The ratings of China Investment Bank (CIB) are under review by Moody's Investors Service for possible upgrade in view of the proposed merger between CIB and the State Development Bank of China (SDB). CIB is a small mainland commercial bank, set up in 1981 as a conduit for the on-lending of funds from the World Bank and the Asian Development Bank and from foreign governments. Initially controlled by the Ministry of Finance, CIB was moved under China Construction Bank in 1994. In the recent years, the bank has been attempting to transform itself into a commercial bank. Moody's said it believed the lack of both a strong business franchise and a retail deposit base, as well as increasing competition, had hampered the bank's efforts in this direction. In addition, the ratings agency believed the bank would require a substantial injection of new capital if its operation and growth were to be prudently supported. Moody's said it had noted that SDB, in announcing the merger, had also indicated that CIB would retain its present name and all its existing businesses. CIB will apply to the China Securities Regulatory Commission for a licence to engage in investment banking. Moody's said its review would focus on the potential benefits and risks of the proposed investment banking business to CIB and the merged bank. The agency's rating of SDB's foreign currency debt is Baa1, which was lowered from A3 on December 3.