City Bank set to receive $75mn loan from AIIB, NDB

The AIIB will provide $50 million while the NDB will give $25 million

City Bank is set to receive $75 million in loans from the Asian Infrastructure Investment Bank (AIIB) and the New Development Bank (NDB).

Of the total, AIIB will provide $50 million while NDB will give $25 million, which is equivalent to Tk 9.14 billion.

The funds will be channelled into infrastructure, renewable energy, transport, technology, and green projects in Bangladesh’s private sector.

The agreement was signed at AIIB’s headquarters in Beijing on Sept 8, City Bank said in a media statement on Thursday.

The deal comes five months after the loan was approved.

“This is AIIB’s first-ever financing for a Bangladeshi private bank or company without sovereign guarantee. The long-term partnership reflects AIIB and NDB’s confidence in City Bank,” said Masrur Arefin, managing director of City Bank.

He added that the loan would stimulate private sector investment, expand long-term infrastructure financing and support projects in key sectors.

When asked when the funding would begin, Deputy Managing Director (Corporate Finance) Mesbaul Asif Siddiqui told bdnews24.com: “To receive funding, we are now preparing the pipeline.”

“Once the investment areas are identified, we can start receiving the funds.”

Although the loan is denominated in foreign currency, City Bank will be able to lend in both foreign and local currency based on client preference, Siddiqui said.

City Bank did not disclose the interest rate. However, a Bangladesh Bank official said the five-year financing would be linked to SOFR (Secured Overnight Financing Rate) CME six-month term.

SOFR interest rates currently stand at 4.2 percent.

Under central bank guidelines, local banks may add up to 4 percent, meaning City Bank’s lending rate would be capped at 8 per cent. This is lower than the average 12.5 percent interest rate on local currency loans in September.