BRICS bank may open by year end

Membership in lender will not be limited to the five nations

The BRICS Development Bank will be operational as early as the end of this year or the beginning of 2016, and membership will not be limited to the group's five-member nations, Vice-Finance Minister Shi Yaobin said on Friday.

Shi said the institution will be open for all United Nations members, with inclusion agreed by its board of governors. He also disclosed preparation work for the new multilateral lender is well underway, including the creation of its articles of association to be approved by each nation's legislature, the establishment of the multilateral secretariat, and the formulation of its mandate and some specific policies.

The details were revealed in a statement on the Ministry of Finance's website. It also said the first meeting of the bank's board of governors will be in early July during the BRICS summit in Russia, at which it will formally appoint its president and vice-presidents.

It is still less than a year since top leaders from Brazil, Russia, India, China and South Africa announced the setting up of the bank, formally known as New Development Bank.

K.V Kamath, who headed India's leading private bank ICICI Bank for more than a decade, has already been named as the first president of the $100 billion bank. Zhu Xian, vice-president of the World Bank, has been picked by China as one of the four vice-presidents.

The bank's headoffice, meanwhile, has been earmarked for Lujiazui, Shanghai's financial hub, while an African regional center will be set up in Johannesburg, South Africa.

The announcement means officials will now have to move fast to establish the bank's position in relation to several other more established and emerging multilateral financial organizations, and the pressure will be on to get it operational as soon as possible.

Another priority will be to underline how the bank differs from the Asian Infrastructure Investment Bank, which has made a huge initial impact since it was first proposed by the Chinese government at the end of last year, attracting the likely membership of 57 countries from Asia, Europe, Africa, Latin America and Oceania.

Shi's statement insisted the BRICS bank will be complementary with the other established development finance organizations such as the World Bank and Asian Development Bank, and the enlarged group will learn from, and cooperate with each other, contributing to connectivity within Asia and the rest of the world.

Huang Wei, a researcher at the Institute of World Economics and Politics under the Chinese Academy of Social Sciences, said there was already a clear difference between AIIB and the BRICS bank.

The former is a regional organization mainly made up of Asian and European nations whose funding will be focused on infrastructure projects in the two continents, while the BRICS bank's scope will span a more diverse geography.

AIIB will also be more commercial-oriented, said Huang, while the BRICS bank will have a distinctly geopolitical flavor, "and also serve as a dialogue mechanism among the five countries".

It is possible their activities may overlap, Huang said, in some cases even compete each other in projects, insisting however that competition is not necessarily a bad thing.

Fan Yongming, director of the Center for BRICS Studies at Fudan University, said that "the BRICS bank represents the unified force of the emerging economies - it is a global, strategic bloc", adding the bank will not only complement, but also challenge the established organizations.

Time line

February 2012: The group's five finance ministers propose the bank at the G20 Summit.

March 2012: BRICS Development Bank officially put on the agenda at the fourth BRICS Summit in New Delhi, India.

March 2013: The fifth BRICS Summit held in Durban, South Africa, decided to establish the BRICS Development Bank.

July 2014: At the sixth BRICS Summit in Fortaleza, Brazil, the countries officially announce the setting up of the BRICS Development Bank, to be headquartered in Shanghai.

March 9, 2015: Russian President Vladimir Putin signs a decree to approve the creation of the BRICS Development Bank.

May 11, 2015: India names K. V. Kamath as the first president.

May 12, 2015: China appoints Zhu Xian as vice-president.