:

• Manages the banks portfolio;
• Disburses credit to people who are partially excluded from the financial system;
• Provides training, education and assistance to people with difficulties in finding employment.

The balance sheet-based model that is characterized by:

• The existence of a direct relationship between the savings bank and the beneficiaries of microcredit;
• Commercially driven lending activities or dedicated social programs in which the bank is involved;
• The consolidation of profits and losses that result from microlending activities within the banks financial statements.

The agency-based model that illustrates:

• Agency relationship with national or international financial institutions;
• Credit policies that are defined by fund providers and applied by the lending institution.

The off balance sheet-based model that is distinguished by:

• The provision of non-recoverable funds by savings banks to their foundations or solidarity institutions that provide microcredit and social services.