Move to diversify services, improve risk control

Bank of China New York Branch has partnered with a private sector arm of the World Bank to provide support for growth and development in the Americas, the organizations announced.

Under a memorandum of understanding signed on Oct 11, International Finance Corporation (IFC) will work with the New York branch of Bank of China (BOC-NY) on trade finance, liquidity management and syndications in Latin America and the Caribbean, according to a statement.

Jean Philippe Prosper, IFC vice-president for Latin America and the Caribbean and Sub-Saharan Africa, and Shiqiang Wu, president of Bank of China-NY, signed the partnership.

BOC-NY will participate in IFC's syndicated loans in the Americas and will invest in IFC initiatives, such as its commodities finance program, which channels funds into global commodities trading and IFC's global trade finance program.

"By partnering with IFC, BOC-NY will expand its client base, diversify its products and services and enhance country risk control and liquidity management in the Americas," according to an IFC statement.

IFC provides support to private-sector development in Latin America through investments and advisory services.

In 2013, IFC gave $6.5 billion to private-sector development and approved $14.8 billion in new advisory-services projects, according to the statement.

Prosper said that the private sector provides 90 percent of jobs globally and that IFC's partnership with BOC-NY will bring more development to the area. "We had a record year in Latin America and the Caribbean last year," he said, "and we can do much more by working with new partners such as Bank of China, who can bring additional expertise and capital" to the region.

"A key way for us to enhance IFC's development mandate is to mobilize and catalyze funding from the international markets, including commercial banks and other international finance institutions," Juan Jose Garcia, senior syndication officer at the IFC, told China Daily. "By entering into this partnership we expect to bring an additional source of expertise and capital in support of IFC's strategy to promote private-sector development in Latin America."

In 2012, IFC's Latin America portfolio totaled $10 billion, with 30 percent invested in financial markets, 24 percent in infrastructure and 10 percent in the oil, gas and mining sector, according to its website.

Garcia said that the Latin American market provides China with a number of opportunities for investment, including export of products and services to the region and investment in infrastructure. He said that the IFC was also working closely with the Export-Import Bank of China to provide parallel loans for a new oil and energy project off the shores of Colombia.

The cooperation between the two organizations comes as China continues to finance growth in Latin America, becoming an important capital resource for the countries in the area. According to a 2012 report from the Global Development and Environment Institute, China has provided loans upwards of $75 billion to Latin American countries since 2005, some of which have difficulty borrowing in global capital markets.

Chinese loans do not come with the "policy conditionalities that are tied to [international financial institutions] and Western loans", the researchers wrote.

China's loans to Latin American countries are exceeding those from Western institutions, with the country lending about $37 billion in 2010, which was more than the loan amount from World Bank, Inter-American Development Bank and United States Export-Import Bank combined.

amyhe@chinadailyusa.com

(China Daily USA 10/22/2013 page1)