FOR IMMEDIATE RELEASE June 16, 2008 Contact: Wendy Carhart, 503.443.7354 - or - Joy Portella, 206.437.7885

- $19.4 million from the Bill & Melinda Gates Foundation helps fund project that will make financial services more widely available to the poor

PORTLAND, Ore. - The global relief and development agency Mercy Corps today announced an innovative approach to poverty reduction in Indonesia and the Philippines that will support the growth of the microfinance sector. The project includes the creation of a commercial bank, which will operate as a "bank of banks," to partner with thousands of microfinance institutions (MFIs) and expand access to financial services for Indonesia's poor. These services—offered using innovative platforms like mobile phones—will give the poor access to savings, loans, insurance and other resources to help build financial security.

The "bank of banks" is part of Mercy Corps' project MAXIS (Maximizing Financial Access and Innovation at Scale), which is receiving $19.4 million from the Bill & Melinda Gates Foundation's Financial Services for the Poor initiative. The foundation works with partners to make high-quality, low-cost financial services available in developing countries so the poor can manage life's risks and take advantage of life's opportunities.

By enabling MFIs to provide improved and expanded services, the bank and supporting institutions aim to reach 16 million people in Indonesia by 2011, and, if successful, could ultimately assist 45 million people in Indonesia and the Philippines to move permanently out of poverty over the next ten years.

"Bank of banks is expected to revolutionize the way microfinance works in Indonesia and beyond," said Neal Keny-Guyer, CEO of Mercy Corps. "With support from the Bill & Melinda Gates Foundation, the bank will help make affordable savings, credit and other financial services available to many more poor people. This will help them take hold of their financial futures, and it will have a profound and lasting impact on their lives."

The Gates Foundation grant will also fund the growth of MFIs that primarily work with poor clients, and build the range of innovative financial services through the support of the Microfinance Innovation Center for Resources and Alternatives (MICRA). MICRA, established by Mercy Corps in 2006, is an Indonesian foundation that provides technical assistance, product development assistance, and research and ratings to MFIs. MICRA will expand its services to the Philippines in 2008.

The Indonesian microfinance sector is one of the world's largest, with more than 50,000 MFIs. Yet, the sector is fractured and poverty remains high, with nearly half of the population living on less than $2 a day. While MFIs currently serve 50 million low-income Indonesians, 40 million more still lack access to any financial services.

Two key factors prevent expanded MFI outreach to Indonesia's poor. First, the majority of Indonesian MFIs lack sufficient access to capital and can only provide the most basic banking services. Second, most poor Indonesians are out of reach of the formal financial sector because they live in underserved areas or are considered high-risk.

The partnership of the bank and MICRA will help overcome these challenges by building the scope and efficiency of the Indonesian microfinance sector, and by providing sustainable flows of capital. MFIs will have access to state-of-the-art technology solutions to share information, offer new innovative products, and increase efficiency and transparency.

The bank will enable MFIs to provide diversified products beyond microloans and savings, including microinsurance, remittances, mortgage finance and mobile banking. These services will help the poor take advantage of business opportunities, protect against unexpected financial shocks, and determine their own financial futures.

"With its many microfinance institutions, Indonesia is a good place to test whether linking diverse and small financial institutions together is a commercially viable and effective way to make savings, loans and other products more widely available to the poorest people," said Bob Christen, Director of Financial Services for the Poor at the Bill & Melinda Gates Foundation. "Mercy Corps is well-positioned to move this innovative concept forward."

With the support of other strategic investors, including the International Finance Corporation, a member of the World Bank Group, and the Hivos-Triodos Fund, total funding for the bank and related programming will be approximately $33 million.

As the founder of the bank, Mercy Corps will play a leadership role in its operation and remain a driving force for it focus on poverty alleviation.

Mercy Corps has worked in Indonesia's microfinance sector since 1997, and has a long history of launching successful microfinance institutions in difficult working environments such as Bosnia & Herzegovina, Afghanistan and Mongolia. As of May 2008, MFIs founded or co-founded by Mercy Corps have distributed more than a million loans worth in excess of one billion dollars. Mercy Corps is committed to exploring cutting-edge ideas that will make financial services more accessible to the world's poor.

About Mercy Corps:

Mercy Corps works amid disasters, conflicts, chronic poverty and instability to unleash the potential of people who can win against nearly impossible odds. Since 1979, Mercy Corps has provided more than $1.5 billion in assistance to people in 106 nations. Supported by headquarters in North America and Europe, the agency's global programs employ 3,500 staff worldwide and reach more than 16.4 million people in more than 35 countries. For more information, visit www.mercycorps.org.

About the Gates Foundation:

Guided by the belief that every life has equal value, the Bill & Melinda Gates Foundation works to help all people lead healthy, productive lives. In developing countries, it focuses on improving people's health and giving them the chance to lift themselves out of hunger and extreme poverty. In the United States, it seeks to ensure that all people -- especially those with the fewest resources -- have access to the opportunities they need to succeed in school and life. Based in Seattle, the foundation is led by CEO Patty Stonesifer and co-chair William H. Gates Sr., under the direction of Bill and Melinda Gates and Warren Buffett.