The European Investment Bank (EIB) and IFC, a member of the World Bank Group, have signed a cooperation agreement creating a Global Emerging Markets (GEMs) Risk Database Consortium to pool data and strengthen risk-management practices among multilateral development banks.
The agreement formalizes the relationship between IFC and EIB in the area of pooling loss data. It also provides a consistent framework for potential partners, including international financial institutions (IFIs) such as the European Bank for Reconstruction and Development, the African Development Bank, and the Inter-American Development Bank, which will be joining the Consortium.
EIB President Philippe Maystadt said: “In the context of promoting the development of the financial markets in emerging countries, the GEMs Risk Database initiative will enhance the cooperation and synergies among IFIs.”
“This is a great knowledge-sharing opportunity for IFC,” said Lars Thunell, IFC Executive Vice President and CEO. “We are pleased to be a part of this initiative, which will help strengthen risk management practices worldwide.”
Credit-risk data, such as default and recovery rates, have become a key element of the risk assessment process. The initiative will expand the universe for such information and strengthen risk management practices among organizations. It will also provide a common platform for enhancements and knowledge sharing.
In collaborating to create this data consortium, IFC and EIB worked to standardize the data collection processes. They structured the data in a way that keeps counterparts’ identities anonymous and preserves data confidentiality. The risk database and common methodology adopted by EIB and IFC have been reviewed independently by Standard & Poor’s and will now be made available to other multilateral development banks.
The consortium has been jointly spearheaded by Alain Godard, EIB Director for Financial Risk Management and Lakshmi Shyam-Sunder, IFC Director for Corporate Risk Management who described the initiative as especially fulfilling because it goes beyond the needs of individual institutions and creates something of wider benefit.
The European Investment Bank was created by the Treaty of Rome in 1958 as the long-term lending bank of the European Union. The task of the bank is to contribute towards the integration, balanced development and economic and social cohesion of the EU Member States. The EIB raises substantial volumes of funds on the capital markets which it lends on favorable terms to projects furthering EU policy objectives. In 2008, the EIB signed loans totaling €57.6 bn.
The EIB is also active outside the European Union. There, its lending is based on EU external cooperation and development policies. EU Mandates are: pre-accession (Candidate and Potential Candidate countries in the enlargement region), European Neighbourhood (Mediterranean Neighbourhood, Russia and Eastern Neighbours), Development (Africa, Pacific and Caribbean / Republic of South Africa), Economic Cooperation (Asia and Latin America). Lending under these mandates focuses on private sector development, infrastructure development, security of energy supply and environmental sustainability.
For further information on the EIB’s operations and new initiatives, please see www.eib.org ; and for full information on the 2008 EIB’s activities, refer to the Annual Reports (Activity and Corporate Responsibility Report, Statistical Report and Financial Report) downloadable at http://www.eib.org/publications.
IFC, a member of the World Bank Group, creates opportunity for people to escape poverty and improve their lives. We foster sustainable economic growth in developing countries by supporting private sector development, mobilizing private capital, and providing advisory and risk mitigation services to businesses and governments. Our new investments totaled $16.2 billion in fiscal 2008, a 34 percent increase over the previous year. For more information, visit www.ifc.org.