Microfinance consolidation: Advantages and
18th MFC Annual Conference
5-6 Novemebr 2015, Prague, Czech Republic
Mr. Braco Erceg, MCC “MIKROFIN“, Bosnia and Herzegovina
10 years of maturity of the sector.
10-12 well performing MFIs. None of them countywide MFI.
Legal form: NGOs supervised by the MoF.
Some 30 banks.
Around 4 million people.
Week economy.
New Law on MFIs to be adopted. Banking Agency to take
over the regulation and supervision of the sector.
• General issue for all the FIs: Is there market for everyone
and what to do next?
Why consolidaton in Bosnia and Herzegovina
and why in 2006?
• Mikrofin was looking for the new markets and country wide presence.
• Benefit was looking for a larger structure and more secure future.
• Together we had an ambition to create largest and countrywide MFI
and to become market leader in the upcoming years.
• At the time of merger Mikrofin had: Assets of around 56 M Euros;
loan portfolio of around 49 M Euros; 36 Branches.
• Benefit had: Assets of around 11 M Euros; loan portfolio of around
10 M Euros; 25 Branches.
• At the time of merger Mikrofin was around 5 times bigger than Benefit
in terms of the assets and loan portfolio.
• Parallel Branches only in two locations (total 61 Branch). Mikrofin
today has 69 Branches.
• Acquisition would, perhaps, better describe the nature of the transaction.
It was difficult for Benefit to accept. Key compromise #1.
MFIs Mikrofin and Benefit has decided to
merge. Why? And why merger, why not
• Board approvals, all documents preparation and delivery to the
authorities. No formal approvals needed from the MoF.
• Agreement to continue working as Mikrofin.
• Appointment of the new BoD (5 members; one from former Benefit BoD
and four from former Mikrofin BoD).
• Court registration of the new entity in February 2007. Timeframe:
around 12 months for “technical“ aspects.
• Integration of MIS, loan books, accounting, network..
• Both MFIs participated in the implementation of the WB microfinance
projects in B&H (LIP I&II). Had similar systems, policies, procedures,
• No major problems.
• Timeframe: around next 12 months. First audited FS of the “new
Mikrofin“ issued as of 31st December 2007.
“Technical“ aspects of merger
• We created largest and country wide MFI. Good market
position. Promising future.
• Mikrofin is today still the largest MFI in B&H and eight
times in a row ranked for the best MFI in the country
(from 2007 to 2014).
• Few more mergers after 2006.
• Today we have some 5-6 MFIs which cover more than 90% of
the microfinance market. Three largest ones cover around 70%
(EKI, Mikrofin and Partner).
• Two bankruptcies of the larger MFIs over the last five years.
Substantial aspects of merger – what we
• Most of the staff related issues. You can easily integrate MIS, portfolio,
accounting. Its different with people!!
• Different institutional cultures. Benefit was more like “one man show“ MFI in
terms of management and decision making while Mikrofin was more
• Most of the staff of Mikrofin was in its thirties or less while most of the staff of
Benefit was in its fifties.
• Most of the original staff of Benefit left new MFI over time.
• The # 1challenge: What to do with the former top management of Benefit?
At some point of time you have two CEOs, two CFOs, two COOs..
• We kept the original positons for some time and being responsible for
management of the former Benefit network. Key compromise # 2.
• This concept has been abandoned later. None of the former top managers of
Benefit was in Mikrofin after 2010.
What have been the key challenges
• Don't be afraid of consolidation! If done in time and
good planned can create a chain of future values.
• Don't think individually! Think institutionally and even
more important think about the benefits your clients
will have in the future.
• Don't compromise. The price you will pay later will be
only higher!
• Good luck!!
Conclusions and Recommendations
Mr. Braco Erceg
Investor Relations Manager
Phone: + 387 51 230-343
E-mail: [email protected]
Web: [email protected]
Thank you!!

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