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International Finance Corp. Tests HF Waters

The International Finance Corp. is investing in a hedge fund to help banks decrease the capital to be kept aside against loans to small companies in emerging markets.

The International Finance Corp. is investing in a hedge fund to help banks decrease the capital to be kept aside against loans to small companies in emerging markets, Financial Times reports. The World Bank unit is allocating $100 million to a fund by Christofferson Robb & Co., which will acquire an additional $300 million from private investors.

The fund will operate with big international banks to use the cash to reduce the banks’ requirements under the Basel capital rules and decrease the impact of planned tighter rules. Banks will reinvest the money freed up that the fund creates back into developing markets. The fund will have a life span of almost six years.

Click here for the story from Financial Times.

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