Beijing, China, November 28, 2001—
The International Finance Corporation will promote the modernization of China’s banking industry and encourage more participation by foreign banks with an agreement signed today to invest US$27 million in Nanjing City Commercial Bank (NCCB).
IFC is taking a 15 percent equity stake in NCCB, which is to date the largest foreign shareholding in a domestic Chinese bank. IFC’s investment will be used to strengthen the bank’s capital base and institutional capacity as well as assist NCCB to achieve international operating and governance standards.
IFC Chief Peter Woicke—who is on an official visit to China—said at the signing ceremony in Beijing, “IFC’s investment in NCCB comes at an important time for China, given the country’s recent entry into the WTO. Our goal is to create a model institution which will set standards for China’s banking industry and support the development of vibrant local private companies. Improving standards in the banking sector is a key step toward strengthening China’s financial infrastructure.”
In addition to its equity investment in NCCB, IFC also arranged for a review and audit of the bank’s financial performance to improve its credit and risk management policies and procedures. This work was funded by the Government of Ireland through IFC's technical assistance trust funds program.
Following its equity investment in the Bank of Shanghai in 1999, the investment in NCCB represents IFC’s continued effort to support the development of the nonstate banking sector in China and the country’s ongoing financial sector reform.
As NCCB’s customer base is chiefly made up of local private small and medium enterprises (SMEs), this investment will extend IFC’s reach to the rapidly growing SME sector in the city of Nanjing. The SME sector in China, as in other developing countries, has been under-serviced by the established banking system.
NCCB was set up in 1996 through a merger of 40 then existing urban credit cooperatives in the city of Nanjing, the provincial capital of Jiangsu Province. NCCB has a diversified shareholding structure. Its current shareholders include the Nanjing City government, district governments, and nine state-owned enterprises (35.6 percent); five large private/nonstate companies (28.3 percent); over 800 SMEs in Nanjing (27.2 percent); and over 6,000 individual Nanjing citizens, including 1,200 NCCB employees (8.9 percent).
IFC’s mission is to promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people's lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, and provides technical assistance and advice to governments and businesses. Since its founding in 1956, IFC has committed more than $31 billion of its own funds and arranged $20 billion in syndications for 2,636 companies in 140 developing countries. IFC’s committed portfolio at the end of FY01 was $14.3 billion.
