1. Cooperation with Banks Opportunity Microcredit România S-P O’Mahony 17 th December 2013 microcredit for small and micro enterprises in Transylvania www.opportunity.ro the website for small and micro entrepreneurs

2. Introduction

3. Vision, Mission and Values Our vision: Our mission: Our strategy: Our core values: is to become the leading social purpose financial institution in Romania. is to provide opportunities for people in financially challenged situations to transform their lives. is to create and sustain jobs, stimulate small businesses and strengthen communities among the marginalised. commitment to small and micro enterprises, humility, respect, integrity, stewardship and transformation. Introduction

4. www.opportunity.ro the website for small and micro entrepreneurs Opportunity Microcredit Romania (OMRO) is a regulated non bank financial institution in the microfinance sector in Romania, member of the Opportunity International (OI) Network Established by OI in 1995 as an NGO, Izvor Foundation Owners are not-for-profit entities committed to creating sustainable enterprises 45 staff in 9 cities in Transylvania Who are we ? Introduction

5. www.opportunity.ro the website for small and micro entrepreneurs Due to the financial burden of heavy regulation from 2007, the Company embarked on the inevitable next step of becoming a bank The aspiration to become a bank influenced the strategic direction in a negative way as the growth required was unsustainable The SME market became important, competing head on with banks for clients and staff and selling larger loans for longer terms This wrong direction was further accentuated by the impact of the global crisis in Romania in 2009 Net result was record of 33% for PAR>30d Lost Years Introduction

6. Establishment of Good Governance as part of turnround story Re-engagement with Opportunity International Network to provide models for best practice in all aspects of microfinance best practice (especially Audit, Risk, Finance, SPM) Introduction of Board Governance Handbook including process to avoid conflicts of interest Extensive, standardised Board Reporting documents Creation of Executive Board, with full participation in Board Meetings Transparency Training in application of values by the Board Annual Board Retreat Activity based Annual Report, rather than financially driven

7. www.opportunity.ro the website for small and micro entrepreneurs Why Good Governance Matters ? If you don’t have it (good governance) you might be lucky, but the chances are mistakes will be made, which is costly, if not catastrophic Even great executives need to be accountable because they can be subjective Transparency is critical, so the Board can contribute but not be overwhelmed Independence from Shareholder interest important, but balanced by appropriate protection of shareholder value Access to global best practice (“don’t reinvent the wheel” / “this is not applicable in our country/context”) Good Governance Matters

8. www.opportunity.ro the website for small and micro entrepreneurs Keys to Improving Governance Good Governance Matters MeasureRationale Choose your minority shareholders right ! Shareholders nominate Board Members & these may not be aligned to the purpose/values of the MFI Ensure fair remuneration of Board Members Avoids passivity Board training criticalThe best professionals on a Board can have a tendency to micro-manage Choose the right Board ChairCritical to minimising the impact of points above Board orientation towards MFIBoard Members have a tendency to see the bad in everything, which can demotivate management Construct governance process (ie Handbook, Approval Limits, Conflict of Interest, Self Assessment) An essential foundation to provide the framework for high performance