The Asian Infrastructure Investment Bank (AIIB)

Brief Overview Of The Asian Infrastructure Investment Bank (AIIB)

The Asian Infrastructure Investment Bank (AIIB) is a multinational development bank that has the sole mission of building infrastructure in countries that are in the Asian-Pacific region. The AIIB bank was an idea that was proposed by the Chinese government in 2013. The bank was subsequently launched in October 2014. The Asian Infrastructure Investment Bank started operating when an agreement was reached on the 25th of December 2015 following a declaration from ten (10) members of the bank who held 50% of the Authorized capital stock.

Currently, the Asian Infrastructure Investment Bank has 76 members and a total number of 26 prospective members from around the globe. Since the development bank began operations and till now, several big rating companies have rated the bank excellently.

 

Members of the Asian Infrastructure Investment Bank (AIIB)

The AIIB has 57 prospective founding members (PFM), and these prospective founding members can become  founding members provided they sign the articles of the agreement that was made in 2015 and by ratifying the articles of the agreement that was made in 2015 or 2016. All of the prospective founding members of the AIIB have signed the articles and 52 out of the 57 of them have ratified the articles including 92% of shares of all PFMs.

Thirteen (13) new states out of which 5 were regional (Afghanistan, Amenia, Fiji, Timor, Leste And Hong Kong) and 8 non-regional (Belgium, Canada, Ethiopia, Hungary, Ireland, Peru, Sudan, and Venezuela) were granted prospective membership in March 2017. Other states have subsequently been granted prospective membership as well.

Current data shows that as of April 2019, the number of states that have been approved membership of the AIIB is 100, comprising of 44 regional members, 31 non-regional members and 25 prospective members.

 

Shareholding Structure Of The Asian Infrastructure Investment Bank (AIIB)

The total Authorization Capital Stock of AIIB currently stands at $100 billion of which 20% of this amount is paid in shares to the bank and the remaining 80% are callable shares. Depending on the size of each member country, the shares are allocated using the GDP Norminal of 60% and GDP PPP of 40%. The number of shares determine the authorized capital fraction that is present in the bank as well.

Malaysia, Singapore and Portugal are three PFMs that did not subscribe to all allocated shares; and for this reason, 98% of shares are available to be subscribed to.

The votes of the AIIB are in three categories:

·        share votes, which is equivalent to the number of shares,

·        basic votes for all members constitute 12% of the total shares,

·        PFM votes (600 votes only).

 

How The Asian Infrastructure Investment Bank(AIIB) Is Governed

AIIB's governance structure comprises of:

• ·        Board of Governors -- made of 1 governor from each member state, made of top-level executives and is the highest decision-making body of the bank.

 

• ·        Board of directors-- comprised of 12 governors of which 9 represent states of the Asian-Pacific regions and 3 represent states from other regions.