2 nd European Microfinance Conference 2005

1. 2nd European Microfinance Conference 2005 WORKSHOP « Transparency: Agreement on basic benchmarks in Europe? » Barcelona 28 October 2005

2. ShoreBank Advisory Services International ShoreBank Advisory Services – InternationalBenchmarking October 2005

3. ShoreBank Corporation • Largest development finance institution in U.S. • Founded in 1973 to maintain banking services and arrest decline in Chicago community • Has grown to $1.7 billion in assets • Bank achieves returns equal or superior to banks of comparable size that do not have a community banking focus • Managed to “triple bottom line” of development impacts, conservation and profitability • Core competencies in • Financing residential real estate rehabilitation • Small business lending • Promoting wealth accumulation for lower-income families 1

4. ShoreBank’s International Footprint Led to Creation of SASI • SASI disseminates ShoreBank’s unique experience internationally • Facilitates access to capital through the private sector • Understands the specific requirements of communities with constricted access to capital. • Creates relationships with entrepreneurs and businesspeople in developing communities by being part of that community Our International consulting business began when Muhammad Yunis of Grameen Bank asked us to go to Bangladesh and work with him on risk management and lending in disadvantaged communities 2

5. ShoreBank’s International Organization ShoreBank Corp (Holding Company) ShoreBank Advisory Services (Consulting) ShoreCap International (Investment Fund) Investment ShoreBank Advisory Services UK Ltd ShoreCap Exchange (TA Facilitator)501(c)3 Technical assistance ShoreBank Advisory Services Mexico S.A. de C.V. Shore Overseas Azerbaijan (Non-Bank Finance Co) 3

6. CGAP Donor Guidelines • Outreach – How many clients are being served? • Depth of outreach – How poor are the clients? • Portfolio quality – How well is the financial institution collecting its loans? • Financial sustainability – ability to maintain and expand without continued subsidized donor funds? • Efficiency – Is the financial institution providing services at the lowest possible cost to client? 4

7. Developing vs. Developed • Interesting to note difference • International Donors (DFID, KfW, FMO, AFD, EBRD) require performance based reporting and link further funding to assessments. • The consultants and investors from Europe into developing microfinance do the same (IPC, Bank Akademie, Planet Finance, ShoreCap, Oikocredit) • Yet US and UK CDFIs have taken longer to provide similar levels of reporting and benchmarking • Donor/Funders in developed countries have taken a gentler approach. NCCA took 20 years to introduce CARS. 5

8. Road Map to Benchmarking • Drawing from CGAP and Developing MFI Lessons: • Funder/Donor Requires Reporting • Coupled with capacity building, information used by MFI to improve operations • After initial experience, becomes tool for fundraising and marketing • Becomes a must within sector • Benchmarking and relative performance is feasible Funder Driven Reporting Requirement Info used to improve operations Becomes tool for fundraising & marketing Key ratios & Reports a Sector norm Benchmarking feasible 6

9. Challenges • Volunteer Boards • Funders/Donors without skills, capacity, interest • Inadequate Systems • Small and stretched management teams at MFIs • Associations lack leverage 7

10. Questionnaire • What indicators do you currently report? • Provide definitions for each • Who requires these indicators – management, board, stakeholders, donor/funders? • How are these indicators used? • What challenges do you face in reporting and tracking indicators? 8

11. Possible Indicators: 9