WASHINGTON, D.C., June 2 -- The International Finance Corporation (IFC) today approved its first investment in the Occupied Territories of the West Bank and Gaza. IFC will subscribe up to 25 percent of the share capital (up to US$3.8 million equivalent) of the Arab Palestine Investment Bank, which will be the first comprehensive commercial and investment banking institution in the Occupied Territories. In addition, IFC will extend a credit line of US$15 million to the bank for on-lending to small and medium enterprises. The Arab Bank Group, a diversified international commercial and investment banking group in Amman, will hold 51 percent of the Arab Palestine Investment Bank's equity. The remaining shares will be subscribed by European institutions and Palestinian investors. The initial capitalization of the new bank will be US$15 million. The Arab Palestine Investment Bank will focus initially on trade finance, project lending, corporate advisory services, and mobilizing wholesale funding from the local mark
et and overseas. The bank will seek agency business from development banks, multilateral agencies, and export credit agencies that are committed to investing in the region. In the future, the bank will seek to expand its operations to other areas of investment and merchant banking to meet the evolving needs of the private sector. "The main objective of establishing the Arab Palestine Investment Bank is to address the urgent need of the Occupied Territories for a strong and dynamic banking institution," said Andre Hovaguimian, IFC Director for Central Asia, the Middle East, and North Africa. "The present financial system lacks the institutional capacity to mobilize and allocate funds for industrial development and stimulate economic growth. The development of the financial sector and establishment of modern banking institutions are vital for economic revival and prosperity, which would provide a sound basis for a lasting peace in the region." (more) Press Release No. 94/93, page 2 of 2 The absence of strong fi
nancial institutions has significantly impeded investment and industrial growth in the Occupied Territories. At present, approximately 3,700 small and medium-sized enterprises and 40 large companies in the Occupied Territories have no access to term funding and cannot look to the banking sector to service their needs adequately. Local businesses are left to rely on advances by sponsors or informally raised short-term capital. The Arab Palestine Investment Bank is expected to serve as a model institution and substantially enhance the quality and range of banking services offered in the Occupied Territories. The bank is expected to be incorporated in the West Bank and will establish a branch in Gaza. IFC is a member of the World Bank Group and is the largest multilateral source of equity and loan financing for private sector projects in developing countries.
