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Personal microcredit The French Savings Banks experience

Personal microcredit The French Savings Banks experience. The French Savings Banks: general overview. 17 Caisses d’Epargne 27 million customers 4.3 million cooperative shareholders 4,242 branches Savings* : 335 Mds € Outstanding credit* : 155 Mds € * 31.12.2010. Part of BPCE Group. FNBP.

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Personal microcredit The French Savings Banks experience

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  1. Personal microcreditThe French Savings Banks experience

  2. The French Savings Banks: general overview 17 Caisses d’Epargne 27 million customers 4.3 million cooperative shareholders 4,242 branches Savings* : 335 Mds € Outstanding credit* : 155 Mds € * 31.12.2010

  3. Part of BPCE Group FNBP FNCE

  4. BPCE Group: a strong position in commercial banking and insurance No.1PRIVATE BANK FOR SOCIAL HOUSING, THE LOCAL PUBLIC SECTOR AND THE PUBLIC HEALTH SECTOR No.1BANK FOR SMALL- TO MEDIUM-SIZED COMPANIES, CRAFTSMEN AND FRANCHISEES No.2BANK FOR INDIVIDUAL CUSTOMERS No.2BANK FOR SELF-EMPLOYED PROFESSIONALS AND ENTREPRENEURS No.2BANK FOR REAL ESTATE FINANCING

  5. Financial inclusion: part of the identity of the savings banks

  6. The commitment of French Savings Banks in microfinance nowadays (2010 figures)

  7. What is personal microcredit? • Definition: small loan to people who cannot get it from the banking system and who will be helped to gain or regain control of their personal finances. • Target groups: • low-income people (people on welfare, working poors) • people without credit history (immigrants, young people...) • social difficulties (divorce, illness, isolated people, roms...) • professional difficulties (unemployment, precariourness...) • difficulty to use financial services (illiterate...) • people in suburban areas • Context: • a growing presence of credit in the people's daily life • development of credit-scoring models, with discriminative impacts • Comparison with business microcredit

  8. Our approach • A financial inclusion approach, beyondmicrocredit: • Wide range of products and services • Emphasis on follow-up, both on financial and social aspects • How? • Creation of non-profit institutions called ParcoursConfiance (path towards trust) • Dedicated experienced loan officers • Partnership with non-profit institutions specialized in social mentoring (job search, psychological help…) • Possibility of financial literacy trainings by Finances & Pédagogie • Characteristics of the credit • € 300 to 12 000 – 12 to 60 months • 2 to 3% interest rate • 50% public guarantee (Fonds de CohésionSociale)

  9. Client’s profile Averageage: 40 A slightmajority of women Professional situation: 54% out of work Marital status: 74% single persons

  10. 60% of the financed projects have a professional purpose Microcreditpurpose Q1. Whatdidyou finance withthismicrocredit? Voiture (65%) Equipement(12%) Formation, orientation(7%)

  11. Impact and outcomes • A the end, 76% of clients assert having improved their personal situation in at least one aspect (financial situation, housing, professional situation…).

  12. Focus on professional projects 80% of the beneficiaries with a professional project are or have been employed since the microcredit. Among borrowers who were initially unemployed, half had found work. Situation d'emploi suite au micro-crédit Situation d'emploi à la souscription N=517 projets professionnels

  13. High level of satisfaction Au final, le microcrédit est plébiscité avec 98% de bénéficiaires satisfaits (70% de très satisfaits) Q39. Globalement, êtes-vous satisfait d’avoir eu recours au microcrédit ?

  14. Main conclusions of our experience • Personal microcredit has a proven social utility, not only for access to employment but also for improving financial and social background (with indirect effect on employment). • Customized financial and social follow-up is a key of success, which supposes strong local partnerships with non-profit institutions and local authorities. It represents a cost that should not be under-estimated: cost of the follow-up, but also cost for making partnerships as efficient as possible at a local level. • Public support has been decisive (guarantee fund, communication to the general public, coordination for mutual learning and best practices exchange, regulation, grants…). • Banking models have tangible advantages (pooling of the resources, scale-up...).

  15. Challenges • Scale-up, by improving the sustainability of the model • Analyze long-term returns for the society and for the banks

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