PSBC Equity Postal Savings Bank of China (PSBC) is the 5th largest PRC commercial bank in terms of total assets and 5th largest in terms of total deposits as of March 31, 2016.  It is a subsidiary of China Post Group Corporation (CPGC).  As of March 31, 2016, PSBC had a total of 40,057 business outlets covering all cities in China and 98.9% of the county areas, and had a retail client base of 505 million.  Leveraging its large network and broad coverage in urban and county areas in China, PSBC strategically focuses on providing financial services to communities, SMEs and Agriculture/ Rural/ Farmers (ARF, or Sannong) customers and are committed to meeting the financial needs of its customers.  PSBC launched a pre-IPO private placement and offered approximately16.92% ownership stake through the issuance of new shares to a shortlist of international and domestic strategic investors, including IFC. This investment is consistent with IFCs strategy for East Asia and China is a key market in achieving the WBG goal of universal financial access by 2020.  China accounts for approximately 16% or almost 400 million people of the worlds 2.5 billion unbanked population.  The investment in PSBC can play a critical and strategic role in expanding financial inclusion in China as it has one of the most extensive bank networks in the world and is also the leading bank in China for SME and rural finance. The partnership is a unique opportunity for IFC to reinforce and significantly expand its mandate of financial inclusion and poverty alleviation in China, given the aligned mandate between PSBC and IFC on financial inclusion, the unique broad outreach in frontier regions, and the potential growth of the institution. 1.	Promote access to finance for MSMEs and rural sector. IFC believes its participation in this project will facilitate access to finance for a large segment of the MSME market which is currently under served. Greater financial inclusion is a strategic priority for IFC in China and this project fits well into that overall objective. As stated above, the development impact of the project is significant and will help change the landscape of MSME/ rural finance in China. Nowadays, a number of policy banks, microfinance institutions, rural credit cooperatives and village and township banks are serving the MSME/ rural sector but none of them can compare to a large and professionally-operated commercial bank with the right mandate and mission, with the most in-depth outreach and strong capital position, and with globally first-class sponsors.  2.	Create jobs, alleviate poverty and boost shared prosperity. In China, MSMEs create 50% of GDP, 60% of tax but 70% of jobs and 80% of innovation; therefore an active MSME segment is critical to maintain employment. In the meantime, due to the unbalanced development between urban and rural areas in China, the poverty mostly lies on farmers. The support to MSMEs and rural sector is equivalent will lead to job creation and poverty alleviation in China.  3.	Promote best practice in banking and governance. As a State-Owned commercial bank, with long history of operating under administrative interventions, PSBC needs to enhance its banking expertise and adopt a more robust governance structure. IFC could bring its global expertise and experience in commercial banking to PSBC; furthermore, IFC''s potential nominee director can also play a major role in introducing international best practice at the Board level.  4.	Promote SOE equity reform, aiming for a more balanced shareholding structure, a market-oriented business model and higher operation efficiency. IFC''s catalytic role in bringing diversified investors will contribute to the ongoing overall SOE reforms in China; in addition, IFC''s extensive experience in privatization could serve as a useful reference to PSBC.