BRICS-built bank aims to shift the balance of global financial power
New Development Bank, the global lender formed by five of the world's biggest emerging markets, will take on riskier and more challenging projects than traditional global institutions such as the World Bank.
Leaders from Brazil, Russia, India, China and South Africa - collectively known as the BRICS - formally started New Development Bank (NDB) at a summit in Russia last week to boost financial and economic ties between the emerging markets bloc.
Since 2009, leaders of the five BRICS have been pushing for a greater say in the global financial order that up to now has centred around the International Monetary Fund and the World Bank - created by Western powers, mainly the USA - after World War Two.
The new BRICS-led bank is aiming to be operational by the first quarter of next year, Tito Mboweni, a non-executive director of the lender and a former governor of South Africa's central bank said in an interview with Bloomberg TV.
It will have initial capital of $50bn and aims to raise that to $100bn over time, providing an alternative funding source to the World Bank and the International Monetary Fund.
"We do need another development bank, but of a different kind," Mboweni said.
The BRICS nations, who are all members of the World Bank, "have nevertheless also found that there are problems with the World Bank group".
"We want to take on the riskier infrastructure projects and other development projects, but there may be cases where we have to work together," Mboweni said.
The so-called BRICS account for more than a quarter of the world's economic output, according to the bank's website.
The lender will be based in Shanghai and its first president is Kundapur Vaman Kamath, chairman of India's largest private sector lender, ICICI Bank. He said NDB will also have a regional headquarters in Johannesburg.
The lender plans to partner with institutions such as the Development Bank of Southern Africa to invest in infrastructure projects, he said.
"This is not a substitute for ... any other developmental financial institution," Mboweni said. "This is an additional source of funding, but we do want to do things differently." (Bloomberg)