WASHINGTON, Oct 11 (Reuters) - The International Finance Corporation, the private-sector lending arm of the World Bank, is planning to launch a $3 billion fund to capitalize small banks in poor countries that are battered by the financial crisis.
The fund would start with $1 billion from the IFC and the other $2 billion from other sources such as governments, sovereign wealth funds, or commercial banks, IFC CEO Lars Thunell told reporters on Saturday.
'In emerging markets we haven't really seen the bank crisis hitting. That I think is an issue that will come much later,' Thunell said.
'If we can say that this fund is available and that people could come this way if they're running into problems, that may be able to avoid some issues.'
A $3 billion fund could support 'quite a lot of assets' in very poor countries, where the size of the banking system is still small, he argued.
A couple of commercial banks have already shown interest in contributing to the fund, according to the IFC.
The financial crisis is also expected to spur demand for IFC's loans as other sources of financing dry up.
'For the first time in history there will be a situation going forward that we are going to have more demand for our services that we can supply,' Thunell said.
He added that the IFC will use its strong financial position, as one of the few surviving AAA credits, to protect its clients from the 'financial tsunami' when it starts to hit emerging economies. Keywords: FINANCIAL BANKS/IFC tf.TFN-Europe_newsdesk@thomson.com ak COPYRIGHT Copyright Thomson Financial News Limited 2007. All rights reserved. The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.
The fund would start with $1 billion from the IFC and the other $2 billion from other sources such as governments, sovereign wealth funds, or commercial banks, IFC CEO Lars Thunell told reporters on Saturday.
'In emerging markets we haven't really seen the bank crisis hitting. That I think is an issue that will come much later,' Thunell said.
'If we can say that this fund is available and that people could come this way if they're running into problems, that may be able to avoid some issues.'
A $3 billion fund could support 'quite a lot of assets' in very poor countries, where the size of the banking system is still small, he argued.
A couple of commercial banks have already shown interest in contributing to the fund, according to the IFC.
The financial crisis is also expected to spur demand for IFC's loans as other sources of financing dry up.
'For the first time in history there will be a situation going forward that we are going to have more demand for our services that we can supply,' Thunell said.
He added that the IFC will use its strong financial position, as one of the few surviving AAA credits, to protect its clients from the 'financial tsunami' when it starts to hit emerging economies. Keywords: FINANCIAL BANKS/IFC tf.TFN-Europe_newsdesk@thomson.com ak COPYRIGHT Copyright Thomson Financial News Limited 2007. All rights reserved. The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.