This summary covers an investment by Deutsche Bank AG in its Bangkok branch in Thailand. The investor has applied for a MIGA guarantee of $20 million for a period of up to four years against the risks of transfer restriction and expropriation of funds.
This project involves insurance of a revolving shareholder loan facility from Deutsche Bank AG to its Bangkok Branch. Currently outstanding tranches will be repaid and the branch is expected to draw new tranches under the facility agreement before it expires. The loan serves as a capital injection to support Deutsche Bank’s investment banking activities in Thailand as part of the bank’s asset-liability management. Deutsche Bank AG is seeking MIGA’s coverage to complement and diversify risk mitigation provided by other market participants. The branch is active in interbank market and investment banking thereby contributing to deepening and strengthening the local financial and capital markets.
Environmental Categorization
The project is a category C under MIGA’s Policy on Social and Environmental Sustainability.
Development Impact
MIGA’s coverage for this loan is being proposed under the framework of the agency’s Financial Sector Initiative, intended to support financial institutions in cross-border investments into emerging markets. The global financial crisis had a significant impact on the Thai economy in 2009. Although the economy rebounded strongly in 2010 due to a surge in exports and fiscal stimulus, Thailand’s economy faces several long-term challenges to achieving higher and sustainable economic growth.
MIGA’s support for this project is consistent with objectives of the government’s Capital Market Development Master Plan for 2009-2013, which sets out a roadmap for finance sector development and reforms over the medium term. The master plan focuses on key dimensions of capital markets including developing the equity market, bond market, and money market. The goal is to help the country transform from a middle-income to high-income economy through increased contribution of the domestic capital market to financing domestic investment and economic growth.
