President Joe Biden on Thursday nominated Ajay Banga, the former CEO of Mastercard, to lead the World Bank.
The surprise selection would install in the role a Wall Street veteran positioned to leverage billions more in private capital the institution needs to transform into a leader on climate change and other global challenges.
Biden said in a statement that Banga is “uniquely equipped to lead the World Bank at this critical moment in history.” World leaders have called on the international lender to rethink how it addresses emerging global crises like climate change, food security and the coronavirus pandemic.
The nomination comes just days after current World Bank President David Malpass announced he would resign by July, months ahead of when the Trump administration-nominated leader’s term expired.
Banga, if confirmed by the World Bank’s board, will have to balance the climate agenda of the U.S., the bank’s largest shareholder, with concerns from other countries about a potential move away from the institution’s core mandates of fighting poverty and funding economic development projects within national borders.
The U.S. has historically been allowed to choose the head of the World Bank, although that dynamic has recently faced pushback from other nations.
Banga, an admired figure for decades on Wall Street, rose to prominence at Citigroup as a protege of then-CEO Sandy Weill. Raised in India as a Sikh, Banga cut a recognizable figure at parties and events with his stylish turban and humble approach.
Weill had to convince him to take the company jet after the Sept. 11 terrorist attacks instead of flying commercial and risking intense immigration scrutiny. Sikh Americans faced significant hostility from some Americans after the attacks even though they had no connection to Islamic jihadists.
Despite being in the mix to take over Citi from Weill, Banga decided to leave the bank to take over at Mastercard, which he led from 2010 to 2020.
Environmental advocates have put a premium on ensuring the next World Bank president will marshal its resources to address rising temperatures and deliver finance to green energy systems across the globe.
Yet Banga is a bit of a mystery to the climate-minded community.
“The World Bank is about a host of issues, which includes climate. So, I mean, first you actually have to run the bank, which is no small feat,” said Kalee Kreider, a longtime adviser to former Vice President Al Gore, who is now president of public affairs firm Ridgely Walsh.
Added Scott Morris, a senior fellow at the Center for Global Development: “Banga’s nomination clearly reflects a desire to focus on the World Bank as a bank and find ways to achieve greater scale in the financial model.”
Some environmental groups are less keen on the choice.
“Biden has chosen a planet-wrecking CEO for World Bank President,” said Bronwen Tucker, Public Finance Campaign Co-Manager at Oil Change International. “This is the sadly predictable outcome of a broken process, but he shouldn’t be allowed to name one in the first place.”
Still, green champions have also recognized that the World Bank’s power comes from bringing in more private capital needed to spark the type of investment crucial to keeping global temperatures from surpassing 1.5 degrees Celsius compared with pre-industrial levels.
Special Climate Envoy John Kerry, who has urged the World Bank to overhaul its practices to drive more capital into high-emitting nations and poorer ones struggling to adapt to a warmer planet, said Banga is the right person to deliver on that mission.
“Ajay has proven his ability as a manager of large institutions, and understands investment and the mobilization of capital to power the green transition,” Kerry said in a tweet. “He can help put in place new policies that help deploy the large sums of money necessary to reduce global emissions and help developing and vulnerable countries adapt, build resilience, and mitigate the impact of greenhouse gases.”
Banga is also an adviser to private equity firm General Atlantic’s BeyondNetZero fund.
“The White House has gone for a bit of an outsider who might shake things up,” said Sonia Dunlop of environmental think tank E3G. “He’s used to pushing big change, big change management stuff through big organizations -- and that’s what we need at the World Bank.”
While Banga might not be a household name to environmentalists, he is well-known to Biden world. He served on an Obama administration trade advisory council, chaired the U.S.-India Business Council, and more recently had been working with Vice President Kamala Harris’ office to “address the root causes of migration from Central America,” a White House official said.
Treasury Secretary Janet Yellen called Banga a “renowned executive” who is well-equipped to balance the sprawling institution’s core objectives with a new agenda focused on climate change.
“His efforts have helped bring 500 million unbanked people into the digital economy, deploy private capital into climate solutions, and expand economic opportunity through the Partnership for Central America,” Yellen said in a statement, POLITICO reports.
