Press Releases


L. Joseph
Phone: (202) 473-7700
Fax: (202) 974-4384

WASHINGTON, D.C., September 9, 1999 — The International Finance Corporation has for the first time become a shareholder in a Chinese domestic bank, through a US$22 million equity investment in the Bank of Shanghai (BOS), which provides financing for the many small and medium enterprises (SMEs) in Shanghai.
The investment, representing 5 percent in BOS's expanded share capital, will be used to strengthen the bank's capital base and management to help it operate to international standards and practices.
IFC director for East Asia and the Pacific, Mr. Javed Hamid, said that IFC's equity investment, coupled with an ongoing technical assistance program, would build the quality of the Bank of Shanghai as well as providing a model for other Chinese banks. The investment is a way to help foster the modernization of China's domestic banking industry and encourage more participation by foreign banks, he said. This is one of only two approvals that the Chinese government has allowed for foreign participation in a fully licensed domestic bank.
Since BOS primarily supports local SMEs, this project will also extend IFC's reach to the rapidly growing SME sector in Shanghai which has been constrained by the inadequacy of financial services.
BOS was established in 1995 through a merger of urban credit cooperatives in Shanghai, representing a significant step in the reform and development of China's financial sector. The shareholders of BOS include the Shanghai Municipal Government and 13 district governments with a 30 percent stake; 11 large state-owned enterprises in Shanghai with an 8 percent; more than 2,000 SMEs holding 28 percent; and 38,000 individuals, including most of the 4,500 employees of BOS, with 34 percent.
Since mid-1995, IFC has assisted BOS with its efforts to transform into a modern banking institution, providing a total of $1.3 million through grants from the government of Japan, the European Union, and IFC itself. This program, one of IFC's largest technical assistance undertakings to date, enabled IFC to team up – first with the Allied Irish Bank and then with ABN/AMRO Bank – to provide wide ranging technical assistance to BOS.
The mission of IFC, part of the World Bank Group, is to promote private sector investment in developing countries, which will 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.