Mexican microlender in deal with Oxxo corner stores
MEXICO CITY, June 3 (Reuters) - Compartamos, a Mexican bank that makes small loans to family businesses, said on Tuesday it reached a deal to let clients make their debt payments through Oxxo corner stores, owned by drinks company Femsa.
Compartamos (COMPARTO.MX), whose $400 million stock market listing last year raised eyebrows among microlending traditionalists, has nearly 1 million clients but does not handle cash.
The bank uses checks and money orders to extend loans to clients, who until now have paid down their credits by depositing money once a week to Compartamos' accounts in traditional banks such as Citigroup Inc (C.N) or Banco Santander SA (SAN.MC).
Femsa (FMSAUBD.MX) (FMX.N) has reached other deals recently to increase traffic at its more than 5,500 Oxxo stores, such as selling fresh coffee and credit on behalf of mobile telephone companies.
Not touching cash has let Compartamos avoid investing in expensive infrastructure and has helped make it one of Mexico's most profitable banks, measured by return on equity.
Compartamos' clients normally have one- or two-person businesses, such as selling clothing at a market stall. They typically borrow around $450, at a 75 percent annual interest rate, to buy supplies or capital, such as a sewing machine or tables.
Critics say the bank's decision to go public last year moves too far from the goal of poverty reduction, the original purpose of microfinance organizations.
Mexico's big banks focus on a small but growing middle class, although they are beginning to design consumer products for the larger segment of lower-income clients. (Reporting by Noel Randewich; Editing by Andre Grenon)
