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China’s $1.7 trillion hangover

China’s $1.7 trillion hangover

Up to 40% of China’s $1.7 trillion LGFV loans are at high risk of default. What’s a panicking Beijing to do?

April 1999

EBRD: Losing other people's money


The EBRD's shareholders demanded that the bank be big in Russia. The investment bankers running the place responded by making deals. The result? €261.2 million ($284 million) of losses last year more than half due to provisioning against the Russian portfolio. New president Horst Köhler says that strategy not volume must drive programmes in future - corporate governance, institution building and lending to small enterprises are his top priorities. But below him not a single head has rolled even though EBRD bankers sat on the boards of Russian banks that went under. Only in a public institution would they get off so lightly. Brian Caplen reports.


Where to from here?

It is Thursday March 11 and the press conference to announce the EBRD's financial losses is about to start. Deputy vice president David Hexter, who has overall responsibility for financial institutions and who sat on the board of the now-defunct Russian bank Tokobank, is sitting next to the bank's vice president of finance Steven Kaempfer.
What happens next says as much about the EBRD's attitude towards the concept of public accountability as it does about the mistakes made in its Russian portfolio - Tokobank started to go wrong only three months after the EBRD invested in it.

Kaempfer, who joined EBRD from Credit Suisse at the start of the year, plays the big leader tasked with fielding awkward questions from the press about the bank's losses. Looking important and ministerial he faces down a coterie of journalists assembled in one of the bank's conference rooms. But as...


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