IFC Capitalization Fund

The $3 billion IFC Capitalization Fund is a global equity and subordinated debt fund that aims to support banks considered vital to the financial system of an emerging market country. By supporting systemic institutions, the Fund aims to speed up economic recovery and boost job creation while reducing the impact of the financial crisis.

IFC has agreed to participate for up to $1 billion in the IFC Capitalization Fund, which was founded in February 2009. The Japanese government is a key founding partner and has invested $2 billion in the fund, bringing the total to $3 billion.

The fund will provide investee banks with investment and advisory services. It will provide Tier I and Tier II capital to emerging market banks as well as advisory services aimed at strengthening private sector development and improving their economic and financial performance.

IFC estimates that a fund of $3 billion would have a leveraged impact of around $75 billion as others co-invest with the fund, and the banks receiving capital would be able to lend to their clients at greater levels. In smaller economies these amounts could have a significant effect on the banking system and economy and help reduce the impact of the crisis on the poor.

For more information on the fund, e-mail cf@ifc.org.