Oikocredit Förderaval III (top-up and term extension)

completed

Since July 2011, GLS Bank has been offering private investors in Germany a classic savings account, from which deposits are used to grant loans to the Dutch cooperative bank Oikocredit. This gives socially minded savers the opportunity to invest in microfinance for the first time. Oikocredit uses this money to finance small businesses, cooperatives and microfinance institutions in developing countries in accordance with social and ecological principles with the aim of promoting employment and income as well as development in these countries. The savings account has a variable interest rate that is based on the German interest rate level and is protected by the German deposit protection system. After the successful launch, savings deposits have risen sharply. GLS Bank has defined an upper limit for unsecured loans in its guidelines. In order to avoid having to stop the dynamic growth of the savings account, which exceeded expectations, in 2012 KfW secured Oikocredit's credit risk from the 3 million mark to GLS Bank with a guarantee, initially of EUR 10 million and a year later of a further EUR 10 million to a total of EUR 20 million - with a risk retention by GLS of EUR 4 million over a term of 5 years (Oikocredit Förderaval I + II). As savings deposits continued to grow strongly and already amounted to over EUR 20 million in mid-2016, it was necessary to increase the guarantee by a further EUR 10 million to a total of EUR 35 million - with a risk retention by GLS of EUR 5 million (Oikocredit Fördervaval III). With this project, KfW is promoting the further growth of microfinance in developing countries on the one hand and the mobilization of private savings capital in Germany for this development purpose on the other.