Out-Law / Your Daily Need-To-Know

European development bank proposes AIIB infrastructure tie up

Out-Law News | 24 Jun 2015 | 12:22 pm | 1 min. read

The European Bank for Reconstruction and Development (EBRD) aims to work with the newly established Asian Infrastructure Investment Bank (AIIB) to jointly fund large infrastructure projects, China News said . 

President of the EBRD Suma Chakrabarti said that the combined strength of both organisations could allow them to take on much larger projects, China News said.

"What I'd really like to achieve by next year, when the AIIB is running, is to have at least two or three co-finance projects. That's going to be our main push. Of course we can do other things together, but projects will be a good way to start," Chakrabarti told China News.

The EBRD and the AIIB have similar financing models, which would allow them to jointly invest in projects and share revenue, Chakrabarti told China News. Opportunities include municipal infrastructure, including waste, water management, public transport and street lighting, he said.

The EBRD was established in 1991 to help build a new, post-Cold War era in Central and Eastern Europe, the bank said.

It is currently active in more than 30 countries from central Europe to central Asia and the southern and eastern Mediterranean, the EBRD said.

The AIIB was launched in Beijing last year to boost investment in infrastructure in Asia. It is expected to have initial capital of close to US$100 billion to invest in infrastructure projects. It will be financed by individual country contributions proportionate to their economic size.

 Fifty-seven countries have joined AIIB as its prospective founding members. The US and Japan have stayed out of the institution.

The EBRD also hopes to learn efficient and innovative ways of funding from the AIIB, Chakrabarti said.

Hou Zhenbo, a researcher at the London-based  Overseas Development Institute, said the overlap between the two banks would probably be infrastructure projects in Central Asia and former Soviet republics, although it is "difficult for us to speculate how large these sets of investments would be in the future", China News said.

The EBRD halted new infrastructure projects in Russia last July as a result of EU sanctions. Russia had accounted for 19% of the bank's investments in the first six months of 2014.