The Trump administration has notified World Bank shareholders that President Donald Trump intends to pick senior Treasury Department official David Malpass as the U.S. nominee to lead the development lender, people familiar with the decision told CNBC and Reuters on Monday.
The nomination of Malpass would put a Trump loyalist and a skeptic of multilateral institutions in line to lead the world's largest development lender. Politico, which first reported the decision, said it would be announced on Wednesday, citing unidentified administration officials.
A White House spokeswoman declined comment to Reuters, and a spokesman for the U.S. Treasury did not respond to queries about the decision.
A senior administration official told CNBC that Trump "really liked" Malpass' experience.
"David has been covering the World Bank and inserting himself in World Bank matters for decades. The president likes Malpass, he served in his campaign and transition," the official said. "He shares the president's views. Malpass knows the World Bank senior staff and a lot of the senior staff support him."
A European diplomatic source said the Trump administration had notified several capitals of the Malpass nomination, adding that European shareholders of the bank were not likely to block it.
Malpass or any other U.S. nominee would still need to win approval from the World Bank's 12-member executive board. While the United States controls the largest share of board voting power and has traditionally chosen the World Bank's leader, challengers could emerge.
Malpass's criticism of the World Bank
Former George W. Bush Treasury official Tony Fratto suggested that European nations could end up blocking Trump's pick.
"The test is, for the Europeans, if they will finally object to a clearly unqualified American nominee," he said. "The alternative is to put in place a candidate who they know lacks interest in the very mission of the World Bank, and is instead hostile to the institution."
If approved, Malpass, the U.S. Treasury's top diplomat as undersecretary for international affairs, would replace Jim Yong Kim in the role. Kim stepped down on Feb. 1 to join private equity fund Global Infrastructure Partners, more than three years before his term ended, amid differences with the Trump administration over climate change and development resources.
Malpass in 2017 criticized the World Bank, the International Monetary Fund and other multilateral institutions for growing larger, more "intrusive" and "entrenched."
Over the past two years, Malpass has also pushed for the World Bank to halt lending to China, which he says is too wealthy for such aid, especially when Beijing has subjected some developing countries including Sri Lanka and Pakistan to crushing debt loads with its "Belt and Road" infrastructure development program. China is the World Bank's third largest shareholder after Japan.
But last year, Malpass helped negotiate a package of World Bank lending reforms tied to a $13 billion capital increase that aimed to limit the bank's lending and focus resources more on poorer countries. The reforms seek to "graduate" countries to private-sector lending and limit World Bank staff salary growth.
Given his history with the organization, some have objected to the notion that Malpass could lead the World Bank.
"There is no case for Malpass on merit," said Justin Sandefur, senior fellow at the Center for Global Development. "The question now is whether other nations represented on the World Bank's board of governors will let the Trump administration undermine a key global institution."
Malpass, 62, was an economic adviser to Trump during his 2016 election campaign. He served as chief economist at Bear Stearns and Co prior to its 2008 collapse and served at the Treasury and State Departments under Presidents Ronald Reagan and George H.W. Bush.
—CNBC's Eamon Javers, John Harwood and Stephanie Dhue contributed to this report