GENEVA (Reuters) – Credit Suisse Chief Executive Tidjane Thiam hailed on Friday a draft pact to make lending to developing countries more transparent, saying the “transformational” accord could cut their borrowing costs.
Finance leaders from the world’s top economies this month adopted new principles to ensure countries that lend and borrow for infrastructure spending do so in a sustainable manner.
The principles, signed off by the Group of 20 finance ministers and central bank governors, now go to the G20 leaders’ summit in Japan on June 28-29.
“We expect to see the major banks in the world, including us, will voluntarily become signatories to these principles because they will bind us to a high level of transparency around our lending,” Thiam told an alumni forum of INSEAD, a Paris-based graduate business school from which he graduated in 1988.
“And we hope and expect more importantly that this transparency will lead to lower risk premiums for borrowing of emerging economies and also greater investor confidence in countries where they invest.”
He pointed out that around 15 African countries were now technically in a state of debt distress with levels of debt that risk their economic development and political stability.
Credit Suisse has had its own issues with lending to poor countries. It was one of the lenders that helped arrange $2 billion in government-guaranteed loans that tipped Mozambique into a debt crisis from which it is still struggling to recover.
The International Monetary Fund and foreign donors cut off support when the loans were disclosed in 2016, triggering a currency collapse and a default on Mozambique’s sovereign debt.
Mozambique in February filed a case in London’s High Court against Credit Suisse.
A former Credit Suisse banker pleaded guilty last month to a U.S. charge that she helped launder money from a kickback scheme involving the loans to state-owned companies in Mozambique.
Credit Suisse has said that the defendants hid their contact from the bank.
(Reporting by Stephanie Nebehay; Writing by Michael Shields; Editing by Jan Harvey)