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Japan finance minister says would be desirable for AIIB to work with ADB

Japan's Deputy Prime Minister and Finance Minister Taro Aso attends a news conference after attending the Asia-Pacific Economic Cooperation (APEC) finance ministers meeting in Beijing October 22, 2014. REUTERS/Kim Kyung-Hoon

TOKYO (Reuters) - Japanese Finance Minister Taro Aso said on Tuesday it would be desirable if the China-backed Asian Infrastructure Investment Bank (AIIB) could work with the Asian Development Bank (ADB) in meeting growing demand for infrastructure financing in Asia.

However, Aso, who last week gave cautious approval of the institution that Washington has warned against, said Japan was not ready to decide to join the Beijing-based bank by a March 31 deadline, citing lack of transparency in the bank's management.

At least 35 countries will join the AIIB by the March 31 deadline, the bank's interim chief announced on Sunday. It has been seen as a challenge to the World Bank and ADB, institutions Washington helped found and over which it exerts considerable influence.

"As demand for an absolute quantity of (infrastructure) financing is growing ... it's not a zero-sum" game between the AIIB and ADB, Aso told reporters after a cabinet meeting.

The problems is "that the AIIB is not transparent and nothing has been decided as to who is (involved), where to decide an executive board and who will examine" loans for each project, Aso said.

"It would be the most desirable that it will work together with the ADB to develop infrastructure in Asia, but it is hard to see it happen as rules are totally different."

Aso reiterated Japan's concerns over the AIIB's ability to sustain debt and respond to the environmental and social impacts of infrastructure development, which could affect existing loans by ADB, World Bank and other lenders.

"I don't know how my previous remarks were taken but Japan has been cautious all along," Aso said. "As these conditions are not met at all now we cannot give the answer by March 31 unless we receive responses."

(Reporting by Tetsushi Kajimoto; Editing by Kim Coghill)