EFSE Annual Meeting 2008: Financial sector players call for intensified and joint action to promote responsible finance.

Frankfurt am Main, May 13, 2008 – The promotion of responsible finance practices was the key topic addressed during the 2nd Annual Meeting of the European Fund for Southeast Europe (EFSE) that took place from 6-8 May 2008 in Sibiu, Romania. The 200 participants included international representatives from development finance institutions, donor agencies, international organisations, microfinance institutions, commercial banks, as well as institutional investors, academics, and policymakers. During the 2nd Annual Meeting, participants expressed their concern regarding ambiguous lending practices and irresponsible service provisioning of financial institutions that may translate into increasing levels of overindebtedness of end borrowers. They called for intensified and joint action of all stakeholders in the financial industry to promote responsible finance in order to prevent negative effects on the stability of financial systems and economies in both developed and emerging countries.

The closing panel discussion concluded that all stakeholders in the financial sector, including shareholders, financial institutions, governments and clients alike, have the responsibility to promote responsible finance practices. Shareholders in financial institutions play an important role as they can bring the pressure needed to affect change. Government authorities are also instrumental in establishing appropriate values. Moreover, the development of proper corporate governance rules can ensure that managers in financial institutions act responsibly. However, in addition to regulators and shareholders, clients also have the responsibility to look into what financial institutions are doing. The challenge remains to take the concept of Responsible Finance to the mainstream and to work towards the definition of corresponding principles and practices.

As a responsible investor EFSE will continue to promote responsible lending practices in the target region and urge partner lending institutions to provide their services in a responsible manner, said Dr. Klaus Glaubitt, Chairman of EFSEs Board of Directors. Through the EFSE Development Facility, the Fund offers complementary non-financial services to qualified partner lending institutions, in addition to its investments. These include technical assistance, consulting and training services to develop and implement responsible lending practices and prudent client advisory practices. Among the projects supported by the EFSE Development Facility, was the production of an educational booklet on financial literacy and transparency, which was circulated as a supplement to a daily newspaper with one of the highest circulation levels in Serbia. Recently, EFSEs Development Facility also financed a study in Moldova on financial literacy and education. Furthermore, there have been training programmes for various microcredit organisations to incorporate social and environmental aspects in credit risk management.

Besides the topic of Responsible Finance, panel discussions, presentations and case studies also covered capital market developments in Southeast Europe, future market opportunities, new products, as well as the integration/transformation of microcredit organisations.

About the European Fund for Southeast Europe:
EFSE is the largest microfinance investment fund worldwide. Aimed at fostering economic development and prosperity in Southeast Europe, the Fund offers long-term funding instruments to local financial institutions in the region for on-lending to micro and small enterprises as well as to low-income private households for housing purposes. In support of the Funds financial investment activities, the EFSE Development Facility organises and cofinances technical assistance and training for capacity building of partner lending institutions. The Fund is a public-private partnership. Its capital base is jointly constituted by donors, development finance institutions and private institutional investors. The Funds shareholders include the German Ministry for Economic Cooperation and Development (BMZ), KfW, EIF (European Investment Fund as trustee for the European Commission), International Finance Corporation (IFC), Netherlands Development Finance Company (FMO), European Bank for Reconstruction and Development (EBRD), Swiss Agency for Development and Cooperation (SDC), European Investment Bank (EIB), Austrian Development Agency (ADA), Danish International Development Agency (DANIDA), and Frankfurt School of Finance & Management. KfW is the Initiator and Promoter of the Fund. The Fund Manager is Oppenheim Asset Management Services. Frankfurt School of Finance & Management acts as advisor and supports the fund management. The Fund operates in Bosnia and Herzegovina, Romania, Serbia, Kosovo, Montenegro, Moldova, FYR Macedonia, Albania and Bulgaria, and is expected to start operations in Ukraine within the coming months. For more information, please visit www.efse.lu.

Media contacts

EFSE Mr. Samir Djikić, Communications Manager Tel: +49 (0)69 9778 7650-26 E-mail: press@efse.lu