BIO Supports Creation of Microfinance Banking Institution in Honduras

11.02.2008
BIO announces it is supporting the creation of Banco Popular Covelo (BanCovelo), which will be the leading microfinance institution in Honduras. BIO has committed funding in the form of equity –USD2 million– in order to assist the savings and loans association Popular in its transformation to a commercial bank, as well as to expand its micro lending operations. This investment is the first in Honduras, and further strengthens BIO’s regional strategy. Moreover, this investment opportunity allows BIO to invest alongside one of the most successful microfinance providers in the Honduran market (Fundación Covelo).

Fundación Covelo began its work in microfinance in 1991, with the objective of serving the poor in the micro- and small business sector. Over time, the organization diversified its products and services to expand its finance offerings and, with that, positioned itself as the leading microfinance institution in the Honduran market.

In 2004, Fundación Covelo created Popular AAP with the vision of creating a bank specialized in microfinance and a goal of serving the working capital and home improvement needs of micro entrepreneurs.

At the end of 2006, the lending activities of Grupo Covelo were consolidated with Popular AAP to create a Honduran microfinance bank called BanCovelo. Fundación Covelo continues to provide non-financial services, such as technical assistance, institutional assessment, training, promotion of software for the microfinance industry, and general support to the microfinance sector as a whole in Honduras.

The mission of BanCovelo is to be an efficient, profitable and professional bank that offers high quality financial products and services to urban and rural markets, with a strong sense of social responsibility and a firm commitment to improving clients’ quality of life.

In addition to BIO’s Investment, BanCovelo investors include international shareholders, such as IFC (member of the World Bank), FMO (from the Netherlands), ACCION Investments (a Boston-based, wholly owned subsidiary of ACCION International), and Banco Centroamericano de Integración Económica (BCIE).

Figures:

-The bank has a network of 27 branches in rural and urban Honduras. BanCovelo expects to triple the number of beneficiaries it serves in the next five years.

- At year-end 2007, it had nearly 24,000 borrowers, of which over 69 percent were women.

-The average loan size is $ 2,175 equivalent in local currency, and the beneficiaries are low-income people.

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