Where we come from: History of ProCredit

1980-1991. Early years of learning

The origins of the ProCredit group lie with IPC GmbH. IPC is a consulting company that since the 1980s has specialised in strengthening financial institutions – some of which were completely inefficient – in developing countries and emerging economies. In its early years, IPC was commissioned by international development organisations to provide consulting services to Latin American savings banks (such as the municipal savings banks in Peru) and also to credit-granting non-governmental organisations (NGOs) in El Salvador, Bolivia and Colombia. Important lessons were learned during this time: If designed properly, lending to very small businesses and microentrepreneurs can be profitable for financial institutions. This could also put an end to very small entrepreneurs’ dependency on informal and exploitative lenders. Then as now, it was important to finance the business activities of successful and reliable entrepreneurs who provide the bulk of employment in developing countries and transition economies and play an essential role in economic development. In contrast, the consumer finance that was practised by many microfinance providers was something that we regarded as counter-productive and potentially dangerous, which is why we rejected it.

A key lesson from these early initiatives was that strong and well-functioning financial institutions are the most important prerequisite for effectively financing small entrepreneurs – on a fair and lasting basis. Because this proved to be possible to only a very limited extent within the organisational structure of NGOs, in the 1990s IPC shifted the focus of its consulting activities towards banks.
Back to top 

1992-1996. Downscaling

In many ways, banks provided more potential for a scalable solution to small business finance. For one thing, the banks were (more or less) regulated, and were therefore assumed to be institutionally stronger than NGOs. For another, due to their deposit business, banks had better access to loanable funds. It was assumed that this would enable a more efficient and fair financial sector to take root in these countries and thus help to promote their overall economic development.

A new type of project, now called “downscaling”, therefore emerged in the early 1990s. This involved advising commercial banks on how to grant loans to very small businesses. Among the largest and most impressive mandates requiring this approach was the country-wide consulting services provided to banks in Russia beginning in 1995. Similar projects were funded across Eastern Europe and in Latin America with varying levels of success. To this day, IPC continues to advise banks with regard to the creation of organisational structures and the optimisation of work processes in the lending business with very small and small companies.

Again a key lesson was that while banks can successfully serve the target group, if this is to occur over the long term and without subsidised consultants, then the right ownership structure and commitment of senior management have to be in place.
Back to top

1997. The first "greenfield" microfinance bank is founded

In 1997, IPC was asked by the IFIs to build with them, as co-owner and as manager, a specialised microfinance bank in Bosnia. And so a new approach to microfinance was born: that of the “greenfield bank”, which was quickly expanded. From the very beginning, the IFIs IFC, KfW, FMO and the EBRD held stakes in the newly founded microfinance banks, and IPC provided the management personnel.

Back to top

1998-2002. ProCredit banks are established

The early success of these institutions created a need to raise capital, particularly for IPC, whose acquisition of equity stakes was an important part of the concept. In this context IMI was founded in 1998. The initial shareholders were IPC and ipc-invest (today’s ProCredit Staff Invest), an investment company set up by IPC employees. Soon after the launch of IMI, further capital was provided by the DOEN Foundation, the Bolivian foundation ProCrédito, and the KfW Group. IMI soon became an important vehicle for communication among shareholders of individual institutions, and so it was natural for other IFIs to take stakes in IMI as well.

Back to top

2003-2005. The ProCredit group takes shape

By 2003, 17 microfinance banks had been established. The shareholders in the individual institutions invariably included IMI and its shareholders IFC, KfW and FMO. Questions about the long-term future of the banks became increasingly important. With the strength of the group and the co-ordinating role of IMI having been recognised, all the banks were re-branded in 2003 with a common corporate identity: ProCredit. In 2005, IMI was renamed ProCredit Holding and ownership of the group was gradually consolidated under this institution.

ProCredit Holding has also strengthened its role in supporting the ProCredit group in key areas such as business development, risk management, audit, IT, human resources and training. Furthermore, the holding company provides on-lending funds to the ProCredit institutions. Since 2004, ProCredit Holding has had an investment grade rating from Fitch Ratings, starting with a BBB- and rising over time to BBB, which was confirmed in 2015.
Back to top

2006-2008. The ProCredit group expands rapidly

Once the group structure had been settled there was more focus on growth. ProCredit Holding established new banks in several countries, including Armenia, Colombia, Honduras, Mexico and Sierra Leone. The balance sheet and staff numbers of the group expanded rapidly in step with the economies and banking sectors of our countries of operation. ProCredit Holding successfully raised the capital needed to underpin this growth. A notable development was the entry of TIAA and the Omidyar-Tufts Fund to the shareholder group in 2006.

2006 saw the establishment of the ProCredit Academies in recognition of the need to systematically develop and integrate our middle and senior managers. Since 2007, ProCredit Holding also put great emphasis on the implementation of risk management and reporting standards necessary for the group to be supervised by German regulatory authorities. These measures led to a significant strengthening of all the institutions and substantially improved the exchange of information in the group.

Back to top

2009-2011. Stability through global crisis as the group moves beyond microfinance

The financial crisis of 2008 led to a serious recession in many countries. After a decade of rapid expansion, growth slowed and the group could focus on institution building and firming up the foundations for long-term financial success. Managing loan portfolio quality and helping our clients to adapt to new macroeconomic conditions was a priority. Already having strong credentials in environmentally conscious lending operations, the group began to disburse green loans. Generally, efficiency and quality became much more important than simply disbursing more loans or opening more accounts. Recognising the central role of technology, ProCredit Holding acquired Quipu in order to fully integrate software development and maintenance into the group. Despite the crisis-like developments in many of its countries of operation, the ProCredit group was able to record a profit each year, and thanks to its solid business model based on diversification and sustainability, was able to do without “rescue packages” of any kind.


Crises are always an opportunity to learn, and after 2008, we implemented a range of changes. We consciously moved beyond our original role as a product-oriented microfinance provider, instead positioning ourselves more clearly as the “Hausbank” for small and medium-sized businesses. In many of our countries of operation, microfinance had been replaced by aggressive lending practices – especially consumer loans – leading to systematic overindebtedness among many borrowers. This represented the exact opposite of our approach to lending, which focuses on sustainability. Furthermore, developments in the economies of many countries had altered the structure of the markets, leading to a decrease in the demand for genuine microenterprise loans.


ProCredit decided to focus more intently than ever on the businesses which provide livelihoods for so many people and which have the potential to create new jobs and drive economic growth. We increased our minimum loan sizes and at the same time we concentrated on the quality and responsibility of the services we provide. We determined that this was where we could make the greatest contribution to financial sector deepening and economic development.
Back to top

2012-Today. Looking to the future

Today, the ProCredit group is well placed for the future. It is achieving good business results despite the difficult macroeconomic environment that still prevails. At a consolidated level the group has been under the supervision of the German banking authorities since 2012. At the same time there has been tremendous investment in institution building and efficiency measures. The group’s sense of identity and purpose is stronger than ever and we continue our efforts to continuously improve our environmental performance. Strengthening and increasing the share of green loans in our portfolio and reducing the negative impact on the environment of our operations is therefore a high priority across the group. In addition, we are more committed than ever to addressing the need for transparent and responsible banking services in the countries in which we operate.

Back to top

Where we come from: History of ProCredit

The ProCredit group is firmly rooted in its pioneering history in development finance. Formally speaking, ProCredit Holding was founded in 1998 as Internationale Micro Investitionen AG (IMI) by the consulting firm IPC and many of that company’s employees via ipc-invest (today’s ProCredit Staff Invest). However, the founding of IMI was only one more stage – albeit a very important one – in the evolution of IPC, the ProCredit partners and their experience with development finance, which goes back more than 30 years. Our business focus develops as our markets develop, but our vision of fair financial sectors has been constant since foundation.

Back to top