Washington D.C., March 20, 2002—The
International Finance Corporation has signed an agreement with the Bank
of Shanghai (BOS) to invest US$25 million in the bank, raising its stake
from 5 to 7 percent. IFC’s investment will be used to further strengthen
the bank’s capital base and institutional capacity as well as to continue
assisting BOS to achieve international operating and governance standards.
BOS was established in 1995 through the merger of 99 urban credit cooperatives
in Shanghai. IFC’s cooperation with BOS began at the bank’s inception
with a long-term comprehensive technical assistance program funded by the
Government of Japan and the European Union. The cooperation led to
an IFC equity investment in 1999 for a 5 percent stake in the bank. This
was the first investment made by IFC in a Chinese bank. Since then,
BOS has made substantial progress in introducing international standards
and best practices to improve the bank’s corporate governance, management,
This new investment by IFC is part of a capital increase undertaken by
BOS. Also participating in the capital increase are the Hongkong
and Shanghai Banking Corporation (HSBC) and the Shanghai Commercial Bank
of Hong Kong for an equity stake of 8 percent and 3 percent respectively.
The investment of the two foreign banks is significant because it
represents the first time foreign commercial banks are investing in a domestic
Chinese bank. Following the capital increase, total foreign shareholding
in BOS reached 18 percent.
Javed Hamid, IFC’s Director for East Asia and the Pacific, said, “We
are very pleased that BOS has made substantial progress following IFC’s
initial investment in 1999 and is able to attract a leading international
bank like HSBC. This is clearly a success story which will have a
strong demonstration impact on China’s banking industry.” He added,
“IFC is committed to promoting banking reform and modernization in China.
This investment represents IFC’s continued effort to support the
development of the private banking sector and the country’s ongoing financial
Mr. Fu Jianhua, CEO of the Bank of Shanghai, said, “The cooperation between
BOS and IFC has been very successful and it has played a significant role
in BOS moving towards international standards and best practices in banking.
We look forward to continuing our long-term partnership.”
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 through the close of the last fiscal year on June 30, 2001, IFC
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.