Personal microcredit The French Savings Banks experience

2 The French Savings Banks: general overview 17 Caisses d’Epargne 27 million customers 4.3 million cooperative shareholders 4,242 branches Savings* : 335 Mds € Outstanding credit* : 155 Mds € *

Part of BPCE Group 3 FNCEFNBP

BPCE Group: a strong position in commercial banking and insurance 4 No.1 BANK FOR SMALL- TO MEDIUM-SIZED COMPANIES, CRAFTSMEN AND FRANCHISEES No.1 PRIVATE BANK FOR SOCIAL HOUSING, THE LOCAL PUBLIC SECTOR AND THE PUBLIC HEALTH SECTOR No.2 BANK FOR INDIVIDUAL CUSTOMERS No.2 BANK FOR SELF-EMPLOYED PROFESSIONALS AND ENTREPRENEURS No.2 BANK FOR REAL ESTATE FINANCING

Financial inclusion: part of the identity of the savings banks 1818 First savings banks 1834 First School Savings Bank 1953 Creation of Finances & Pédagogie 1989 Supporting the devt of Adie 2005 Parcours Confiance 2008 ECI 5

The commitment of French Savings Banks in microfinance nowadays (2010 figures) 6 Microcredit and related products and services Business microcredit ~35,000 (EU def) ~700 (France Active) Personal microcredit (Parcours Confiance) ~3000 microcredit 37% marketshare Financial literacy Finances & Pédagogie 11,000 hours of training (2009) 55,000 beneficiaries (2009) International Cooperation Ecureuil Coopération Internationale ~ 30 missions per year

What is personal microcredit? 7  Definition: small loan to people who cannot get it from the banking system and who will be helped to gain or regain control of their personal finances.  Target groups: low-income people (people on welfare, working poors) people without credit history (immigrants, young people...) social difficulties (divorce, illness, isolated people, roms...) professional difficulties (unemployment, precariourness...) difficulty to use financial services (illiterate...) people in suburban areas  Context: a growing presence of credit in the people's daily life development of credit-scoring models, with discriminative impacts  Comparison with business microcredit

Our approach  A financial inclusion approach, beyond microcredit: Wide range of products and services Emphasis on follow-up, both on financial and social aspects  How? Creation of non-profit institutions called Parcours Confiance (path towards trust) Dedicated experienced loan officers Partnership with non-profit institutions specialized in social mentoring (job search, psychological help…) Possibility of financial literacy trainings by Finances & Pédagogie  Characteristics of the credit € 300 to – 12 to 60 months 2 to 3% interest rate 50% public guarantee (Fonds de Cohésion Sociale) 8

Client’s profile 9 Marital status: 74% single persons Professional situation: 54% out of work Average age: 40 A slight majority of women

60% of the financed projects have a professional purpose 10 Q1. What did you finance with this microcredit? Voiture (65%) Equipement (12%) Formation, orientation (7%) Microcredit purpose

Impact and outcomes 11  A the end, 76% of clients assert having improved their personal situation in at least one aspect (financial situation, housing, professional situation…).

Focus on professional projects 12 80% of the beneficiaries with a professional project are or have been employed since the microcredit. Among borrowers who were initially unemployed, half had found work. Situation d'emploi suite au micro-crédit N=517 projets professionnels Situation d'emploi à la souscription

High level of satisfaction 13 Au final, le microcrédit est plébiscité avec 98% de bénéficiaires satisfaits (70% de très satisfaits) Q39. Globalement, êtes-vous satisfait d’avoir eu recours au microcrédit ?

Main conclusions of our experience  Personal microcredit has a proven social utility, not only for access to employment but also for improving financial and social background (with indirect effect on employment).  Customized financial and social follow-up is a key of success, which supposes strong local partnerships with non-profit institutions and local authorities. It represents a cost that should not be under-estimated: cost of the follow-up, but also cost for making partnerships as efficient as possible at a local level.  Public support has been decisive (guarantee fund, communication to the general public, coordination for mutual learning and best practices exchange, regulation, grants…).  Banking models have tangible advantages (pooling of the resources, scale-up...). 14

Challenges  Scale-up, by improving the sustainability of the model  Analyze long-term returns for the society and for the banks 15