Operating context and challenges faced by MDBs and DFIs
MDBs and DFIs play a fundamental role in channeling financial resources towards developing countries to promote economic development and reduce poverty. The complexity of this already intricate mandate has been further compounded by the challenges stemming from the climate emergency, the aftermath of the COVID-19 pandemic, and the conflict in Eastern Europe. Furthermore, these global challenges have widened even more the investment gap in developing countries, now estimated at USD 4 trillion annually.
To adapt to the changed landscape, MDBs and DFIs are challenged by their shareholders and other stakeholders to implement comprehensive strategic and operational reforms, including through:
- Scaling up financial support for climate-related initiatives and ensure effective implementation of the MDBs’ joint approach to Paris alignment;
- Enhancing collaboration with the private sector and other MDBs and DFIs, involving a broader interpretation of the blended finance concept and a better allocation of risks between public and private parties;
- Reformulating their approach to risk tolerance by conducting an empirical evaluation of their risks and engaging in dialogue with rating agencies and supervisors to acknowledge preferred creditor status and callable capital;
- Broadening the application of innovative financial strategies to optimize MDBs' balance sheets and transfer risks to other parties;
- Reforming their own governance structure and strategic planning, ensuring sharper focus on mobilisation rather than their own balance sheet, and greater operational agility through a clearer division of responsibilities between the Board of Directors' strategic planning and oversight role, and the management's day-to-day role;
- Improving the end beneficary experience and the “time to market” through digital transformation, eliminating long bureaucratic processes, standardising rules and protocols, and streamlining approval and disbursement procedures.
Corporate strategy
- Develop and review strategic plans
- Design and develop financial products and instruments
- Set up blended finance structures
- Establish Public Private Partnership structures
- Redesign and review business and operating models
- Develop and review sustainability and ESG strategies
- Benchmark ESG market and stakeholder sentiment
Risk and regulatory
- Assess the impact of balance sheet optimisation techniques
- Develop and review the risk appetite framework
- Develop and review the enterprise risk management framework
- Integrate climate into the risk management framework
- Internal risk reporting services
- Credit risk modeling services
- Basel III/IV advisory services
IT Technology Strategy
- Improve reporting processes
- Automate process and report generation
- Develop and implement digital transformation roadmaps
- Design and implement cybersecurity frameworks
- Data analytics services
Program design and Implementation
- Provide technical assistance to corporate counterparties and financial intermediaries
- Develop and deliver training materials
- Support policy design and implementation
- Develop and review talent management frameworks
Our work for MDBs and DFIs:
- Banking and regulatory capital advice to a leading MDB
- Strategy and Product Design for a leading MDB
- Development a capital management strategy to enhance the financial capacity of an MDB in Africa
- Mid-term strategy development for a national development bank
- Paris Alignment advisory and training development for a leading multilateral development bank
- Wide range of advisory services to MDB's financial intermediaries: product development, climate risk integration, training development, and technical support
Banking and regulatory capital advice to a leading MDB
- Description of the client: Multilateral development bank that provides guarantees and risk mitigation tools to banks and insurances to de-risk their portfolios and operations in emerging markets
- Objective of the assignment: Determine the potential market size for the client's risk mitigation products and understand potential opportunities of the novel climate and ESG regulations
- Specific tasks performed during the assignment:
- Analysis of the regulatory issues and capital treatment of infrastructure projects and project finance transactions in emerging markets
- Identification of regulatory initiatives aimed at reducing capital requirements for climate change financing in banks’ portfolios
- Analysis of key strategies banks are taking to optimise capital consumption driven by climate change regulations
- Identification of innovative risk mitigation strategies that could help project finance transactions meet the criteria for high quality project finance under Basel III
- Provision of strategic recommendations to improve the design of the political risk insurance product to mobilise additional bank and insurance investment into climate related infrastructure projects in emerging markets
Strategy and Product Design for a leading MDB
- Description of the client: Multilateral development bank that provides guarantees and risk mitigation tools to banks and insurances to de-risk their portfolios and operations in emerging markets
- Objective of the assignment: Develop two innovative insurance products by leveraging the bank's existing risk mitigation products and assess their capital relief capacity
- Specific tasks performed during the assignment:
- Design a new guarantee product adapted to the needs of the bank debt providers and bond investors, and a capital relief and optimisation product
- Develop and implement a data and policy driven engagement strategy to secure the best possible treatment of the new products by regulators, supervisors and credit rating agencies
- Conduct a market testing of the new products
Development a capital management strategy to enhance the financial capacity of an MDB in Africa
- Description of the client: Multilateral development bank with operations in the whole African continent
- Objective of the assignment: Explore options increase the bank’s lending capacity and secure its AAA rating
- Specific tasks performed during the assignment:
- Proposed three scenarios with several underlying options that can be leveraged to secure AAA rating and increase financial capacity
- Developed a capital management model to assess proposed scenarios and analysed them based on predetermined qualitative and quantitative criteria
- Benchmarking and comparison of scenarios explored against actions undertaken by other multilateral development banks
- Conducted analysis on CRAs rating methodologies and the potential ways to strengthen the client’s credit rating
Mid-term strategy development for a national development bank
- Description of the client: National development bank that operates in southeast Europe
- Objective of the assignment: Conduct a mid-term strategy review to enhance the Bank's efficiency and unlock the full potential of the national economy in international financial markets
- Specific tasks performed during the assignment:
- Proposal on strategic guidelines for the Bank, including its key values, vision and mission statement, and formulation of the key strategic goals
- Proposal of a 5-year plan for the implementation of the identified strategic goals
- Evaluate the Bank's products and their alignment with the strategic objectives set for its establishment
- Defining recommendations for operational and organisational improvements
- Assessment of the minimum capital requirements for the implementation of the strategy
Paris Alignment advisory and training development for a leading multilateral development bank
- Description of the client: Private sector arm of a major multilateral development bank with operations globally
- Objective of the assignment: Provide advisory services to support the Bank’s financial intermediaries on Paris Alignment and development of a comprehensive training programme
- Specific tasks performed during the assignment:
- Development of a comprehensive training programme for financial intermediaries on aligning their operation with the Paris Agreement
- Presentation of the MDBs’ methodology for Paris alignment for mitigation and adaptation
- Provision of information on key trends in climate risk management (including TCFD) and sustainable finance at the global and regional levels
- Provision of training to the financial intermediaries on relevant tools applicable to the use of proceeds’ alignment and counterparty’s alignment respectively
- Development of templates and tools that financial intermediaries can utilise to develop its internal implementation of a PA management system
Wide range of advisory services to MDB's financial intermediaries: product development, climate risk integration, training development, and technical support
- Description of the client: +150 financial intermediaries (e.g., commercial banks, lending institutions, fund managers, National Promotional Banks and Institutions) of a leading multilateral development bank
- Objective of the assignment: Enhance the capabilities of financial intermediaries of an MDB in financing projects that contribute to climate change mitigation and adaptation and related areas, focusing on identifying eligible projects, measuring impact, and ensuring successful funding deployment.
- Specific tasks performed during the assignment:
Targeted bilateral advisory support to selected FIs implementing green intermediated finance activities
Development of financial products, on integration of climate risks considerations within their risk management and with market assessments
Advisory support provided to the Bank’s intermediated operations such as setting up a support helpdesk, preparation of reports and advisory guidance materials and development and delivery of training package for all FIs on issues such as EU Taxonomy
Technical support to potential FIs on compliance with the Bank’s frameworks relevant to green financing
Development of tools to properly asses the eligibility of their investments in line with the green criteria of the Bank
Contact us
Philippe Pierre
Advisory Partner, Government & Public Services Leader, EU institutions Leader, PwC Luxembourg
Tel: +352 49 48 48 4313
Patrice Witz
Advisory Partner, Technology Partner and Digital Leader, PwC Luxembourg
Tel: +352 62133 35 33
