The Oregonian
(USA) June 16, 2008
Portland-based Mercy Corps buying Indonesian bank to help poor
The humanitarian agency will start the Bank of Banks to help
Indonesian agencies provide insurance, mortgage finance,
remittance services and mobile banking
Monday, June 16, 2008
Richard Read The Oregonian Staff
Nonprofit Mercy Corps is buying a commercial bank in Bali,
Indonesia's tourist paradise, in a novel $33 million deal that
could move tens of millions of people out of poverty in the next
decade -- and create a new economic-development model.
Using a $19.4 million grant from the Bill & Melinda Gates
Foundation, Mercy Corps will head a consortium to create
Indonesia's first microfinance wholesale bank -- provisionally
titled the "Bank of Banks," nicknamed BoB.
The deal, to be announced today, capitalizes on Mercy Corps'
experience with microfinance programs, which typically extend
small-business loans to people too poor to be served by regular
banks. It also propels the Portland-based relief-and-development
organization to a new frontier where nonprofits, foundations,
government agencies and commercial entities collaborate to move
beyond handouts in less-developed nations.
Mercy Corps, with investment from an arm of the World Bank and a
Dutch fund, plans to convert a struggling Bali bank into an
institution that can help thousands of small microfinance
organizations attain stability and boost services. The Bank of
Banks will enable the Indonesian organizations to move beyond
offering microloans and savings accounts to provide insurance,
mortgage finance, remittance services and mobile banking.
The bank and supporting institutions aim to help 16 million
Indonesians build financial security by 2011, reaching them in
new ways, via cell phones, ATMs and the Internet. Mercy Corps
managers say that if successful, the strategy -- to be expanded
to the Philippines -- could help 45 million people permanently
move out of poverty during the next 10 years.
"Bank of Banks is expected to revolutionize the way microfinance
works in Indonesia and beyond," said Neal Keny-Guyer, chief
executive of Mercy Corps.
Biggest, first
The deal represents several firsts for Mercy Corps. The Gates
grant is the biggest it has received from the Seattle-based
foundation. While Gates has supported Mercy Corps
disaster-response initiatives, the foundation hadn't yet backed
one of the humanitarian organization's non-emergency programs.
Mercy Corps has years of experience in microfinance, an approach
that became widely known when Bangladeshi banker Muhammad Yunus
and his Grameen Bank won the 2006 Nobel Peace Prize for their
grass-roots financial programs.
In 2001, Mercy Corps co-founded XacBank, a commercial bank in
Mongolia that extends financial services to yak herders and
others across one of the world's most sparsely populated
countries. Microfinance institutions started by Mercy Corps in
Kazakhstan, Kyrgyzstan and Tajikistan have disbursed $240
million in loans during 10 years to businesses and communities.
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