25473 - Nanjing City Commercial Bank

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Summary of Proposed Investment

Project Number

25473

Company Name

Bank of Nanjing Co., Ltd.

Date SPI Disclosed

Oct 10, 2006

Country

China

Industry

Financial Markets

Projected Board Date

Nov 9, 2006

Status

Completed

Sector

Commercial Banking - General

Department

Global Industry, Financial Markets

Environmental Category

Previous Events

Approved : Nov 9, 2006
Signed : Nov 13, 2006
Invested : Nov 16, 2006

Project Description

This proposed project is to provide an RMB loan of up to RMB 400 million (approximately $50 million equivalent) to Nanjing City Commercial Bank (NCCB) to support its lending to local SME clients and help improve its asset-liability maturity matching. The IFC loan will be funded by part of the proceeds from the second tranche of IFC’s RMB Bond (Panda Bond II) which is expected to be issued in November 2006.

IFC would also provide a technical assistance program to NCCB to support its SME lending business.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	47.22
Equity

Development Impact

The proposed project is expected to have very positive impacts on China’s financial market and economic development.

The SME sector, mostly privately owned, provides a significant proportion of employment of the country. A growing and robust SME sector is critical to help accelerate China’s transition to a market economy. However due to the small scale of the SMEs, this sector has always been under served by banks which provide over 90% of funding to the economy. Among all the difficulties, lack of access to bank’s financing is always cited as the top challenge faced by SMEs. The proposed RMB loan under this project will be the first IFC loan to a local Chinese bank to support its SME lending. It will act as a catalyst to help mobilize more banks’ resources in SME business and hence to increase the accessibility of local SMEs to bank’s financial services.

The proposed IFC loan combined with a technical assistance program will not only provide NCCB with the long term funding, but also help the bank develop an end-to-end process and methodology in terms of customer identification, risk-based pricing, system and product development, etc. If executed successfully the program can be potentially rolled out to other banks that have similar demand of NCCB. In light of this, the project will help to bring and establish the best SME lending practice for smaller Chinese banks and hence promote healthy growth of the banking sector as a whole.

Since becoming a shareholder of NCCB in 2002, IFC has been playing a proactive role in developing NCCB’s institutional capacity and building up its SME portfolio. This proposed RMB loan and a technical assistance program will enable IFC to continue to play this role, and enhance NCCB’s confidence in building and growing its SME business. By helping the bank establish best lending practices, the project will have indirect impacts on NCCB’s SME customer not only on their increased accessibility to funding, but also improved corporate governance, information disclosure and management sophistication. This project will also help set standards for future asset-liability management and SME lending or risk sharing programs.

This is a Category FI project according to IFC’s Environmental and Social Review Procedure.

As an existing IFC client NCCB has been implementing a Social & Environmental Management System (SEMS) as part of its risk management system. As the proposed project will apply IFC’s revised environmental & social requirements, IFC will review the SEMS and suggest Supplemental Actions, if required, to address any gaps. NCCB will be required to commit to implement the Supplemental Actions according to an agreed time frame, to the satisfaction of IFC.

NCCB will continue to submit periodic reports to IFC.

Contacts

For Inquiries About the Project, Contact

Mr. Lin Fu, Chairman
Huaihai Road 50, Nanjing City
Jiangsu Province, China
Telephone: (0086)025-84544100
Fax: (0086)025-84546951

For Inquiries and Comments About IFC, Contact

General IFC Inquiries
IFC Corporate Relations
2121 Pennsylvania Avenue, NW
Washington DC 20433
Telephone: 202-473-3800
Fax: 202-974-4384
E Mail: Webmaster

This Summary of Proposed Investment is prepared and distributed to the public in advance of the IFC Board of Directors' consideration of the proposed transaction. It is not an offer of shares to the public and is intended solely to enhance the transparency of IFC’s activities. This document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only. The following SPI is disclosed in accordance with IFC’s Policy on Disclosure of Information that went into effect April 30, 2006.

The map is for illustrative purposes and does not imply the expression of any opinion on the part of the World Bank, concerning the legal status of any country or territory or concerning the delimitation of frontiers or boundaries. Country borders or names do not necessarily reflect the World Bank Group's official position. In some cases, available project location information is limited to the country of the project's activities. Locations are approximate.

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