Center for Social Innovation

Banco Compartamos was formed in 1990 as a non-governmental organization to aid the poor in rural areas of Chiapas and Oaxaca, Mexico, by providing microloans. In 2001, Carlos Danel and Carlos Labarthe took the organization private, and then in 2007 took Compartamos public in an IPO valued at $1.53 billion. Compartamos executives received $150 million of the $450 million in proceeds. Banco Compartamos became one of Mexico’s most successful banks, with an average return on equity of 40 percent.

Critics, however, charged that Compartamos managed its business to benefit its investors, not its borrowers, and did a disservice to the world of microfinance. This case briefly explores Banco Compartamos and its approache to microfinance.