SINGAPORE (Reuters) – China is likely to hold a 25-30 percent stake in the new Asian Infrastructure Investment Bank (AIIB) while India will be the second-biggest shareholder, delegates said on Friday after a three-day meeting of the bank’s founding member-nations.
AIIB said in a statement that it expected to be operational by the end of the year. It said the meeting in Singapore finalised the articles of agreement, which are expected to be ready for signing by the end of June, but did not give details. (http://bit.ly/1FrydwQ)
No details of the ownership structure were disclosed, but delegates told Reuters that China would likely take a 25-30 percent stake in the bank, and India was likely to be the second-largest shareholder.
China’s share in the $100 billion lender would be less than 30 percent, an Asian delegate told Reuters. A second delegate said India’s share would be between 10 and 15 percent. Both spoke on condition of anonymity.
In all, Asian countries are expected to own between 72 and 75 percent of the bank, while European and other nations will own the rest.
Another delegate said each country representative would take the proposals back to their governments for a final decision.
Some were skeptical of the timeline for the bank to start running, as each member will need to obtain cabinet and legislative approvals at home.
“It is uncertain if we can start from early next year,” said one of the delegates.
“China hopes that members will get such approvals by year-end and the operations start from the next year. But I wonder if it is possible, given domestic political situations in each country.”
A total of 57 countries have joined AIIB as its prospective founding members, throwing together countries as diverse as Iran, Israel, Britain and Laos.
The United States and Japan have stayed out of the institution, seen as a rival to the U.S.-dominated World Bank and Japan-led Asian Development Bank, citing concerns about transparency and governance, although Tokyo for one is keeping its options open.
AIIB’s launch is coming at a time when the space for infrastructure lending is already crowded due to the presence of major multilateral lenders and Japan’s latest move to provide $110 billion for Asian infrastructure projects.
The amount of Japanese funds, to be invested over five years, tops the expected $100 billion capitalization of the AIIB.
Jahangir Aziz, head of emerging market Asia economics at JPMorgan, said spending on infrastructure was a great idea on paper, but it was unclear how the AIIB or the New Development Bank, a lender promoted by China and other members of the BRICS group of nations, would be structured.
“We will have to wait for the actual structure of governance before we can see how successful these (institutions) will turn out to be,” he said. “The proof of the pudding will be in the eating.”
(Reporting by Karen Lema in MANILA and Manoj Kumar in NEW DELHI; additional reporting by Eveline Danubrata in JAKARTA, Aradhana Aravindan, Rujun Shen, Jongwoo Cheon and Saeed Azhar in SINGAPORE; Editing by Raju Gopalakrishnan)
Like this article? Take a second to support us on Patreon!