50 Years of Asia: How Asia’s Banks Fight Bank Against Disruption
9 May, 2019How Multilateral Development Banks Moved to Asia
9 May, 2019Euromoney, May 9 2019
Read the full article here: https://www.euromoney.com/article/b1f9vf7w1cf3d8/ndb-the-brics-bank-takes-shape
Over the last 12 months, the New Development Bank has gone from concept to fully fledged lender. It says it wants to be differentiated by its nimbleness and focus on sustainability. Where does it fit in a changing multilateral landscape?
There is a certain cosiness to the 36th floor of the Brics Tower, where the executives of the New Development Bank reside, and it’s not just because it’s a grim and murky day in Shanghai.
“The guy who just walked in is one of the vice-presidents; his office is next to mine,” says Leslie Maasdorp, CFO of New Development Bank and a vice-president himself. “The president’s office is there. There are two more VPs there,” he says, pointing. “On this floor is the entire credit committee.” Being small, centralized and nimble is a key differentiator for NDB, says Maasdorp: “If there’s a project, we don’t have to wait for weeks to convene the investment committee. We call a meeting, assess the project, approve it and move on with our lives. “To convene five people on one floor is a lot easier than 12 in different time zones.”
Over the last 12 months, NDB has had the chance to put that nimbleness to the test. It has gone from being an interesting idea to being a genuine lender and, in doing so, has become perhaps the single most important outcome of Jim O’Neill’s iconic Brics acronym of 2001 referring to Brazil, Russia, India and China.
Bric became a formal institution in 2010, with South Africa added later in the year. It was never entirely clear what it meant, other than an arbitrary and conveniently pronounceable aggregation of enormous emerging market economies. It was and is strikingly diverse in geography, culture, political systems and economic outlook.
So why did such an apparently meaningless bloc need a bank?
“In the context that there are several multilateral banks, why was this thing actually set up?” Maasdorp nods.
“The creation of the bank,” he says, “is an expression of the intent of emerging markets to take their rightful role in global governance.”
Also, the five Brics nations illustrated the desperate need for infrastructure development in emerging markets. Clearly, they are not the only countries with that need – Indonesia and the Philippines need roads and power just as much as South Africa and India – but there was a sense that a bank for the Bric economies would still have plenty it could achieve.
“Also, given climate change – and we are absolutely persuaded that the world is undergoing fundamental changes – these banks have a public good objective to build infrastructure in a new kind of way,” Maasdorp says. “It’s not just about building roads or ports or power plants, but looking through the lens of what damage you are doing to the environment.”
A Brics bank, it was decided, should be all about sustainable infrastructure, climate resilient and built with proper governance. It would also need to have a long-term view and a profound understanding of technological change.
“You cannot just build a road,” Maasdorp says. “You’ve got to configure what autonomous driving will mean in five, 10, 25 years for that road. So we weren’t just created to be another bank for emerging markets.”
Full article: https://www.euromoney.com/article/b1f9vf7w1cf3d8/ndb-the-brics-bank-takes-shape?copyrightInfo=true
