The award for the region’s best bank for corporate responsibility recognizes the holistic commitment to responsible banking of SME lender ProCredit Group.
Founded in 2003 to provide finance to smaller and micro enterprises across southeastern and eastern Europe, the German group subsequently adapted its strategy to focus on the core SME segment, which accounts for nearly three-quarters of employment and 63% of value added in its countries of operation.
The rationale for the shift was partly commercial – as well as being high-risk, the micro segment was becoming overbanked – but also reflected the desire of ProCredit’s shareholders and management to support the real economy and avoid encouraging over-indebtedness among financially unsophisticated populations.
For the same reason, the group made the decision to exit the retail lending market that has proved so lucrative for other CEE banks in recent years. Loans to SMEs today make up 94% of ProCredit’s portfolio, with housing loans accounting for nearly all of the remainder.
In the SME segment, ProCredit has taken a customer-centric approach to lending. While technology is used in the credit process, the group prioritizes client contact and relationships. It is also committed to avoiding pro-cyclical lending by encouraging clients to take on more risk during economic upturns.
Also integrated into the credit process are ESG factors. ProCredit is committed to promoting sustainability in its 10 countries of operation in CEE – which include Ukraine and Georgia, as well as markets across the Balkans – and all clients are assessed for their environmental and social impact.
The group has a comprehensive exclusion list that includes underground mining, bitcoin-related services and – since last year – the production of single-use plastics.
Green lending is also a priority for ProCredit and last year the product was a major driver of the group’s impressive overall loan growth of 10%. Its green portfolio expanded by 24% and by the end of December accounted for 19% of all outstanding loans.
ProCredit also made further progress towards carbon neutrality last year, achieving a 46% reduction in CO₂ emissions.
Another unique aspect of ProCredit’s responsible banking ethos is its approach to human resources. Not only does the group score highly on gender equality, with 48% of top management positions held by women at the end of 2020, but it also rejects many of the tenets of modern banking.
To avoid what supervisory board chairman Claus-Peter Zeitinger describes as “the chief executive fetish,” responsibility for the management of each of the group’s banks is held by a joint board of three to five people.
Bonuses are banned on the basis that staff should be properly rewarded through their base salary and incentivized by a rewarding working environment.
In addition, all senior managers and a high proportion of other employees undertake multi-year training programmes at an academy in Germany, where they study history, religion, ethics and philosophy, as well as banking, in order to instil self-awareness, humility and intellectual curiosity.
