Countries from five continents formally signed up Monday to the China-led Asian Infrastructure Investment Bank -- a potential rival to the Washington-based World Bank and the Asian Development Bank.

A total of 57 countries, including South Korea, have joined the AIIB to be operational by the end of this year with a paid-in capital of $20 billion and total authorized capital of $100 billion.

South Korea will contribute $750 million of paid-in capital over the next five years.

Korea’s chief delegate and Finance Minister Choi Kyung-hwan signed the articles of association creating the AIIB’s legal framework at a ceremony in Beijing’s Great Hall of the People.

According to the agreement, Korea will hold a 3.81 percent stake in the AIIB, making it the the fifth-largest shareholder after China, which holds 30.34 percent, India (8.52 percent), Russia (6.66 percent) and Germany (4.57 percent). This is the largest stake that South Korea has ever claimed in an international financial organization. In the U.S.-led World Bank and the Asian Development Bank, Korea ranks 19th and 8th in its stake size, respectively.

“We hope the entrance to the AIIB will bring larger business opportunities to South Korea’s advanced infrastructure and financial industries,” the Korean Finance Ministry said in a press release. 

The United States and Japan did not join the AIIB, citing transparency reasons, although China pledged high transparency standards in the AIIB. Yet the communist country secured 26.06 percent of voting rights, giving it de facto veto power on major decisions, which require three-quarters approval.

The presidential term for the AIIB will be five years, with one or more vice president. A board of governors will run the bank, while a 12-member board of directors will oversee the operations.

The signing ceremony came about 20 months after Chinese President Xi invited Korea to join the AIIB during his visit to Korea in October, 2013. Korea officially applied to join the organization on March 27.

The signing by founding members “is an embodiment of the concrete action and efforts made by all countries in the spirit of solidarity, openness, inclusion and cooperation,” Chinese President Xi Jinping said after the ceremony.

Signaling China’s central role at the bank, he added: “Now we are willing to listen to your views and proposals.”

The AIIB is expected to go into operation later this year and its headquarters will be in Beijing, despite calls from Indonesia that it be based in Jakarta, further cementing China’s influence over the institution.

But all financial terms in the agreement are in U.S. dollars, rather than China’s currency, the renminbi, and the bank’s working language will be English.

Washington sought to dissuade its allies from taking part but European countries including Britain, France and Germany have rushed to sign up as they seek to bolster ties with the world‘s second-largest economy.

There are some concerns over transparency of the lender, which will fund infrastructure in Asia, as well as worries that a resurgent Beijing will use it to push its own geopolitical and economic interests.

The articles of association promise the bank will “be guided by sound banking principles in its operations” and ensure its operations comply with “policies addressing environmental and social impacts.”

But equally vague statements in the past have done little to soothe critics.

Supporters say fears over undue Chinese influence are overblown, and that the participation by more than 50 countries will dilute Beijing’s power.

The articles of association specify that the bank’s president must come from the Asian region and will serve a maximum of two consecutive five-year terms.

Shi, a vice finance minister, said that China will “recommend a strong and powerful candidate” for the position, Xinhua reported.

In Tokyo, Japan’s Chief Cabinet Secretary Yoshihide Suga said: “We hope the AIIB will play a role as a financial institution that contributes to Asia’s development while meeting standards of international institutions, including for its governance.

“We’d like to watch it closely, including its actual operations.”

By Chung Joo-won and news reports (joowonc@heraldcorp.com)