China-backed AIIB sets target to be operational by year-end

[SINGAPORE] China-backed Asia Infrastructure Investment Bank (AIIB) on Friday set an ambitious target to become operational by the end of the year after a three-day meeting of prospective founding member nations in Singapore.

AIIB said in a statement that the meeting finalised the articles of agreement, which are expected to be ready for signing by the end of June, but did not give details.

Delegates told Reuters that China would likely take a 25-30 per cent stake in the bank, and India was likely to be the second-largest shareholder.

China's share in the US$100 billion lender would be less than 30 per cent, an Asian delegate told Reuters. A second delegate said India's share would be between 10 and 15 per cent. Both spoke on condition of anonymity.

In all, Asian countries are expected to own between 72 and 75 per cent of the bank, while European and other nations will own the rest.

A third delegate said each country representative would take the proposals back to their governments for a final decision.

Some were sceptical of the timeline for the bank to start running, as each member will need to obtain cabinet and legislature approvals at home. "It is uncertain if we can start from early next year," said a delegate, who declined to be named as he was not authorised to speak to the media. "China hopes that members will get such approvals by year-end and the operations start from the next year. But I wonder if it is possible, given domestic political situations in each country." A total of 57 countries have joined AIIB as its prospective founding members, throwing together countries as diverse as Iran, Israel, Britain and Laos.

The United States and Japan have stayed out of the institution, seen as a rival to the US-dominated World Bank and Japan-led Asian Development Bank, citing concerns about transparency and governance, although Tokyo for one is keeping its options open.

AIIB's launch is coming at a time when the space for infrastructure lending is already crowded due to the presence of major multilateral lenders and Japan's latest move to provide US$110 billion for Asian infrastructure projects.

The amount of Japanese funds, to be invested over five years, tops the expected US$100 billion capitalisation of the AIIB.

REUTERS