The ProCredit group is made up of banks that have specialised in small and medium-sized enterprises in transition economies. Our business model consists of the core activities of traditional banking business. We are active in Eastern Europe, South Eastern Europe, South America and Germany. The superordinated company of the group is ProCredit Holding AG & Co. KGaA, based in Frankfurt am Main, hereinafter referred to as ProCredit Holding. Our corporate strategy and our activities are guided by the objective of making a sustainable contribution to economic, social and environmental development in our countries of operation. ProCredit’s business strategy is based on the formation of long-term relationships with our clients and staff and on careful risk management. The group does not engage in speculative lines of business. With our business policies focused on sustainability, we have been able to record profits each year, achieving steady performance even in times of economic volatility. Through our collaboration with SMEs, we aim to contribute to creating jobs, enhancing capacity for innovation and raising ecological and social awareness. In this regard, we concentrate on enterprises with stable, formalised structures, and attach particular importance to supporting local production, especially in agriculture. Our SME clients value ProCredit as an equal partner that understands their needs and the unique challenges they face. We offer a broad range of transparent financial services. We promote a savings culture and improve the financial stability of our clients. Lending to private clients is limited, and serves mainly to enable them to acquire and maintain long-lasting assets, as is the case, for example, with energy-efficient home improvement loans. As a banking group with an ethically oriented corporate mission, we not only attach great importance to ensuring that our institutions are not used as a vehicle for money laundering, terrorist financing or other illegal activities, but equally forcefully we combat fraud risks at all ProCredit banks. To ensure compliance with these standards, a uniform framework is applied at all banks which is sometimes even stricter than the German, European and local regulations. Moreover, our employees are instructed to counteract the risks of money laundering and fraud even before they occur, based on the establishment of long-term client relationships and a culture of open and transparent communication. The ProCredit group has a Code of Conduct which is binding on all staff members. The Code of Conduct builds upon the fundamental principles of human dignity and emphasises our strong commitment to show mutual respect for each other and act responsibly. It aims to serve the staff as an ethical compass for their behaviour and their decisions both within and outside the company. The Code of Conduct also contains an Exclusion List specifying business practices that are harmful from a social, moral or ecological standpoint or that are not in compliance with usual health and safety regulations, and must therefore not be financed by the ProCredit banks. The ProCredit group applies an intensive and comprehensive staff selection procedure and runs a structured, group-wide training programme in its own training centres. The aim is to ensure that our staff members meet the high standards we expect of them, expectations which go far beyond mere professional skills, and to assure compliance with our ethical standards. Our local and inter-regional trainings cover not only business management and financial subjects, but also historical, philosophical, ethical and socio-political topics. We offer our staff long-term career prospects based on a transparent, standardised group-wide salary and promotion structure. This also includes regular feedback talks and performance assessments, as well as participation in our multi-level continuing professional development programmes. The ecological and social sustainability of the economic development we support is a particularly important part of our development policy vision. In this context, environmental protection plays an especially prominent role. The ProCredit group has developed a comprehensive environmental management system. This consists of internal measures aimed at minimising the negative impact of our banks on the environment, such as reducing our own consumption of energy and materials, and our waste production. In addition, as a standard part of our business relationships with our clients, we conduct an analysis of the environmental impact of their activities, with a view to uncovering evidence of environmental damage, noise pollution and socially unacceptable working conditions. Furthermore, we encourage our clients to invest in energy efficiency, renewable energy and environmentally friendly technologies.
The customer base of the ProCredit banks includes both business and private clients. We provide our clients with a comprehensive range of banking services in the areas of financing, deposits and payment transactions. The focus on small and medium enterprises is reflected in our relatively high proportion of business clients. At the end of the financial year, they made up 92% of the loan portfolio. In serving private clients, we concentrate on deposit services and payment transactions, with lending playing only a strongly subordinated role. Most of these loans are mortgage and home improvement loans. From development, risk and efficiency perspectives, we value clients with a solid business model. This includes the organisation of the business as well as the contributions made to its employees and to society as a whole. These businesses play an important role in the establishment of an SME sector and have an important impact on the development and modernisation of economies. Our relationships with business clients are based on a good understanding of the respective enterprise and its business processes as well as the specific requirements associated with it. The successful long-term business relationships which we strive for with our customers are based on the high-quality individual advice provided by our client advisers. This involves our business client advisers making regular visits to customers at their premises in order to analyse the clients’ business situation and risk profile and to provide them with comprehensive advice. We strive to become their “house bank”, offering them the full range of financial services from a single source and focusing flexibly and individually on their specific needs in order to build up and maintain long-term business relationships. The significance of such services is obvious when one considers the poor standard of financial services that to some extent are being offered to small and medium enterprises in our countries of operation. In addition to our e-banking services, we also offer our business and private clients a modern network of branches where they can perform all financial services involving payment transactions and account management. The majority of ProCredit bank branches are equipped with modern 24-hour self-service areas which positively stand out from the competition in terms of how large, functional and progressive they are. A wide range of transactions can be performed here in a secure and efficient manner.
The ProCredit group is committed to certain principles and values which guide our business operations. These principles are set forth in our Code of Conduct and can be summed up in the following five key qualities:
- Personal integrity and commitment relates to our personal dealings with clients and colleagues
- High professional standards relates to our personal responsibility towards our work and towards the company
- Social responsibility and tolerance relates to business relationships with clients, the prevention of money laundering and respect for the environment
- Open communication relates to dealing with conflicts and the full, fair and constructive exchange of communication both internally and externally
- Transparency relates not only to the content, but also the manner in which information is disseminated The Code of Conduct is closely linked to the daily life of our staff and influences their dealings with clients, colleagues and public authorities.
It describes our responsibility towards colleagues, the institution and society, and demands a high degree of conformity on our own set of values. The Code of Conduct is binding for all employees in the ProCredit group. It does not contain fixed rules and instructions on how to behave in specific circumstances. Instead, it describes the principles which guide the behaviour of our staff members in individual situations. The Code of Conduct is discussed intensively with members of ProCredit staff and is signed by all ProCredit employees.
ProCredit Holding is the superordinated company of the group, responsible for maintaining an adequate level of equity for the group and ensuring that all reporting, risk management, anti-money laundering and compliance obligations required under German and European banking regulations, and particularly the requirements defined in section 25a of the German Banking Act (“KWG”), are met. At a consolidated level the ProCredit group is supervised by the German financial supervisory authorities (BaFin and Bundesbank). The Management and selected management-level staff of ProCredit Holding are members of the supervisory boards of the local ProCredit banks, and are thus involved in all strategic business processes. ProCredit Holding plays an important role in determining the group’s human resources policies and in the development and delivery of curricula in the ProCredit academies. All managers of ProCredit banks must graduate from these academies. Moreover, ProCredit Holding sets the overall policy guidelines and standards regarding the material areas of banking operations in order to ensure that appropriate organisational structures and processes are in place in the ProCredit banks. These guidelines and standards are supplemented by the exchange and dissemination of best practices at seminars, workshops and training sessions on specific topics that ProCredit Holding holds on a regular basis. Optimal IT solutions are a central part of implementing the business and risk strategies of the group. Quipu GmbH, a 100% owned subsidiary of ProCredit Holding, develops software solutions especially for the ProCredit group. In close collaboration, the systems used in connection with client operations, treasury functions, reporting and accounting are developed and implemented by Quipu. The IT and software development priorities are set in the Group IT Strategy and approved by the Management of ProCredit Holding. Furthermore, the ProCredit Bank in Germany supports the group by assuming a central role in the group treasury function and by providing funding opportunities to the ProCredit banks. It also offers a number of the ProCredit banks in Eastern Europe the possibility of co-financing for medium-sized business clients. In Germany, it offers clients online savings facilities and is an interesting partner for German companies with business relationships in our countries of operation. In addition to financing and accounts, the ProCredit Bank in Germany offers international payment transactions at attractive conditions, not only between our countries of operation but also to other countries. The ProCredit group divides its business operations into regional segments. The banks are split into the following four regions:*
- South Eastern Europe, accounting for 44.8% of the group’s total assets, consisting of seven banks in Balkan countries: Albania, Bosnia and Herzegovina, Bulgaria, Kosovo, Macedonia, Romania and Serbia
- Eastern Europe, accounting for 12.5% of the group’s total assets, with three banks located in countries currently or formerly belonging to the Commonwealth of Independent States (CIS): Georgia, Moldova and Ukraine
- South America, accounting for 15.6% of the group’s total assets, consisting of three banks in: Bolivia, Colombia and Ecuador**
- Germany, accounting for 17.2% of the group’s total assets, consisting of the ProCredit Bank in Germany, ProCredit Holding, Quipu and the ProCredit Academy in Fürth
* Assets from discontinued business operations account for 9.9% of the group’s assets.
** The South America segment also includes the new institution “Administración y Recuperación de Cartera Michoacán S. A” (ARDEC) in Mexico, which is not assigned to a separate segment due to its negligible share (0.2%) of the group’s assets. Part of the loan portfolio of the institution to be sold, ProConfianza S.A. in Mexico, was transferred to ARDEC. This institution will manage the reduction of this unsold part of the loan portfolio.
The shareholders of ProCredit Holding, comprising a number of private and public institutions, are equally as interested in the banks’ developmental impact as in their commercial success. ProCredit Holding has the legal form of a partnership limited by shares. The general partner is ProCredit General Partner AG, a small independent company owned by the core shareholders (IPC GmbH, DOEN, KfW, IFC and ProCredit Staff Invest GmbH & Co. KG). The core shareholders have been guiding the activities of the group since its foundation and make a material contribution to the success of the ProCredit group. The largest single shareholder is IPC GmbH, which holds 18.4% of the shares. IPC GmbH is a consulting firm that has been active in development finance for 35 years, was a key initiator behind the founding of the ProCredit group and continues to have a significant influence on its development. KfW (13.6%), acting on behalf of the German Federal Government and other entities, finances investments and accompanying advisory services in developing countries and emerging economies with the aim of creating sustainable, integrative financial systems. The Dutch DOEN Foundation holds 13.3% of the shares. The DOEN Foundation is financed by the Dutch Postcode, BankGiro and Vrienden lotteries, which aim to promote a green, socially integrative and creative society. IFC, the International Finance Corporation (10.3%) is a member of the World Bank Group and is the world’s largest development institution focused exclusively on the private sector. ProCredit Staff Invest GmbH & Co. KG (5.5%), made up of three associated legal entities, makes it possible for employees of the ProCredit group to invest in the company. The remaining shares are held by an American pension fund, development finance institutions and funds which engage in financial services and development projects in emerging economies and developing countries.