Bank links to provide green credit

By Zhang Fengming  |   2008-6-17  |     ONLINE EDITION

THE Shanghai Pudong Development Bank today teamed with International Finance Corp to ease the provision of green credit to small and medium sized companies with up to 1 billion yuan (US$144.9 million) in credit available.

IFC, the World Bank's private-investment arm, will offer technical support and share half of the risk of the loans, the two parties said today.

IFC will provide as much as 500 million yuan in the event of default on the loans with a single case maximum of 40 million yuan.

Implementation of projects supported by the Pudong bank's loans is expected to reduce carbon dioxide emissions by more than 3.5 million tons a year, the equivalent of the emissions from 250,000 cars.

The Shanghai-listed bank inked the cooperation with IFC after six months' negotiations.

Pudong Bank, the Chinese partner of Citigroup, is the third Chinese bank linking with the IFC under the China Utility-based Energy Efficiency Finance Program, which works under the Ministry of Finance.

IFC may expand similar cooperations with more banks based on its successful cooperation with existing partners, said Michael K. Ipson, the IFC country manager for China and Mongolia.

IFC has signed so-called "risk-sharing" agreements with the Industrial Bank Co and the Bank of Beijing Co.

A total of 37 loans worth 645 million yuan have been approved under the mechanism by the end of 2007 by the Industrial Bank and the Bank of Beijing.

The program is expected to cut 20 million tons of carbon dioxide or other green house emission annually before 2010. Energy Efficiency projects with a combined credit of up to 10 billion yuan are expected.

The government has ordered banks to restrict lending to polluters and encouraged them to finance energy-efficient technology.

China is the world's second-largest oil consumer. The government aims to cut energy consumption by 5 percent this year for each unit of gross domestic product.