Tuesday, May 24, 2005

IFC shift its fashion investing from banking

Originally uploaded by bigkoala.
International Finance Corporation, the investing unit of the world bank, will shift its investment focus to insurers, securities firm and rural finance companies from the commercial lenders, reported Bloomberg.

The reported said IFC is trying to replicate the experience in the banks to other segments in the financial sectors, quoted Karin Finkelston, International Finance's associate director for East Asia and the Pacific.

The action could be explained as a way for the World bank unit to shift to other financial segments before foreign banks are allowed to open local-currency business in China at the end of 2006. It has already spent $150 million buying stakes in five domestic Chinese commercial banks in the past four years, including Bank of Beijing, Bank of Shanghai, Nanjing Commercial Bank, Xian Commercial Bank and Fujian Industrial Bank. Four of the total are based on the eastern China, the most prosperous places in the country. The stakes IFC hold in the banks range from 5 percent to 15 percent.

IFC's enthusiasm in the local lenders in the past years have provided comforts to the other foreign investors. Common wealth Bank of Australia, the largest home lender in China, has bought stakes in Shandong-based Jinan City Commercial Bank and Zhejiang-Based Hangzhou Bank in last september and this April. ING Groep NV, the biggest Dutch financial services company, also bought a 19.9 percent of Bank of Beijing for $215 million.

Most banks invested by IFC and other banks are equipped with less bad loan and better management system. IFC may hard to find any other good ones to invest before the shifting decision.

At the end of April, IFC planned to buy 5 percent of Changjing BNP Paribas Peregrine Securities Co., a Chinese investment bank one-third owned by France's second-biggest bank, which partly showed its interest in investing the potential investment banking industry in China.

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