AIIB Freezes All Activities Related to Belarus and Russia, NDB Freezes New Russia Transactions

Posted by

The Asian Infrastructure Investment Bank (AIIB), headed by China’s Jin Liqun, has suspended all business related to Russia and Belarus over the situation in Ukraine.

Russia is the third largest shareholder at the AIIB, is among its founding members, and has a seat on the bank’s board of directors. As announced last year, the AIIB’s annual meeting for 2022 was due to be held in Russia.

Separately, the Shanghai-based New Development Bank (NDB), with a “much higher exposure to Russia” (Financial Times), has also “put new transactions in Russia on hold”. Russia is among the five main shareholders at this bank.

What happened

On Thursday the AIIB said in a statement: “Our bank is actively monitoring the situation and assessing its impact on AIIB’s operations and our members’ economies. We the management will do our utmost to safeguard the financial integrity of AIIB, against the backdrop of the evolving economic and financial situation. Under these circumstances, and in the best interests of the bank, management has decided that all activities relating to Russia and Belarus are on hold and under review.” The bank added that is “stands ready to extend financing flexibly and quickly and support members who have been adversely impacted by the war, directly or indirectly.” (See full statement here.)

The same day, the NDB released a brief statement: “The New Development Bank (NDB) applies sound banking principles in all its operations, as stated in its Articles of Agreement. In light of unfolding uncertainties and restrictions, NDB has put new transactions in Russia on hold. NDB will continue to conduct business in full conformity with the highest compliance standards as an international institution.”

Why is the move a surprise

The move may be a surprise to some as Beijing has close ties to Russia and has so far described the situation in Ukraine as a “military operation”. Yet, while China has acknowledged Russia’s broader “security concerns”, it has consistently called for a political settlement, even offering to mediate talks to broach a ceasefire agreement.

The AIIB is a multilateral development bank, founded in Beijing in 2016 as a counter to the Western-dominated World Bank and IMF, and is considered to be the brainchild of President Xi Jinping. China holds the AIIB’s majority voting rights at 26.53% while India and Russia are the next two biggest shareholders at 7.58% and 5.97%, respectively. Ukraine is not a member of the AIIB.

The NDB is also a development bank and was established by the BRICS group of emerging nations (Brazil, Russia, India, China, and South Africa). As per the NDB’s factsheet, Russia is one of its five major shareholders, each holding close to 20% of the bank’s subscribed capital.

What’s at stake

AIIB has approved US$800 million financing for Russian projects in the transportation infrastructure sector, and so the country accounts for only a small portion of the bank’s loan portfolio.

In October 2020, the AIIB extended financing equivalent to US$300 million to the Russian Railways (RZD) to alleviate temporary liquidity constraints due to the decline of long route passenger transport and deferred client payments against the backdrop of the COVID-19 pandemic. RZD owns and operates Russia’s integrated national passenger and freight railway network and is the largest commercial employer in Russia with around 900,000 employees at the end of 2019, as per the AIIB website. The AIIB’s funding for the “Russian Federation: Upgrade of the Electric Rail Fleet Project” is now on hold.

Previously, in December 2019, the AIIB had approved its first investment in Russia, loaning US$500 million for the improvement of transport connectivity and road safety in the country’s key economic corridors (see AIIB report here).

Meanwhile, two AIIB-funded projects were proposed for Belarus – in the domains of public health and transport: “Belarus: Belarus Emergency Response and Public Healthcare Support Project” (proposed funding: EUR116.27 million) and “Belarus: Rehabilitation and Upgrading of National Road R46” (EUR84.4 million). Financing for both these are now on hold.

As for the NDB, there are currently 15 approved projects for investment in Russia totaling about US$4.8 billion. These include:

  • US$550 million in loans for a Locomotive Fleet Renewal Project
  • US$300 million for an Affordable Housing Program
  • Up to US$1 billion equivalent for a COVID-19 Emergency Program

However, since the NDB’s statement says the bank is suspending “new transactions in Russia”, it is not immediately clear whether any of these projects will be affected.


Following Moscow’s invasion of Ukraine in late February, Western-backed sanctions have sought to shut out Russia from the global financial system. The G7 has sanctioned Russia’s central bank, wiping away almost half of the country’s foreign reserves held in G7 countries’ financial institutions. International companies have felt compelled to cut corporate and sales ties to Russia and many have retreated from tens of billions of dollars’ worth of investments. Some Russian banks have also been blocked from SWIFT, the messaging tool that powers the global banking transaction system.

Reuters reported on March 3 that the Moscow branch of a Chinese state bank had “seen a surge in inquiries from Russian firms wanting to open new accounts”. The news agency’s exclusive report stated that “200-300 companies” had approached the China state bank, quoting an anonymous contact with direct knowledge of the bank’s operations.