This month we have seen the death of a large microfinance institution BANEX (formerly Findesa), once the leading Nicaraguan MFI was forced into liquidation by the Nicaraguan Banking Superintendant (NBS) after defaulting on its creditors. Findesa was founded in 2002 had a spectacular growth and a remarkable track record til early 2008. They were granted the banking licence in September 2008 and changed its name to BANEX. The portfolio quality of Nicaraguan MFIs deteriorated very quickly in the past 2 years due to 1)the negative impact of the global financial crisis especially seen by the decline of remittances from Nicaraguans working in the USA, and 2) the “no pay movement” in the north and central parts of the country. Furthermore, Banex was hit by its product mix with high exposure to small and medium enterprises and high concentration in livestock loans. According to the national newspaper, NBS stated that all 3000 depositors of Banex were paid back in full. For more information please read David Roodman’s excellent writeup and the short note from Microrate
The good news. The long awaited IPO of SKS Microfinance took place and the shares made an impressive debut on the Bombay and National Stock Exchange of India on Aug 16th. The IPO was over 13 times subscribed and the shares closed the first day with an 11% premium. The valuations are much higher than Compartamos and the topic of MFIs going public is actively debated as industry players are divided in their views.