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Brics bank on the move: NDB targets $41bn lending and new sovereign members

In a rare interview, the head of the New Development Bank set up by the Brics nations, KV Kamath, tells GlobalMarkets of his vision of attracting a host of new members that his finance director believes will lead to lending volumes quadrupling within less than a decade

The New Development Bank (NDB) is on track to quadruple its lending within just eight years as it brings in a host of new countries as partners, the fast-growing multilateral institution said yesterday.

In an exclusive interview with GlobalMarkets, NDB president KV Kamath said the bank would use its annual summit next month in Rio de Janeiro to decide which sovereigns it will invite to join the institution that was established by the Brics countries — Brazil, Russia, India, China and South Africa — just five years ago.

He said membership was both “under active consideration”, and “open to all members of the United Nations”. Once new members were in place, he said, new net annual lending to projects would rise “very quickly” to $18bn, from a projected $10bn in 2020, and $7bn-$8bn this year.

Kamath expressed his pride at the rate of lending growth managed by a development bank that did not exist until 2014. “Ten billion dollars [in new annual lending] is a sizeable number,” he said. “Other banks took far longer to hit that number, which we are reaching in just over five years.”

Leslie Maasdorp, the bank’s finance director, projected new annual lending would more than quadruple to $41bn by 2027. “That’s a very conservative number, and I believe we will exceed it as we are planning to bring in more partners,” he said. He tipped the NDB’s roster of sovereign members to increase five-fold or more by the middle year of the 2020s, and to include developed and developing countries alike.

Under the radar

The NDB has matured into an effective multilateral institution that has remained under the radar, rarely giving sit-down interviews with the media. But Kamath and his team have a clear sense of their identity and destiny. Based in Shanghai, it has an outstanding loan book of $10bn and an AA+ credit rating, and is focused on two specific ambitions: making local-currency lending more prevalent, and alleviating the negative environmental impact of new infrastructure, agriculture, energy and industrial projects in the emerging world.

Kamath pointed to lessons learned from the heady rate of development in China, one of the NDB’s five founding members, along with India, Brazil, Russia and South Africa.

Rapid growth has resulted in “a lot of damage to [China’s] environment. As India and much of Africa develop, damage will occur, and we will work to mitigate that damage happening and, where possible, repair it. A lot of our projects will focus on that.”

Maasdorp pointed to the importance of, wherever possible, pricing every loan the NDB does in the relevant local currency. “The IMF has been providing loans to fragile countries denominated in US dollars for decades,” he said

Kamath’s contract expires in July 2020, in line with the NDB’s single five-year fixed-term limits on senior executives, with Maasdorp set to depart 12 months later. The next president’s identity will be chosen by Brazil.

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