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IFC Loan to Help SMEs in China

International Finance Corporation (IFC), a member of the World Bank Group, announced on Wednesday it had agreed to lend US$45 million to China's first solely foreign-funded bank, the Business Development Bank (BDB).

The money will help extend the bank's reach across the country and expand its lending to small and medium enterprises (SMEs).

In a statement, the BDB said it expected to expand the coverage and volume of its lending to smaller businesses significantly over the next few years through a new SME lending model, without further elaborating.

It disclosed the America-based United Commercial Bank (UCB) had signed an agreement with its shareholders to acquire all its shares and develop the bank into a model SME bank.

According to the BDB, the UCB would partner with IFC in its program to broaden BDB's SME lending coverage and capacity.

"This project will have a strong demonstration effect, show that SME financing is commercially viable and encourage other banks in China to engage more actively in the sector," said Richard Ranken, IFC director for East Asia and Pacific.

The Shanghai-headquartered BDB was established in 1992. It was the first wholly foreign owned bank approved by the China Banking Regulatory Commission. Its core business is to offer loans to SMEs engaged in international business, most of which deal with manufacturing and processing. In the 2007 fiscal year, IFC committed US$8.2 billion and mobilized an additional US$3.9 billion through loan participation and structured finance, such as syndicated loans for 299 investments in 69 developing countries.

(Xinhua News Agency December 6, 2007)

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