Banco Solidario

Debt : June 2023

BIO has given a USD 20 M loan to Banco Solidario, a microfinance institution in Ecuador

Amount

$ 20,000,000.00

Type of investment

Debt

Development impacts

  • Local economic growth
  • Financial inclusion
  • Promotion of ESG best practices
  • Gender

Beneficiary locations

Latin America and Caribbean: Ecuador

Investment field

Financial Institutions

Activity

KK.64.191  Microfinance institution

Organisation

Banco Solidario

Domicile

Ecuador

More investments in

Banco Solidario

  • Subsidy $ 16,143.00 (2023)
  • Subsidy € 15,719.00 (2021-2022)
  • Subsidy € 12,290.60 (2019-2020)
  • Debt € 8,338,200.00 (2019)
  • Subsidy € 77,220.00 (2012-2014)
  • Debt € 5,987,000.00 (2012-2016)

Banco Solidario started its activities in 1996 with a social mission which focuses on the microfinance segment and vulnerable populations.

Banco Solidario (BS) is one of the leading microfinance players in Ecuador: 48% of its total portfolio is lent to microenterprises for productive purpose (105,881 microloans outstanding with an average loan amount of USD 3.1k). The rest (52%) are inclusive loan products targeting entrepreneurs and low-income populations. BS additionally provides a range of savings products, micro-insurance, traditional and digital payment & transfer facilities, financial education and business development trainings with the aim to improve financial inclusion.

The company is registered as a universal bank under the supervision of the Superintendence of Banks (SB).

Development impacts

  • Local economic growth

    BIO’s investment will be used to grow the microfinance loan portfolio

    Banco Solidario offers a large range of financial products & services - including deposits, financial education and business development trainings (4.5k people trained in 2022).

  • Financial inclusion

    BS developed its products to better cater to the needs of the lower-income strata of the population and marginalized groups, through
    (i) small loans (one of the lowest average loan sizes in the Ecuadorian financial sector, with 88% of its loans offered being below GDP per capita,
    (ii) Quick disbursements,
    (iii) Adapted repayment periods and
    (iv) Inclusive products for marginalised groups lacking formalised and stable income and/or credit history e.g. gold-backed microloans to unbanked (12% GLP).

    About 38% of its clients do not cover the basic family basket (USD 707), 50% have household monthly incomes lower than USD 1k and 42% of its new clients in 2021 were previously unbanked.

  • Promotion of ESG best practices

    BS is Smart Campaign Certified (Gold rating) and has an excellent A+ social rating (MFR, 2021), demonstrating a respectful and transparent treatment to its clients, preventing them from entering in over indebtedness.

    BS developed the SoliAmbiental app, a digitised ESMS that is easy to use for loan officers and adapted to the microenterprise segment.

    BS recently launched the project EcoMicro, a tool that evaluates the green aspect of the bank’s agricultural portfolio - currently, more than 10% of the Agriportfolio is rated as green and BS target to reach 20% by the end of the year.

    In 2021, BS was recognized as the fourth-best place to work (companies above 500 employees) in Ecuador by the Institute Great Place to Work.

  • Gender

    BS is eligible to 2X challenge based on 2 criteria: leadership - 46% of women in top management and 49% in upper management - and employment - 62% of its 1440 employees are women. EDGE analysis performed within the bank (2021) shows evidence of overall more dynamic women’s career transitions compared to men (2021).

    55% of the clients are women, although there are no specific product targeting women at the moment despite some positive effect on access to finance for women with 85% of BS’s loans disbursed without requesting for a second signature from the husband/wife.

    BS is subscribed to the United Nations Women’s Empowerment Principles (WEPs) and is part of the Finance Alliance for Women organisation, which promotes the economic empowerment of women and the proper management of financial services for women.

    Following EDGE analysis co-financed by BIO in 2021, BS will work in implementing the key recommendations and continue improving its standards and products towards gender equality.

E&S Impact

Banco Solidario has agreed to
  • Provide training on client protection for the E&S team and loan officers;
  • Provide training on road safety and general security for loan officers;
  • Adopt the EDFI exclusion list.

Situation at the time of investment

  • Banco Solidario has a Sustainability Policy describing their social performance management.
  • They have achieved a Gold Client Protection Certification in 2021. In the same year, they did a social rating, resulting in a score of A+.
  • To manage their internal environmental impact, the institution has an Environmental policy and Environmental Management system. In addition, a basic ESMS Manual was developed in 2021, detailing how the institution analyses E&S risks at client level.
  • The bank is part of the Sustainable finance committee of la Asociación de Bancos del Ecuador and has committed to the “Green Protocol” (an agreement made between 10 Ecuadorian Banks to promote good environmental practices).
  • Banco Solidario has appointed a Sustainability Manager and a full-time Sustainability Coordinator. A Sustainability Committee monitors the institution’s social performance and sustainability initiatives.

Risk Category: Low-risk C

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