INSTITUTIONS

Increased direct and indirect presence of commercial banks

This increase has been encouraged by the entry of the holding company Procredit in almost all the countries of Eastern Europe, of Italian-based Banca Intesa in Russia and of Austrian-based Raiffeisen Bank with financial deepening first in Serbia and subsequently elsewhere through stockholdings in numerous institutions in various countries of eastern Europe.

In Central Asia the microfinance sector has a shorter history, characterised by a small number of large organisations and a great many smaller ones, particularly cooperative institutions, with most of the sector’s portfolio concentrated in around 30 organisations. The high profit margins obtained (this sub-region is considered to have the highest profitability levels in the world, though its efficiency indicators show much room for improvement) have helped to create the following scenario as regards credit numbers: NBFI 61%, commercial banks 25% and cooperative institutions 14%.

The actions of the EBRD in support of the deepening of commercial banking in countries which formerly belonged to the USSR, such as Russia, the Ukraine, Georgia and the Central Asian republics, have helped to multiply the number of these banks in the microfinance market. In some countries, such as Russia or Kazakhstan, commercial banking is the dominant form in the market.

Cooperative institutions remain important

In Russia, the Caucasus and the CIS there is a strong tradition of cooperativism, and as a result cooperative institutions outnumber other types of organisation there, and are a common alternative. Until recently the cooperative was the only permitted legal form for organisations that acted as intermediaries with microenterprises in some countries, such as Croatia.

No significant presence of microcredit NGOs

By contrast with other regions, there is no significant presence of NGOs engaged in microcredit operations in the countries of this geographical area. Numerous NGOs have been identified, but they are small. The political systems from which these countries have emerged may be determinant in this.