IFC raises Philippines stake, may invest in China, Korea
IFC raises Philippines stake, may invest in China, Korea
WASHINGTON (Bloomberg): The International Finance Corp., the private lending unit of the World Bank, has raised its stake in a Philippines bank and may invest in banks in China and Korea, bolstering its presence in Asia's cash-strapped financial industry.
The IFC raised its stake in Far East Bank & Trust Co., the seventh-largest bank in the Philippines, to 3 percent from 2 percent, and also plans to invest as much as $50 million in Kookmin Bank of South Korea, Javed Hamid, director of East Asia and the Pacific at the IFC, said on Tuesday.
In China, the IFC expects approval from regulators before June to invest as much as about $20 million each in Minsheng Bank and Bank of Shanghai, among the nation's smallest banks. The move would pave the way for greater foreign ownership in the country's financial industry.
"The Chinese authorities want to deregulate the financial sector, but they want to move cautiously," Hamid told Bloomberg. "They have asked us -- encouraged us -- to look at investment possibilities, and that would be like an experiment to see how it works."
The negotiations are taking place just as the outlook for Chinese banks worsens. Standard & Poor's Corp., warned this month that it may cut the ratings of five of China's largest banks because of an increase in non-performing loans, which will crimp profits.
China was the largest destination for IFC investment in the year ended June 30, with companies such as Chengdu Chemical Co. and Shanghai Krupp Stainless Steel Co., receiving loans, equity and project financing of about $580 million. China was the World Bank's biggest borrower between 1992 and 1997.
Even so, the IFC isn't writing a blank check for Minsheng and Bank of Shanghai, Hamid said.
In the Philippines, the IFC bought about $5 million of Far East Bank's shares, which are traded the Philippine Stock Exchange, Hamid said. It's the latest international lender to invest in the Southeast Asian nation in the last three months, including a $280 million loan from the International Monetary Fund and $600 million from the World Bank for three projects.
In Korea, the IFC plans to invest in Kookmin as part of a group of investors, Hamid said. Like many of the nation's banks, it needs new funds to stay afloat after ballooning bad debts eroded its capital. The bank said last month it will offer more than $500 million of new stock and use proceeds to crank up lending.