Ajay Banga, World Bank nominee must swap finance for climate

In January 2020, the then Mastercard chief executive Ajay Banga wrote a corporate call-to-arms on the payment company’s website. “I don’t think you need me to tell you why action on climate change is required,” he began. “Hectares of forests are on fire at any given time. Trillions of tons of glacial ice are melting. Temperatures are rising.”

Three years later, this urgent rhetoric is being scrutinised by bemused World Bank officials as they try to grasp who the man soon to become the institution’s president is, and what he stands for.

If backed by other shareholder nations, Banga, the new US nominee, faces the gargantuan task of revamping the bank’s mission against a backdrop of divided countries and clunky, uncooperative bureaucracy. The multilateral lender, established following the 1944 Bretton Woods agreement, has faced sustained criticism from smaller, less wealthy nations seeking help in paying for the ravages of climate change.

Wealthier countries have recently pushed the bank to offer more concessional finance for climate projects, engage in stronger mobilisation of private finance and push through reforms to free up more of its existing cash. The sudden exit of Trump-appointed David Malpass has provided an opening for the US — which typically chooses the bank’s leader — to install someone new.

But Banga, 63, who was born in India and is loved by Wall Street, is not who development financiers and others had in mind when weighing up who could accelerate the bank’s metamorphosis into a development lender with a green hue. “They have landed somebody nobody has ever heard of in our world,” says one development official.

Banga, a naturalised US citizen who declares himself a ‘Made in India guy’, studied economics at Delhi University before working for Nestlé and then launching fast food franchises, including Pizza Hut and KFC, as India’s economy liberalised. In 1996, he joined Citigroup, eventually becoming chief executive of its Asia-Pacific business, before joining Mastercard in 2009. He became CEO a year later.

The son of an army officer, Banga previously told the FT that moving around frequently as a child brought benefits later on. “I make friends easily. I adjust easily to new situations. I was always the new kid on the block, so I had to learn to break into established groups.”

Widely liked, he is described by those familiar with him as humble and approachable, a good listener and someone with a personal touch. A music fan, his tastes range from Sikh radio and jazz to Elvis Presley and Lady Gaga. “As a person, he can have a conversation with anyone” says Rick Haythornthwaite, who was chair of Mastercard when he was CEO.

Banga also presided over financial success. During his tenure at Mastercard he tripled revenues, increased net income sixfold and grew market capitalisation from under $30bn to more than $300bn. “Ajay has an unbelievable record at Mastercard,” says Ken Moelis of Moelis & Company. “He is one of the most respected figures in finance.” 

In recent years, Banga has served as chair of the investment holding company Exor, which owns a controlling stake in Juventus football club, and as an independent director at Temasek, Singapore’s state-owned investment fund. He also served as vice-chair of General Atlantic, a US private equity group, and advised its climate-focused fund.

In 2020, he launched Mastercard’s pledge to plant 100mn trees. “We see it as a platform to unite corporate sustainability efforts and make meaningful investments to preserve the environment,” he wrote. On the website, he boasted of its “green-certified offices” and efforts to attain a “zero-waste footprint”.

But these efforts raise eyebrows in the development world. “Cutting single-use plastics in the office cafeteria is well and good, but delivering and implementing climate investments in the developing world is a whole other ballgame — and I’m not sure he has that experience,” says another development official. “This is not at all what I was anticipating. The US administration has been messaging this would be a climate person”.

Successfully overhauling the Bank’s approach to climate will mean taking on some of the thornier measures proposed by a G20 panel last year, and grappling with the highly technical process of how the lender measures its financial risk. Banga’s backers hope his corporate experience, which includes work on microfinance and financial inclusion, will be an asset here — and when it comes to attracting more money from the private sector.

According to Rachel Kyte, dean of the Fletcher School at Tufts University, Banga’s previous work with governments should help him pick up the multilateral baton. “It’s an inspired choice,” she says. “He’s a proven change management leader.”

This is needed at the bank, which Janet Yellen has urged to engage in “stronger” mobilisation of private finance. Some shareholders want the reform effort to include new targets linked to how much private capital the bank leverages, rather than how much money it lends.

Nominations close at the end of March and, assuming there are no surprises, Banga will start in May. Meanwhile, bank watchers and the climate world will continue to parse his past for clues. He may be “a bit weak on the climate and development credentials”, says Claire Healy, director of the climate consultancy E3G in Washington. But he also seems “like a GSD guy — gets stuff done. And we need that now more than ever.”

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James Fontanella-Khan and Antoine Gara contributed reporting