NDB's Maasdorp Talks About Bank's Upcoming China Projects, Bonds: CBN Interview
Yicai Global
/SOURCE : Yicai
NDB's Maasdorp Talks About Bank's Upcoming China Projects, Bonds: CBN Interview

(CBN - Global)April 6 -- BRICS' New Development Bank Vice-President and Chief Financial Officer Leslie Maasdorp gave an exclusive interview to CBN reporter Ms. Wang Lin during the 2016 China Development Forum in which he discussed NDB's recent progress and upcoming projects.

Formerly the BRICS Development Bank launched by member countries Brazil, Russia, India, China and South Africa, the NDB was founded in Shanghai in July last year to mobilize resources for development projects in BRICS and other emerging economies.

Nominated to NDB by South Africa, Mr. Massdorp has extensive experience in international investment management. He was president of the South African arm of the Bank of America Merrill Lynch, and has held key positions in multinational financial organizations such as Goldman Sachs and Barclays Capital.

Mr. Maasdorp is also laying the groundwork for NDB's Africa regional center to be based in Johannesburg, South Africa.

CBN: How has progress at NDB been these last few months? What is the next big move we can expect?

Mr. Maasdorp: Firstly, NDB is about to announce its first project this month. The project will be worth a total of USD750 million. It will involve all five member countries and will be carried out mainly in the form of loans. These loans will mostly be for new energy projects in order to promote green development and financing.

Secondly, the initial equity capital contribution from NDB shareholders is in place.

Thirdly, NDB has secured an AAA rating from two of China's largest credit rating agencies, the China Chengxin Credit Rating Group and the China Lianhe Credit Rating Co. This lays the foundation for NDB's attempt to issue bonds in China as such ratings help to ensure that our financing costs will be lower.

Fourthly, NDB's first investment project in China will be the issuance of yuan-denominated bonds within the inter-bank market. This will be a green bond, signifying NDB's commitment to green and sustainable development. NDB will be the first multilateral development agency to issue green bonds in China since the People's Bank of China issued an announcement on green finance last December.

Fifth, NDB has started recruiting and has more than 100 positions to fill. Candidates from BRICS countries will be given priority in the selection process. However, for certain specialist positions, recruitment will be carried out globally.

Sixth, on February 27 this year, an agreement and memorandum of understanding regarding the headquarters of the NDB was signed in Shanghai. Now NDB is a fully operational organization.

CBN: What is the difference between NDB and other existing financial development institutions such as the World Bank and the Asian Development Bank?

Mr. Maasdorp: NDB is a multilateral financial development bank that has been initiated and established by emerging economies. Its focus is on developing countries, particularly the five BRICS nations. The five BRICS countries are all shareholders in, lenders to as well as borrowers from the bank.

This clearly differs from the governance structure of the World Bank, Asian Development Bank and European Bank for Reconstruction and Development whose members include developed countries which only fund these institutions but do not borrow from them.

Each of the five shareholders in NDB enjoys equal representation and speaking rights. The Chinese economy is nearly 30 times that of South Africa, but both countries have the same representations and speaking rights at NDB. The BRICS countries wish to seek consensus and to create a new mechanism for international relationships. No single country in BRICS has the right to veto, as we discourage such unilateral behavior.

NDB shareholders do not want a bank that rigidly adheres itself to existing institutional 'Best Practices' but rather want a bank that will explore 'Next Practices' to create new management experiences and methods.

CBN: NDB and the Asian Infrastructure Investment Bank are both newly established development agencies, and members of NDB are also members of AIIB. What is the difference between NDB and AIIB?

Mr. Maasdorp: NDB has a broader geographical representation than AIIB. The five BRICS member countries are from different continents and the bank's projects are distributed across these various regions, while AIIB's main focus is Asia. This is a significant difference.

Secondly, China will not borrow from AIIB to develop projects in China, but China will borrow from NDB. NDB's first project will be in China.

In addition, NDB will promote the development of local currency operations. The bank's first financing project will be to issue yuan-denominated bonds into the Chinese inter-bank market in late May. This will add more depth to the bond market to help internationalize the yuan. It will also be a green bond.

CBN: Once the growth of BRICS countries starts to slow, how will this affect the development of NDB?

Mr. Maasdorp: Short-term economic difficulties in the BRICS countries should not affect NDB prospects.

NDB has already raised its initial funding and is focused on its long-term prospects over the next 10 to 15 years. It is also developing the basic infrastructure for the next 20 to 30 years. Presently, there is impact from many short-term elements, but we still look forward to our future and long-term prospects.

NDB was established on the basis of a common vision and shared goals between its member countries. BRICS leaders will deepen the development concept embedded in NDB as they overcome the difficulties each economy faces in its development. Each of the BRICS economies has a mid- to long-term development plan, and each is currently working on its own economic transformation.

Although it seems that BRICS countries may grow apart as their economies develop differently, with China and India registering positive growth while Brazil, Russia and South Africa have negative or near-zero growth rates, I believe that soon the BRICS economies will once again get back on track to pursue common growth and development.

Follow Yicai Global on