Bob Annibale: ?Banker to the Banker of the Poor?
“Citi was doing this before it was cool,” said Bob Annibale, Global Director of Citi Microfinance, opening his keynote at Columbia’s Social Enterprise Conference last week.
As he provided an overview of Citi’s long history in microfinace, a scan around the room confirms that Annibale and his colleagues started their work before many members of the audience were born. Dating back to a first loan to ACCION in 1982, the Citi Foundation has been providing microfinance lenders financial support, capacity building, financial education, and banking services. After years of philanthropic support, Citi Microfinance was launched in 2005 to focus on commercial relationships with microfinance institutions and microfinance investors.
The most important insight for me was the work Annibale did in “mainstreaming microfinance” into Citi’s global operations. No one is making inspirational videos to highlight these operational processes, but their importance cannot be overstated. Annibale spent time integrating microfinance into Citi’s operations outside of his New York and London-based units to the local branch level. Microfinance guidance was built into credit policies, while risk rating models were created to rate Microfinance Institutions (MFIs). Since Citi Microfinance is a separate entity from the Citi Foundation, Annibale was forced to create a sustainable and commercially viable business. And he has done to just that, while helping to scale microfinance around the world to reach millions of new customers.
Citi’s name is all over the highlight reel of microfinance’s growth in the last decade. In 2004, Citi/Banamex announced the first issuance of peso-denominated investment grade bonds to Banco Compartamos to finance microfinance activities in Mexico. In 2006, Citigroup helped structure the first AAA-rated securitization of microcredit receivables for BRAC in Bangladesh. In 2009, OPIC approved $250 million to expand a joint microfinance-lending program under which OPIC acts as a reinsurer for Citi-originated and funded-local currency loans to MFIs in emerging markets. More information on these achievements can be found on Citi’s site and in Elizabeth Rhyne’s book Microfinance for Bankers and Investors, a text I highly recommend.
Today Citi serves more than 100 MFIs in more than 40 countries. Emphasizing Citi’s global reach and history, Annibale noted “We opened branches in the Congo before we opened any in Connecticut!” (Note: I wasn’t sure it this was a joke and tried unsuccessfully to verify this point). Still, the key to Citi’s success has been partnerships. Citi has leveraged its expertise, capital, products and presence with complementary MFIs that understand local markets and customers. Citi’s strategy has been to work closely with microfinance institutions in local markets, connecting them with commercial financing and to their own domestic local capital markets. As Annibale noted, everything we they do is “run locally, in local currency, in local law, and in local languages.”
Rather than serving as an equity investor in MFIs or managing microfinance investment vehicles (MIVs), Citi offers diversified set of financial services to MFIs, including direct and structured financing, local currency financing and interest rate hedging, and product distribution partnerships with MFIs for savings, remittances, and insurance products. Annibale noted, “If Muhammad Yunus is the ’Banker to the Poor’ then I’m the banker to the banker of the poor.” (If Annibale ever writes a book, he might just have his title).
More recently, Citi has been working to develop and deliver non-credit products, including microinsurance, savings, and remittance services for unbanked customers, Annibale explained. He emphasized the value of working with intermediaries who have an understanding of a client and distribution channels to deliver customized product. Annibale highlighted the well-documented power of mobile and branchless banking services to help the unbanked access these services from Kenya to Brazil. Domestically, Citi is working with Grameen America to help unbanked clients open savings accounts in Queens, NY. In San Francisco, Citi has worked with city officials to create Kindergarten to College where every kindergartner entering public school will open a savings account with an initial seed deposit. (I presume finance class is after naptime and before finger painting).
Leaving the audience with hints of “what’s next” Annibale highlighted his interest in affordable housing, sustainable energy financing, and additional savings products. Given Citi’s track record, we have good reason to keep watching.