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    United States says EBRD facing questions about future

    Hurriyet English with wires
    19.05.2008 - 11:27 | Son Güncelleme:

    The United States said on Sunday the European Bank for Reconstruction and Development (EBRD) is facing key questions about its future as it considers adding Turkey to its investment countries, the AP reported.

    The London-based bank, holding its annual meeting in Kiev, has shareholders comprising 61 national governments, including the United States and Turkey, as well as the European Community and European Investment Bank.             

    The bank is rapidly approaching an important decision about its future strategic direction, U.S. Treasury under-secretary for international affairs, David McCormick told a meeting of EBRD governors.         

    "We will work with other shareholders to give Turkey's application a serious and thorough review in the coming months," he was quoted as saying by the AP.

    The EBRD's original mandate when it was created in 1991 was to encourage former Soviet countries to adopt market economies. The bank currently invests in 28 countries in central and Eastern Europe and the Commonwealth of Independent States (CIS).

    The EBRD’s board of governors convened again on Monday to consider a range of issues including plans to admit Turkey as a country of operations and the allocation of the banks net profits for 2007.

    But McCormick wrote in an article for British-based Emerging Markets magazine that the move could dilute the EBRD’s central focus.

    "While acknowledging the potential benefits of an expanded mandate, the United States and a number of other countries are concerned that it would dilute focus from the EBRD’s core mission," he wrote.

    Meanwhile, McCormick said on Sunday the United States would push for the EBRD to issue a shareholder dividend in 2009. "We expect that a dividend will be considered again next year," he said.

    The EBRD’s net profits fell by more than a fifth to 1.9 billion euros ($2.9 billion) last year, the bank said in March, when it also revealed that the bank president Jean Lemierre would leave in July.

    The earnings compared with a record-breaking net profit of 2.4 billion euros ($3.75 billion) in 2006, which sparked speculation that the bank could issue its first-ever shareholder dividend.

    "While we support the governors’ net income allocation resolution, we continue to believe that a small distribution would provide a strong and positive signal to investors of the opportunities for profit in this region," McCormick added.

     

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