International Finance Corporation (IFC) is considering an investment of up to $150 million in a risk-sharing facility with Japanese lender MUFG Bank as the latter gears up to offer loans to banks in Europe and Central Asia with a special focus on Turkey.
The partnership will see both MUFG and IFC share equal risks in a portfolio of up to $300 million of senior loans, per a disclosure made by the World Bank arm.
MUFG will retain at least 50 per cent of the total cost of the project and will subsequently redeploy the capital savings from IFC towards its own sustainable energy finance (SEF) activities.
MUFG, formed in 2006 through a merger between Bank of Tokyo-Mitsubishi and UFJ Bank Limited, provides a range of domestic and international banking services from its offices in Japan and around the world.
Through the initiative, both MUFG and IFC hope to boost economic recovery during the COVID-19 health crisis.
“In the COVID-19 environment, this project positions the private sector as key to support the economic recovery process during this acute shock, shortening the time it will take for the most vulnerable to return to their traditional income-earning opportunities,” IFC stated in its disclosure.
In October, IFC proposed to extend a loan package of $150 million to Indonesian non-banking financial institution (NBFI) Finansia Multi Finance. The package will comprise senior loans committed in tranches to support Finansia’s lending programme to middle-low income households and MSMEs.
IFC said on its website that it is providing $8 billion in fast-track financial support to existing clients to help sustain economies and preserve jobs during this global crisis, which is likely to hit the poorest and most vulnerable countries the hardest.
In response to the COVID-19 crisis, it recently announced its plan to dole out $35 million to Bangladesh Prime Bank and $40 million to City Bank. Meanwhile, it is also providing $25 million to Hattha Kaksekar Limited, and $150 million to Vietnam Prosperity Joint Stock Commercial Bank. In India and China, it made headlines for proposing to offer $35 million to JK Paper, and $150 million to Muyuan Foods.