1. Microfinance in Brazil a commercial bank view Global Conference on Access to Finance World Bank Headquarters, Washington, DC May 30-31, 2006

2. Banco ABN AMRO Real’s Mission

3. Banco ABN AMRO Real’s Model

4. Why Microfinance? To enhance social and economic development, contributing to income generation and employment, through one of the Bank’s Core Businesses - credit To stimulate empowerment, improving life quality of clients and of their neighborhood, and to reinforce our positioning in Sustainable Development To develop a sustainable new business opportunity To use and apply already existing expertise in Microfinance by partnering with a field leader – Acción International

5. Our Mission “To improve the flow of financial resources in the country by offering the lower income population access to credit that will enable the creation and growth of small businesses, generating (self) employment and income to make life projects come true”

6. First international commercial bank in Microfinance in Brazil Initiative developed in-house by multidisciplinary team First microfinance venture in São Paulo by a commercial bank Since the beginning of its operations in August 2002 Real Microcrédito has: Had a capital allocation of USD 2.2 million Made 18,400 loans totaling more than USD 13.5 million Present portfolio of 8,000 clients totaling USD 5.3 million Over 40% of loans below five hundred dollars Forty eight percent of loans to women Created 90 direct jobs Real Microcrédito: a pioneer All data as of March 2006

7. Our Operations(1) Banco ABN AMRO REAL Capital provider (97%) Funding and booking for lending activities Management team provider Managerial support (HR, Legal, Accounting, Marketing) Full infrastructure support Access to and units within branch network Real Microcrédito (Service company) Strategy definition Client identification and evaluation Hiring of commercial and operational team Coordination of credit process from approval through collection

8. Lending - Individual or Solidarity Groups Working capital Fixed asset financing Home and business improvement Credit agents: Hired in/outside the communities Trained in basic skills (analysis, sales, methodology) Role: from the approval to the final repayment of the loan, and business advisory Acción International: Capital provider (3%) technical assistance partner project implementation and portfolio growth transfer of methodology Our Operations(2)

9. Challenges and Opportunities Challenges Overcome skepticism of poor people Make “microfinance” known among microbusi- nesses Reduce poverty by financing productive activities Overcome high rate of negative credit records Provide adequate financing for the needs of microentre- preneurs Opportunities Develop a sustainable business and a new client niche for the bank Change the perception of poor people that banks and credit are for the rich Foster entrepreneurship in poor communities Build self esteem and stimulate the poor to build their own way out of poverty

10. Key Learning Points Personal and business life is totally integrated: products to meet both High financial needs, low trust in banks, competitive environment: create reliable connections in the communities Bank’s infrastructure is important: select those aspects that facilitate our operation; use synergy with branch network In the poorer communities solidarity credits are more efficient: have adequate products for the different needs of clients Credit agents are key to success: from approval to final repayment of the loan, over business advisory High rates of negative credit records: set flexible rules that do not compromise repayment Accion’s experience cannot be replicated in full: learn and develop a local model

11. Next Steps 2006 -Continue expansion and consolidation in São Paulo, Campinas and Rio de Janeiro State 2006 -To reach operational breakeven by the end of first half 2006 2006 -Develop indicators to measure social and environmental impacts on the communities serviced 2006 -Expand to other metropolitan areas in Brazil (mainly Northeast) using the bank’s branches as a foothold and support 2006/2007 - Development and implementation of credit scoring and automation - palmtop - for the microcredit business