BBVA Microfinance Foundation, the microfinance arm of BBVA Group, a multinational financial services group, and BanCredito, the state owned bank formerly known as Cartago Agricultural Credit Bank, have signed a collaboration agreement for an undisclosed amount to promote initiatives that would make credit and other financial products accessible to the most disadvantaged sectors of Costa Rica’s population and others in Central America. “This alliance will result in important benefits for the development of Costa Rica’s microfinance sector, as both of our entities share common objectives: allow people who currently don’t have access to the traditional financial system to be able to establish small production activities that would help them improve their quality of life and that of their families in a sustainable manner,” BBVA’s Mendez del Rio said.
According to the CIA World Factbook, in 2006, 16% of Costa Rica’s population was living below the poverty line. Neighboring Nicaragua had 40% of the population living below the poverty line and in recent years Nicaragua to Costa Rica immigration has been on the rise creating even more of a need for the types of programs that the alliance plans to promote.
Established in 1918 and nationalized in 1948, Bancredito is the youngest of three state-owned financial institutions in Costa Rica. The bank was created to supply financial services and products to small and medium business owners in an effort to contribute to the creation of jobs and support the country’s economic growth.
BBVA is a Spanish based multinational commercial and retail bank that was formed through the 1999 merger of Banco Bilbao Vizcaya and Argentaria. For the six months ending June 2008, BBVA generated EUR 3.1 million in net profit for a ROE of 25.3 percent. Today BBVA operates in 32 countries. In 2007 BBVA created a microfinance hedge fund, BBVA Codespa Microfinanzas, before launching the BBVA Microfinance Foundation. Started with an initial EUR 200 million investment, the foundation is a nonprofit organization aimed at driving the development of small-scale production to promote sustainable development in countries in which the bank operates. Initial operations were in Peru and Colombia; Puerto Rico has since been added. This latest announcement of the alliance with Bancredito further demonstrates BBVA’s commitment to building out its Latin American microfinance network.
By Iyanna Holmes
Additional Resources:
BBVA Press Release: BBVA Earmarks EUR 200 Million for the World’s First Private Microfinance Network
CIA World Factbook: Costa Rica, Nicaragua
The Guanacaste Journal: Groups Promote Microfinance Initiatives in Costa Rica
MicroCapital.org article, January 10, 2007: BBVA Launches a Microfinance Hedge Fund Advised by Blue Orchard and Fundacion Codespa
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