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
“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
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 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.