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ScotiaBank and IFC to Invest in Xi'an City Commercial Bank, China


L.Joseph
Phone: (1-202) 473-7700

Fax: (1-202) 974-4384

E-mail:
ljoseph@ifc.org


XI’AN, CHINA, September 9, 2002—Canada’s Scotiabank and the International Finance Corporation (IFC), the private sector financing arm of the World Bank Group, today signed a Memorandum of Understanding (MOU) to make an equity investment in China’s Xi’an City Commercial Bank (XACB).  

This transaction demonstrates IFC’s intention to promote banking development in western China and encourage more participation by foreign banks, and similarly highlights Scotiabank’s commitment to grow its presence in China. The investment will strengthen XACB’s capital base and institutional capacity and help it achieve international operating and governance standards.  The transaction is subject to final approval of the respective institutions and regulators.


“This transaction gives us an excellent opportunity to develop our knowledge and skills in the Chinese domestic banking market.  In addition, our expertise will be enhanced by working jointly with IFC who have had positive experiences with two other investments in Chinese banks,” said Robin Hibberd, Senior Vice-President, Asia/Pacific and Middle East, Scotiabank.  “We have been very impressed with the management of XACB and the progress they have made since its establishment in 1997. The positive support and progressive attitude of the Xi’an City Government was also instrumental in our decision.”


IFC Vice President Mr. Assaad Jabre, who is on an official visit to China, said, “This represents IFC’s first investment in a financial institution in China’s western region and is fully consistent with our strategy in China’s financial sector, which is to promote the development of non-state financial institutions and to catalyze banking reform and modernization.  Improving standards in the banking sector is a key step toward strengthening the country’s financial infrastructure.”


“IFC is very pleased to introduce Scotiabank as a strategic investor and technical partner in XACB,” added Mr. Javed Hamid, IFC Regional Director for East Asia and Pacific. “Scotiabank will actively participate in the management of XACB, which will help to ensure an effective and efficient transfer of international banking best practices to XACB.”  Mr. Hamid also commended the Xi’an City Government and XACB’s board of directors for their willingness to introduce international standards and best practices.


XACB President Mr. Jianhong Yin said, “Equity participation by Scotiabank and IFC will help XACB strengthen its capital base and, more importantly, learn from advanced international management experience, in order to adopt international standards and banking best practices and promote the development of XACB.”  He added, “We look forward to successful cooperation with Scotiabank and IFC.”


XACB was established in May 1997 through the consolidation of 42 urban credit cooperatives.  It has a diversified shareholding structure, 22% owned by the Xi’an City Government and some local state-owned enterprises, and 78% owned by over 450 SMEs and 12,800 individuals (including most of XACB’s employees).


XACB’s customer base is primarily local private small and medium enterprises (SMEs).  The investment will extend IFC’s reach to the fast growing SME sector in the city of Xi’an.  As in many other countries, the SME sector in China has been under-served by the established banking system.  XACB is also actively expanding its retail banking business as this part of the market is rapidly growing.  For more information on XACB, please visit
www.xacbank.com.

Scotiabank is one of North America's premier financial institutions and Canada's most international bank.  Almost 49,000 employees of Scotiabank Group and its affiliates provide personal, commercial, corporate and investment banking services in some 50 countries around the world.  Scotiabank has been operating in China since 1982 and presently has two branches (Guangzhou, Chongqing) and a representative office in Beijing.  Scotiabank Group had CDN$300 billion in assets, as at July 31, 2002.  Scotiabank trades on the Toronto (BNS), New York (BNS) and London (BNV) Stock Exchanges.  For more information on Scotiabank, please visit
www.scotiabank.com.

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 $34 billion of its own funds and arranged $21 billion in syndications for 2,825 companies in 140 developing countries.  IFC’s committed portfolio at the end of FY02 was $15.1 billion, with an additional $6.5 billion held for participants in loan syndications.  For more information on IFC, please visit
www.ifc.org.

Scotiabank Contact:
Diane Flanagan
Phone: (1-416) 866-6806
E-mail: dianeflanagan@scotiacapital.com

XACB Contact:
Xuefeng Yan
Phone: (86-29) 744-4798
Fax: (86-29) 745-0956