Saudi Arabia in talks to join the China-based “Brics bank”.

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The New Development Bank, the Shanghai-based lender better known as “BRICS bank”, is in talks with Saudi Arabia to admit the country as its ninth member, a move that would strengthen its financing options while l founding shareholder Russia struggles under the impact of sanctions.

The addition of the kingdom would strengthen ties between the bank, set up by the world’s largest developing economies as an alternative to Western-led Bretton Woods institutions, and the world’s second largest oil producer.

“In the Middle East, we attach great importance to the Kingdom of Saudi Arabia and are currently engaged in a qualified dialogue with them,” the New Development Bank told the Financial Times in a statement.

Talks with Saudi Arabia come as the NDB is preparing to undertake a formal assessment of its funding options, which have been called into question by the Russian invasion of Ukraine. The bank holds its annual meeting on Tuesday and Wednesday.

Membership would strengthen Riyadh’s ties with the BRICS countries at a time when even Saudi Arabia, the world’s largest exporter of crude oil, is pursue closer relations with China. Chinese President Xi Jinping hailed a “new era” in ties between the countries when he visited the kingdom late last year, and Beijing in March brokered a deal between Saudi Arabia and Iran to resume diplomatic ties.

Saudi Arabian officials were unavailable for comment.

The NDB was established in 2015 from the so-called BRICS countries – Brazil, Russia, India, China and South Africa – to finance development projects in emerging economies. It has lent $33 billion to more than 96 projects in the five founding member countries and has expanded its membership to include the UAE, Egypt and Bangladesh.

Saudi Arabia would be another shareholder with deep pockets as the NDB assesses its ability to mobilize funds, after the war in Ukraine has raised concerns about the bank’s dependence on Russia. As a founding member, Russia has an approximately 19% stake in the bank.

The NDB was forced to suspend its $1.7 billion exposure to Russia, or about 6.7% of its total assets, and to cease funding new Russian projects to reassure investors it was complying with sanctions led by the West against Moscow.

Fundraising options are “the biggest thing at the moment,” Ashwani Muthoo, director general of the NDB’s Independent Evaluation Office, set up last year, said in an interview. “We are struggling to mobilize resources.”

Muthoo, who declined to comment on the Saudi talks, said the council wanted to look into alternative instruments and currencies to bring resources. The NDB has been raising funds in Chinese renminbi and was trying to raise South African rand this year.

“We will have to analyze the situation in Russia, the war. . . these are the kinds of things we’re going to have to look at,” Muthoo said.

Moscow said it sees the bank as a tool to ease the impact of Western sanctions and move away from dollar-pegged oil sales. This was stated by Russian Prime Minister Mikhail Mishustin on a visit to China this week that Moscow saw “one of the bank’s main objectives” in defending the blockade against “illegitimate sanctions from the collective West”.

Also the Asian Infrastructure Investment Bank, another multilateral lender in which China is the largest shareholder froze its business in Russia last year, although it had much less exposure.

The moves by the NDB and AIIB reveal how even institutions intended as challengers to Western multilateral organizations have largely cooperated with financial sector sanctions against Russia due to their reliance on access to dollar funding.

Ratings agency Fitch downgraded NDB’s credit rating to double-A from double-A plus last July, warning that “reputational risk” from its Russian stake could potentially limit access to the dollar bond market.

This month, the agency revised the outlook for the bank from “negative” to “stable,” noting steps it has taken to mitigate its exposure to Moscow. Multilateral lenders generally rely on high ratings and low funding costs to lend at a lower price.

Additional reporting by Max Seddon in Vilnius