Case Studies in Donor Good Practices No.20: Experienced Consortium Deepens Bulgarian Financial System by Creating ProCredit Bank, a Commercial Bank for Microenterprises

This case study describes how a consortium of international development organizations, a commercial bank, and a microfinance technical-service company worked closely to establish ProCredit Bank Bulgaria (PCBB), a full-service commercial bank for small and micro-enterprises.The study:

• Provides an overview of the creation of PCBB, naming the donor investors that created it, along with the Bulgarian Government and the Bulgarian National Bank;
• Details the activities of the four-member consortium that have contributed significantly to the growth of PCBB;
• Describes the economic scenario in Bulgaria;
• Explains how the consortium responded to market needs by creating a full-service commercial bank.

The study then identifies the following factors that helped in the rapid expansion of PCBB:

• Substantial external financial investment;
• Ability to tap local capital;
• Wide range of products and services;
• Welcoming competition.

It lists the following keys to investor success:

• Common investor vision;
• Shared aversion to competing projects;
• Qualified management;
• Commercial reporting and governance.

The study also lists the future consortium challenges as:

• Obtaining sufficient financing for growth;
• Balancing shareholder goals;
• Deciding on future ownership.

Finally, it concludes by stating that:

• The consortium of donors and investors that established PCBB learned that they could achieve far more together than they could alone;
• Changing a financial system so that it serves micro-entrepreneurs requires bold decision and a wide range of skills, experience and instruments.