China Minsheng Bank Capital Increase 2006

Summary of Proposed Investment

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. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only.

Project number	24844
Company name	China Minsheng Banking Corp., Ltd.
Country	China
Sector	Finance & Insurance
Environmental category	FI
Department	Global Financial Markets Group
Status	Pend PDS-ER

Date SPI disclosed	January 22, 2007
Projected board date	February 22, 2007

Overview

Sponsor/Cost/Location

Development Impact

Contacts

Attachments

Project description

The project entails an additional equity investment in China Minsheng Banking Co., Ltd., (Minsheng or the company), an existing IFC investee bank in which IFC currently holds 0.93% equity stake.

Anticipated development impact of the project

SMEs are a driving force in the Chinese economy, absorbing both new entrants into the labor force and taking up workers who have been made redundant at restructuring SOEs. However, growth has been restricted by a lack of access to credit. Minsheng has initiated a specific SME strategy with the ability to impact thousands of SMEs in China. Minsheng’s success in SME banking will have a significant impact on the development of the SME banking sector in China and will in turn have a positive impact on China’s future development. The proposed investment will allow IFC to play a crucial role in the transformation of Minsheng into leading position in the SME segment. The success of the Minsheng model will have a strong demonstration effect, and is important for continuing the privatization of the banking industry.

IFC's expected development contribution

The proposed investment will enable IFC to strengthen relationship with Minsheng, delivering impact by assisting the bank to develop SME business, innovative sustainable finance products such as CHUEE (energy efficiency) program, and housing finance for low-income households.

Environmental and social issues - Category FI

This project has been classified as a Category FI project according to IFC’s Environmental and Social Review Procedure. During appraisal, IFC will analyze the FI portfolio for types of transactions, size, tenor and industry sectors and determine the Applicable Requirements, if any, that would include a combination of:

- The IFC FI Exclusion List and/or;
- The applicable National Environmental and Social Laws and regulations and/or;
- The IFC Performance Standards.

While the client is an existing client, considering that the project will apply the new Environmental and Social Policy framework, IFC will review the effectiveness of the implementation of the requirements under the existing transaction. IFC will also review, if required, the capacity of the FI to manage social and environmental risks and to establish and maintain a Social & Environmental Management System (SEMS). If required, IFC will suggest Supplemental Actions to address any gaps in the SEMS. Based on the review, the project will be required to:

- Develop an, or upgrade, if necessary, any existing SEMS, prior to disbursement to the satisfaction of IFC;
- Identify responsible, qualified persons to manage and implement the SEMS;
- Commit to implement the SEMS, to ensure that its investments/activities supported by IFC financing are in compliance with the Applicable Requirements;
- Commit to take action to remedy any gaps in SEMS implementation on an ongoing basis;
- Submit a periodic report to IFC as per a format to be provided by IFC.

IFC PROJECTS