Interview: Sir Danny Alexander, Asian Infrastructure Investment Bank
Nicky Burridge caught up with the Asian Infrastructure Investment Bank’s Sir Danny Alexander at an ICAS event in Hong Kong, where he explained the bank’s vision.
Sir Danny Alexander could be dubbed an accidental banker.
He took up a post as Vice President and Corporate Secretary of the Asian Infrastructure Investment Bank (AIIB) in February this year, nine months after he lost his seat as MP for Inverness, Nairn, Badenoch and Strathspey in the 2015 general election.
Sir Danny is self-deprecating about his move, joking that it was not so much a case of him deciding to leave politics behind, as politics leaving him behind.
But if his change of career was not planned, his new role at the AIIB – the multilateral development bank which aims to support the development of infrastructure in the Asia Pacific region – is clearly one he relishes.
There is a huge economic interest for the UK and all of Europe to see the Asian economy get stronger and that requires infrastructure investment.”
“For me it is a fascinating project, not just because the objectives of the institution are worthwhile, but also because we are based in Beijing, and it is the first time that an international institute of this sort has been based in China,” he says.
“I am in the privileged position to shape, with the help of many colleagues, the way the institution works, and I am learning every day. That is a wonderful position to be in.”
From UK politics to banking
In his former post as chief secretary for the Treasury in the Coalition government, Sir Danny led the UK’s infrastructure programme for five years, and one of his decisions was to recommend that the UK should become an early member.
The move was controversial at the time, not least because other major countries, such as the US, declined to join.
Sir Danny says: “It was a bold decision. We were the first major developed economy that decided to join this initiative of the Chinese Government.”
He adds: “The UK has a strong record in playing a leading role in this kind of international institution; we have a lot that we can contribute. There is also a huge economic interest for the UK and all of Europe to see the Asian economy get stronger and that requires infrastructure investment.”
Today the AIIB has 57 member countries, which between them have committed $100bn of capital. Perhaps mindful of US scepticism about the bank, Sir Danny is keen to stress it has been set up to run along 21st century governance lines.
“We have to construct the institution in the right way, build the right culture and establish the core processes,” he says.
“But we also have to get our investments in, and in a year’s time, we will need to have a growing portfolio of investments in different jurisdictions and countries in Asia.”
'Lean, clean and green'
Sir Danny describes the bank’s operating principles as being lean, clean and green.
He explains: “Given that we are capitalised by taxpayers from around the world, we must be lean and keep strong control on our costs. It is quite easy for international organisations to be top heavy. We must also be clean, with zero tolerance for corruption and an openness to transparency, which is very important and not always familiar to all our shareholders.”
The bank also has a strong environmental focus. “In Asia, you have the twin challenges of climate change and urbanisation. Those are massive challenges,” he says.
When you come to this region you see a part of the world that is incredibly dynamic, where there are lots of opportunities, but also where people are very open to learning and sharing experience.
Another major challenge is Asia’s infrastructure requirements. Sir Danny explains: “From the perspective of social and environmental development, the infrastructure needs across Asia are enormous and the funding gap is also enormous, running into the many trillions of dollars.”
As a result, one of the bank’s key aims is to work with the private sector in order to mobilise funding.
“The needs dwarf the resources of all the sources, be they governments or international institutions. These problems are only going to be cracked if we can also mobilise private sector resources to a very large scale,” he says.
Sir Danny relocated to Beijing with his family earlier this year, a move he describes as a “fascinating personal journey”.
He jokes: “Two little red-headed Scottish girls attract a certain amount of attention in Beijing.” But aside from the challenges of learning Mandarin, he is enjoying life in China’s capital.
“It is a very safe city, there is a lot to do and the food is fantastic. I now cycle to work more or less every day,” he says.
Does he have any advice for chartered accountants who are considering making a move to Asia?
“Go for it. It is a fascinating and wonderful place to live,” he says. “When you come to this region you see a part of the world that is incredibly dynamic, where there are lots of opportunities, but also where people are very open to learning and sharing experience.
“People who come here can really make an impact and a difference.”
Sir Danny Alexander was speaking at an ICAS members’ event in Hong Kong on 15 September.