Investment Updates News
- World Bank moves westward
Date: 5-Jun-2007 Sources: (Shenzhen Daily)
INTERNATIONAL Finance Corp. (IFC), the private-sector arm of the World Bank, plans to invest more than US$600 million in China this year, slightly less than last year as it shifts to projects in rural, western regions and advising on China's outbound strategy.
IFC Executive Vice President Lars Thunell told reporters Saturday in Beijing the IFC is moving further westward to invest in rural credit cooperatives and micro-finance projects as foreign banks grow less leery of the risks of taking stakes in China's nationwide and coastal banks. During his visit, IFC also signed an agreement to jointly invest with the Export-Import Bank of China in projects in Africa and elsewhere.
'Our role has changed,' said Thunell at the end of a visit to China that included a stop in far-western Xinjiang region's capital of Urumqi. 'In the beginning it was much more actual loans and capital, but over time we have refocused.'
Now, IFC is giving more advice than capital to bankers and regulators, pushing for better risk-based pricing on loans and more lending for small- and medium-sized enterprises and energy-efficient projects. IFC loans and equity investments in China for the fiscal year of 2006 totaled US$639 million on 24 projects, with roughly half in equity and half in loans.
That changing focus is a measure of how far China's banking system has come since IFC took its first stake in a Chinese bank - 7 percent of Bank of Shanghai --- in 2000.
'At the time, I think that looked a bit daring,' said Karin Finkelston, associate director of IFC's East Asia and Pacific Department. 'But now there are 25 foreign banks invested in the Chinese banking system and a lot of Chinese banks are benefiting from foreign investment.'
Thunell visited Urumqi City Commercial Bank, which IFC is advising, during his visit to the region in western China. Pakistan's Habib Bank Ltd. signed a memorandum of understanding in February 2006 to take up to a 19.9 percent stake in the Urumqi bank.
'We're trying to set examples and be a trusted partner for pilots, demonstrating that the world won't fall apart if a foreigner gets involved in a rural bank,' Finkelston said.
IFC partnered with Dutch banking group Rabobank to become the first foreign investors to take a stake in a Chinese rural cooperative bank in July last year, when they agreed to pay about 266 million yuan (US$34.3 million) for a combined 15 percent stake in United Rural Cooperative Bank of Hangzhou.
(As part of its mission in China, IFC officials are now working to advise Beijing on its push to secure natural resources in Africa and elsewhere as some activists and governments raise concerns about the impact of Chinese aid money and loans.
Thunell signed a memorandum of understanding with Export-Import Bank of China, the country's credit-line to projects in Africa and other parts of the globe, to work together on joint-investment projects and other cooperation. Export-Import Bank Vice President Li Jun told reporters Friday the bank hopes to extend $20 billion worth of loans to Africa over the next three years, but the final amount will depend on finding suitable projects.
'We can share with them some of our experiences, some of our standards,' Thunell said. 'The Chinese authorities are recognizing that the China brand is very important and part of that, more and more, is sustainability issues.'
Thunell heads to Hong Kong Sunday where IFC's senior managers will meet for the first time outside Washington, he said. China is the third largest country in the IFC's portfolio after Russia and Brazil, with $1.5 billion or 7% of IFC's total investment. Russia accounts for 9%.）
Sponsor Results:
