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Wednesday, September 19, 2007

Deutsche Bank AG said Wednesday that it has set up an investment portfolio for micro-credit markets, a move aimed at making very small loans available to people in developing countries.
FRANKFURT, Germany: Deutsche Bank AG said Wednesday that it has set up an investment portfolio for micro-credit markets, a move aimed at making very small loans available to people in developing countries.

The Frankfurt-based bank, Germany’s biggest, said the ?60 million (US$84 million) in bonds in the db Microfinance Invest Nr 1 placement would be used by 21 microfinance institutes in 15 countries to provide at least 120,000 small loans to tiny businesses, often one- or two-person operations.

The countries concerned are Peru, Kazakhstan, Georgia, Nigeria, Honduras, El Salvador, Bosnia, Tajikistan, Colombia, Ecuador, Azerbaijan, Kenya, Kyrgyzstan, Nicaragua and the Philippines.

Micro-credit loans have been in existence for years, and gained widespread acceptance last year when Bangladeshi economist Muhammad Yunus and the Grameen Bank he founded won the Nobel Peace Prize.

Yunus employed the simple yet revolutionary idea of loaning tiny sums of money to poor people to start businesses in an effort to escape poverty.

The notion has been spreading globally since the early 1970s, and has seen more than 100 million take advantage of the cheap amounts to buy livestock or chicken to make money. In recent years, money for a single cell phone has been enough to start thriving enterprises in isolated villages without phone lines from East Asia to West Africa.

Deutsche Bank said it placed ?36 million (US$50 million) of the portfolio with private investors, foundations and churches as senior loans with an annual interest rate of 6 percent. The remaining amount was posted elsewhere in the markets.

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