Brussels, July 10, 2003—
In collaboration with a group of investors, ShoreBank Corporation has announced it will establish ShoreCap International, a $25 million company that will invest capital in and advise local regulated financial institutions that make small and microbusiness loans in developing and transitional economies. In addition, an affiliated non-profit organization, ShoreCap Exchange, will provide technical assistance to help investee institutions establish profitable and effective small business and microlending programs.
During a signing ceremony here yesterday, International Finance Corporation (IFC), ABN AMRO, ShoreBank Corporation, Netherlands Development Finance Corporation (FMO), the Ford Foundation, the Belgian Investment Company for Developing Countries (BIO), and Finnish Fund for Industrial Cooperation Ltd. (FinnFund), signed a joint memorandum of agreement announcing their intentions to invest in the new company. From these investors, ShoreCap has received expressions of interest totaling $15.5 million. The company will begin work immediately reviewing an initial portfolio of regulated financial institutions for possible investments.
About ShoreCap and ShoreBank
The new venture’s lead sponsor is ShoreBank Corporation, a for-profit community development and environmental bank holding company with $1.4 billion in assets that is headquartered in Chicago. ShoreBank Corporation has a long track record of helping revitalize economically disadvantaged areas in the United States and successfully transferring that experience to partner institutions in the developing world.
“ShoreCap is being created to help local financial institutions reach businesses in under-invested areas that are too small or too new to interest conventional banks,” says Mary Houghton, President of ShoreBank Corporation and Chairman of ShoreCap International. “By providing access to capital and helping a good idea become a profitable business, we can help create jobs, build wealth and move people out of poverty. Over the past 30 years, ShoreBank has proven that we can deliver these strong social returns in a financially sound manner.”
The launch of ShoreCap will create a new avenue for using ShoreBank Corporation’s investment and advisory expertise with the support of other partners to increase small and microbusiness lending in developing economies, a critical tool in economic growth. ShoreCap is the only company or fund of its kind led by a U.S. bank holding company. It will be based in London, collaborating with banking institutions in Asia, Africa, and Central and Eastern Europe.
ShoreBank Corporation has proven its ability to achieve financial and social bottom line objectives. In the United States, it has invested $1.46 billion in underserved communities, contributed to the rehabilitation of more than 38,000 units of affordable housing and manages more than $30 million in funds to support small business. Internationally, ShoreBank Advisory Services has overseen $203 million of lending to small enterprises by 45 banks in nine emerging market countries and has helped more than 20 microfinance institutions increase their capacity.
ShoreBank in Cooperation with Other Financial Institutions
One of ShoreBank Corporation’s hallmarks is its collaboration with other financial institutions and community development, environmental and non-profit partners. The creation of ShoreCap International builds on years of previous work with many of the intended investors, including IFC and ABN AMRO.
ShoreBank Corporation teamed with IFC in 1999 as a founding shareholder in K-Rep Bank Ltd. in Kenya, which is now the country’s leading commercial micro and small business financial institution offering services to low-income entrepreneurs and households that lack access to mainstream banks. In 2002, they partnered to provide technical support for the launch of housing finance institution Ro-Fin Mortgage Loan Company in Romania. In addition, they created and managed a $10 million small loan program in Romania.
"For several years, IFC has successfully worked with ShoreBank on a project-by-project basis in a wide range of countries," said IFC Executive Vice President Peter Woicke. "We now look forward to strengthening our partnership by working together in ShoreCap. ShoreCap plays a key role in development by helping local financial institutions in frontier markets learn financially viable ways to offer marginalized communities a full range of commercial banking services, including deposit-taking, housing finance, and long-term small business lending."
ABN AMRO has a longstanding and good relationship with ShoreBank through its subsidiary LaSalle Bank in Chicago. LaSalle bank has an equity participation in ShoreBank. In Brazil, ABN AMRO provides microfinance through its subsidiary Banco Real.
“ABN AMRO is very pleased with the envisaged establishment of ShoreCap,” explains Paul Mudde, ABN AMRO Head of Reputation Management & Sustainable Development. “Through the investment we will further expand our microfinance activities with the aim to improve the quality of life for people in underinvested communities in developing countries. Our strategic alliance with ShoreBank, IFC and other investors will create a strong and dedicated platform to share knowledge and expertise in the area of micro and small business lending.”
Jim Wolfensohn, President of the World Bank, says: “The World Bank is pleased to be a founding shareholder. When I first learned what ShoreBank has done in underinvested communities in the U.S. and in advisory work abroad, I told them that these kinds of banks are needed in the countries the World Bank serves. Nearly two years later, ShoreCap is ready to start helping that happen.
“I am especially pleased to see leading private financial institutions like ABN AMRO join the effort to expand access to credit in the developing world. We know that loans to small and micro businesses can help grow more equitable economies. Yet, the world over, access to credit for smaller borrowers is scarce to nonexistent. We all have a stake in creating more inclusive economies. Fostering local financial institutions which provide credit in their communities will help make this happen.”
About the Companies
ShoreBank Corporation:
ShoreBank is America’s first and leading community development and environmental banking corporation. ShoreBank is committed to building vibrant communities by providing financial services and information to create economic equity and a healthy environment. Headquartered in Chicago, ShoreBank has banks and affiliated non-profits in Chicago; Cleveland; Detroit; Ilwaco, Washington; and Portland, Oregon; business development services in Michigan’s Upper Peninsula, and consulting services around the world. For more information:
www.shorebank-online.com
IFC:
The mission of IFC is to promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people's lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. From its founding in 1956 through FY02, IFC has committed more than $34 billion of its own funds and arranged $21 billion in syndications for 2,825 companies in 140 developing countries. IFC's worldwide committed portfolio as of FY02 was $15.1 billion for its own account and $6.5 billion held for participants in loan syndications.
www.ifc.org
ABN AMRO:
Netherlands-based ABN AMRO is a leading international bank with total assets of approximately EUR 597 billion. It has over 3,000 branches in 66 countries and territories, and has a staff of about 105,000 full time equivalents worldwide. ABN AMRO is listed on the Euronext, London and New York stock exchanges. ABN AMRO operates through three Strategic Business Units, each responsible for managing a distinct client segment. Wholesale Clients provides integrated corporate and investment banking services to corporate, institutional and public sector clients worldwide. Consumer & Commercial Clients focuses on retail and SME clients in three home markets – the Netherlands, the U.S. and Brazil – and in a number of selected growth markets. Private Clients & Asset Management provides private banking services to wealthy clients and investment products to financial intermediaries and institutional clients.
