MDBs face being trapped between nationalist pressures and global crises

Multilateral development banks must avoid becoming squeezed between ever-growing demands to deal with global threats such as climate change and the rise of nationalism among their member states keen to use these institutions for wider political agendas

  • By Elliot Wilson, Virginia Furness
  • 19 Oct 2019
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As the political and financial worlds come together in Washington DC this weekend, never has the role of multilateral development banks (MDBs) been more in question.

They stand at a crossroads, torn by conflicting demands on their time, energy and resources. On the one hand, it is crucial for them to work together to tackle issues like global growth and climate change. On the other, they are under pressure from populists and governments pursuing their own nationalist and isolationist policy agendas.

Werner Hoyer, president of the European Investment Bank (EIB), the world’s largest MDB, said the premise of development banks — multilateralism itself — was itself under threat. Pointing to US president Donald Trump’s decision to withdraw 1,000 American troops from Syria with no prior warning, was “one of the most terrible pieces of news you can hear”.

Pax Americana was, he said, “extremely useful to peace and prosperity. I find the partial [withdrawal] of America from that position leads to a strong or dangerous erosion of the idea of enlightened Western rule-of-law based democracies.”

“I am horrified by this and I hope it will not be the last word on this in Washington.” Anti-multilateralists, he added, “can be seen and heard everywhere. If Europeans don’t stick to multilateralism, it is dead.”

The challenges facing Bretton Woods institutions, new multilaterals like Beijing’s Asian Infrastructure Investment Bank (AIIB) and regional development lenders, are many and stark. At the apex, the IMF faces a showdown with Trump’s policy hawks, who oppose higher funding and shareholding quotas.

Catalyst for change

Leslie Maasdorp, finance director of the New Development Bank, a Shanghai-based multilateral founded in 2015 by China, India, Brazil, Russia and Saudi Arabia, said the “real debate among MDBs is whether these institutions are still fit for purpose”, and capable of working together to tackle complex issues like climate change. “We need to expand our capital, use it better, and use it to become a catalyst of change, rather than just lending” to worthy projects, he said.

Other development experts pushed back against claims they failed to find common ground over trans-national causes and projects. “We are in daily contact with [other MDBs],” Takehiko Nakao, the president of the Asian Development Bank (ADB), told GlobalMarkets.

“We totally co-ordinate with one another. Traditional MDBs were founded on the basis of collective action, and we are guided by our shareholders.”

Bruno Balvanera, Central Asia managing director at the European Bank for Reconstruction and Development, noted advances made by MDBs working with Uzbekistan and its reformist president Shavkat Mirziyoyev. The EBRD is holding meetings this week with the World Bank, EIB, Islamic Development Bank and ADB to determine a collective strategy in Central Asia’s most populous state.

The final question is whether the biggest and boldest development banks will remain international both in ownership and outlook, or morph into single-interest vehicles attuned to the demands of a single, powerful sovereign.

Asked if the world would emerge under the control of, say, three global MDBs, with the World Bank skewed toward the needs of the US, the AIIB dominated by Beijing, and the EIB running the table in Europe and Africa, ADB chief Nakao looked affronted by the suggestion.  “Why are you only naming three [institutions],” he replied. “What’s wrong with the ADB?”

  • By Elliot Wilson, Virginia Furness
  • 19 Oct 2019

All International Bonds

Rank Lead Manager Amount $bn No of issues Share %
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1 JPMorgan 164.80 545 9.83%
2 BofA Securities 139.54 459 8.33%
3 Citi 128.00 437 7.64%
4 Goldman Sachs 99.84 283 5.96%
5 Barclays 92.11 342 5.50%

Bookrunners of All Syndicated Loans EMEA

Rank Lead Manager Amount $bn No of issues Share %
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1 Deutsche Bank 9.11 38 6.62%
2 UniCredit 7.52 36 5.46%
3 BofA Securities 7.39 29 5.37%
4 BNP Paribas 7.38 42 5.36%
5 Credit Agricole CIB 6.01 35 4.37%

Bookrunners of all EMEA ECM Issuance

Rank Lead Manager Amount $bn No of issues Share %
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1 Credit Suisse 3.10 7 9.19%
2 JPMorgan 3.10 21 9.18%
3 Citi 2.87 19 8.51%
4 Morgan Stanley 2.81 15 8.33%
5 Goldman Sachs 2.43 15 7.19%