CALPIA

completed

Financiera Calpiá S.A., which opened for business in July 1995, is the result of a successful transformation of an NGO (non-governmental organization) into a regulated finance company. Financiera Calpiá operates 15 branches and manages an outstanding loan portfolio consisting of approximately 38,000 loans with a total balance of over $31.3 million (as of December 2001). As a finance company subject to banking supervision, Calpiá started offering savings products to its target group of small and micro entrepreneurs in 1996. Its transformation into a commercial bank will allow it to further expand into the business of current accounts, receiving of remittances, SME-lending, etc..Calpiá offers the following products, with an average loan size of $808:Standard microenterprise creditsCredit lines to preferred customersSeasonal short term loans to the microenterprise sectorProducts targeted to agro-fishing sectorHousing improvement Special line for financing reconstruction and housing funded with special linesSmall business lendingShort term credits, guaranteed with fixed term depositsIFC would contribute to the conversion of Calpiá into a commercial bank by taking financial services from low income clients to the next level of commercialization. Latin America, with its large and developed microfinance sector, offers a unique environment for commercial bank transformations. IFC can contribute its experience with MFIs worldwide and Calpiá could benefit from IFC’s burgeoning knowledge in this field. Microfinance schemes have been shown to have a major positive impact in reducing poverty and unemployment in developing countries. In general, the disadvantaged economic sectors in developing countries have limited access, if any, to financing through the traditional financial institutions. This IFC equity investment would allow Calpiá to transform itself from a finance company to a commercial bank. In addition, Calpiá could, with this new capital, leverage its loan portfolio by roughly $20 million.The project''s objective-- to give small farmers and proprietors of small businesses long-term access to loans from the banking syistem-- would lower current capital costs for any loan obtained outside the formal financial sector, where interest rates can be as high as 1000% per annum. Calpiá’ offers services, first and foremost, to customers in which existing local banks have no interest, providing a possibility for sustainable social and economic development.