Commercial International Bank Focuses on SMEs

Global Finance, Jan 2005

Working with IFC to improve services and access to small businesses

In response to the growing contribution of small and medium-size Enterprises (SMEs) to the Egyptian economy, Commercial International Bank (CIB), Egypt's largest and most profitable private bank, is launching a new finance operation aimed at the SME sector.

CIB, Egypt's fifth-largest financial institution in terms of asset size, has identified significant business opportunities within the SME sector despite the inherent risk management challenges this sector represents.

Small and medium enterprises comprise much of the local economy and represent a vast and largely untapped market for financial institutions in Egypt and other developing countries. Although often plagued by weak financial reporting and other issues that cause leading local banks to perceive them as high-risk, many commercial banks around the world have managed to overcome these obstacles with proven models of profitable and effective small business lending.

In September 2003, the International Finance Corporation (IFC) signed a major advisory service mandate with CIB to assist it in developing retail and small and medium enterprise finance operations. The aim of the project is to help CIB develop and implement relevant organizational structures, information technology systems and products that will enable it to areach its objectives in terms of the growth and quality of its retail and small business operations over the next five years.

The project will also take advantage of CIBs extensive client base and its excellent relationships with its customers in order to gain access to their SME suppliers and buyers and therefore maximize profitability.

Risk management techniques and risk assessment models have also been introduced for the first time by CIB. The Credit Scoring Models for the consumer and SME Risk Rating Tool are essential components of an IRB (internal ratingbased approach) credit rating system. A new Consumer Credit and SME Credit Policy Guide are also under development in order to ensure compliance with the Basel II regulations.

To support its SME lending operations, CIB has also decided to install Temenos T24 to handle its new Credit Management System. This provides a total solution, including hardware, software, implementation service and interfacing. The system will run on the latest IBM servers, will be interfaced to CIBs existing systems and will handle the bank's new lending mechanisms for SMEs.

CIB's new SME finance operation will provide it with the opportunity to contribute to the overall growth of the Egyptian economy and to the development of the retail and SME sector and will assist the bank with the diversification of its product portfolio and sources of profit.

Contact Information:

Strategic Relations and Finance

Programs Group

Tel: (202) 570-2679

Fax: (202) 571-2362

Email: maha.ragab@cibeg.com