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Bank Representative Offices in Donor Countries: Establishment of a European Office and a Japanese Office

Following the opening of the North American Regional Office (NARO) in October 1995, this paper seeks approval for opening such offices in Europe (Frankfurt, Germany) and Japan (Tokyo).

The terms of reference for and functions of the NARO, modified for the different geographical coverage, should also apply to the latter. The European office would cost about $1.3 million and the Tokyo office about $1.8 million.

RELATED DOCUMENTS

Bank Representative Office in Donor Countries: Establishment of a North American Office A Review of the European Representative Office A Review of the Japanese Representative Office

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Contents

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Introduction

1. On 7 February 1995, the Board approved the document R33-95 entitled "Bank Representative Offices in Donor Countries: Establishment of a North American Office", which established:

• the need, rationale, and functions for Bank representative offices in donor countries in general, and one in North America in particular; and
• that, given the need for balance in donor representation, there was a case for establishing such offices in Europe and in Japan, subject to Board approval (copy attached for ready reference).

2. Following the opening of the North American Representative Office (NARO) in October 1995, this paper seeks Board approval for establishing such offices in Europe and Japan. As the need and rationale for representative offices in donor countries were articulated in the above-mentioned Board paper, (reference: Chapters I-IV), they are not repeated in this paper. The paper therefore focuses on location and cost of the proposed offices. It concludes with a recommendation to open new representative offices in Frankfurt, Germany and in Tokyo, Japan.

II. Proposal for Representative Offices in Europe and Japan

A. Functions and Terms of Reference

3. As noted in the above-mentioned Board paper, there are two broad functions for Bank representative offices in donor countries, which should apply equally to such offices in Europe and in Japan (reference: paras. 9, 14, 15 and 16, Ibid). Within these functions, the specific terms of reference given to NARO (reference: paras. 25 and 26, Ibid), as appropriately modified to reflect the difference in geographical coverage, should also apply to the representative offices in Europe and in Japan. For these offices, dissemination of information to governments and the general public including NGOs, and cooperation with financial institutions for purposes of enhanced resource mobilization should be given priority consideration.

B. Location

4. As several European member countries have expressed their interest to host the proposed office¹ , a comparative analysis has been carried out to help guide the decision. The factors considered pertain to quality and cost. Quality factors include those relating to availability of qualified local staff, infrastructure, access to financial institutions, proximity to international organizations, and contacts with media. Cost factors relate to local staff, office rent, office fitting out, and telecommunication. Among the quality factors, infrastructure (particularly air, rail and road connections) as it relates to dissemination of information, and access to financial institutions, both public and private particularly for cofinancing, are considered of particular importance to the Bank. After careful consideration of all relevant factors, it is proposed to locate the European Representative Office (ERO) in Frankfurt. For the Japanese Representative Office (JRO), Tokyo is proposed.

C. Organizational Arrangements

5. The organizational arrangements and staffing for ERG and JRG will follow those adopted for NARG (reference: paras. 18 and 29, Ibid).

D. Cost

6. The Appendix provides details on the estimated full costs of ERG and JRG, and the associated budgetary impact for 1996. In this regard, it has been assumed that professional staff positions will be redeployed from Headquarters, as noted in the above-mentioned Board paper (reference: para. 28, Ibid). In view of the desirability of full independence, it is not suggested that the host country provides office space or staff. The full costs for ERG are estimated at about $1.28 million, and JRG at $1.79 million, with a combined budgetary impact of approximately $1.27 million in 1996.² As in the case of NARG, every effort will be made to keep costs to a minimum (reference: paras. 28 and 31, Ibid).

III. Recommendations

7. It is recommended that the Bank open a European Representative Office in Frankfurt and a Japanese Representative Office in Tokyo in 1996, along the lines outlined in this paper. Following the framework adopted for NARG, performance assessments of ERG and JRG will be carried out at the end of the first two years of their operation (reference: paras. 19 and 30, Ibid).

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