World Bank president joins private equity firm following sudden resignation

World Bank President Jim Yong Kim sudden departure to join New York-based private equity firm Global Infrastructure Partners (GIP) has sent shockwaves through the international community. The surprise move at the top development finance bank raises questions as to why the multilateral boss would depart for Wall Street in such a hurry - and who the Trump administration might push forward as his replacement.

The move to the private sector follows Mr Kim’s unexpected 7 January announcement that he would leave the bank effective 1 February. He still had more than three years left on in his term.

Mr Kim will observe a one-year cooling off period in his new role which will bar him from doing business with the World Bank Group. Financing infrastructure in developing countries is the World Bank’s core business, raising the possibility of conflicts of interest.

In his statement following the 7 January announcement, Mr Kim stated that it had been “a great honour to serve as president of this remarkable institution” and that  “[the] World Bank Group is more important now than ever as the aspirations of the poor rise all over the world and problems like climate change, pandemics, famine and refugees continue to grow in both their scale and complexity”.

However, in a letter to staff explaining his decision to join GIP, Mr Kim’s comments can be read as veiled criticism of the public institution’s effectiveness. “The opportunity to join the private sector was unexpected, but I’ve concluded that this is the path through which I will be able to make the largest impact on major global issues like climate change and the infrastructure deficit in emerging markets,” he wrote.

Christopher Marks, managing director and head of emerging markets at Mitsubishi UFJ Financial Group, says: “Independent of the hand-wringing over politicised governance at the World Bank...his appointment as vice chairman at GIP is an excellent occasion to shake up multilateral development banks’ hesitant embrace of blended, public-private financing of infrastructure in emerging markets.”

GIP currently has $51bn under management and “makes equity investments in high-quality infrastructure assets in the energy, transport and water/waste sectors”, according to its website. The firm focuses on investment in wealthy OECD countries but says it can also pursue high-quality investments in emerging markets, though those remain in the minority in the current portfolio.  

Some of its investments include London’s Gatwick airport, US renewable energy giant Clearway Energy Group and the ports of Brisbane and Melbourne.

Mr Kim’s succession battle is expected to be heated, and comes at a time when the Trump administration has expressed deep skepticism about the role and value of multilateral institutions. Traditionally the World Bank head is selected by the US – the bank’s largest shareholder – while the Europeans pick the head of the International Monetary Fund.

The process of electing a new president will likely resurrect simmering debates as increasingly powerful emerging markets question their exclusion from the leadership selection process at top institutions.

Mr Kim, a physician by training and co-founder of non-profit Partners in Health, was nominated to lead the World Bank in 2012 by former US president Barack Obama. Previously a vocal critic of the organisation, his efforts to reform the bank have met with fierce internal resistance from staff.

His achievements during his time at the bank include securing a $13bn capital increase despite the current US administration’s dubiousness and replenishing the IDA fund for least developed countries.

Kristalina Georgieva, the bank’s chief executive, will take over as interim president when Mr Kim leaves. The Bulgarian national was EU finance chief before joining the Washington-based institution, and is seen as a potential contender for the permanent role.

However, observers in Washington speculate President Trump could push for a replacement who mirrors his skepticism of multilateralism and sympathizes with his anti-status quo global agenda.