Shanghai, November 10, 2006—
The International Finance Corporation, the private sector arm of the World Bank Group, will support the growth of China’s small and medium enterprises by providing a local currency loan of RMB 366 million ($46 million equivalent) to Nanjing City Commercial Bank, one of China’s leading banks in its category. The loan will be funded by the forthcoming RMB 870 million Panda Bond issue, IFC’s second such transaction, and will be used to support NCCB's small business lending.
Financing will be accompanied by a two-year technical assistance project to help NCCB build its small business lending capacity. IFC’s support is aimed at increasing access to finance for small and medium enterprises in China and improving small business lending standards within the country’s banking sector.
“IFC’s loan to NCCB is part of our effort to enhance access to finance for China’s small and medium enterprises,” said Jyrki Koskelo, IFC Director of Global Financial Markets. “By providing support we expect to help NCCB grow its small and medium business portfolio while adopting international best practices in marketing and risk management.”
The loan is expected to help meet critical long-term capital investment needs of small businesses in China by expanding their access to credit, thereby supporting their growth. It aims to demonstrate that financing the small business sector can be profitable, thus encouraging other city commercial banks in China to expand their lending to this sector. The financing will also contribute to the development of NCCB’s small business lending capacity via training opportunities and product innovations that allow for technology transfer. It reflects IFC’s commitment to overall improvement of small business lending standards within China’s banking sector.
In China, 85 percent of private enterprises are small businesses. These include both small enterprises and unincorporated individual or household enterprises that employ fewer than eight people. A survey by the IFC’s Private Enterprise Partnership for China indicates that over 70 percent of small business owners say their lack of financing is a leading constraint. IFC’s partnership with NCCB is aimed at bridging this gap and creating more jobs in China.
Since becoming a shareholder of NCCB in 2001, IFC has been playing a proactive role in developing the city commercial bank’s institutional capacity. Technical assistance has helped improve NCCB’s corporate governance, credit skills and risk management. This new loan will enable IFC to continue to play this role and enhance NCCB's capability in growing its SME lending business.
“This project demonstrates IFC’s commitment to banking sector development in China,” said Richard Ranken, IFC’s Director for East Asia and the Pacific. “By providing long-term local currency financing we are helping a local bank grow its small and medium enterprise loan portfolio while strengthening its institutional capacity.”
About IFC
The International Finance Corporation, the private sector arm of the World Bank Group, is the largest multilateral provider of financing for private enterprise in developing countries. IFC finances private sector investments, mobilizes capital in international financial markets, facilitates trade, helps clients improve social and environmental sustainability, and provides technical assistance and advice to businesses and governments. From its founding in 1956 through FY06, IFC has committed more than $56 billion of its own funds for private sector investments in the developing world and mobilized an additional $25 billion in syndications for 3,531 companies in 140 developing countries. With the support of funding from donors, it has also provided more than $1 billion in technical assistance and advisory services. For more information, visit
www.ifc.org
.
About NCCB
NCCB operates in Nanjing, the capital city of Jiangsu Province, which is located in the Yangtze River Delta economic zone. NCCB serves the local economy by focusing its banking services on local citizens and small and medium enterprises. At the end of June 2006, the bank’s shareholders’ equity was RMB 2.3 billion ($292.8 million), and its total assets were RMB 61 billion ($7.64 billion). It has 59 branches and over 1,300 employees. In 2005, net profit was RMB 309 million ($38.6 million). NCCB is the fifth-largest bank in Nanjing by deposits, ranking after the branches of the big four state commercial banks. In 2001 NCCB became the second Chinese bank to attract foreign investment. Currently IFC holds a 5 percent stake and BNP Paribas holds a 19.9 percent stake in the bank. NCCB submitted an initial public offering application to the country’s security regulator in an effort to become China’s first listed city commercial bank.
