GLOBAL – Standard Chartered Bank and International Finance Corporation have established a US$1 billion facility to facilitate trade finance in emerging markets, helping sustain trade flows in developing countries and narrow the gap in global trade finance.
The initiative according to the IFC, will support significant trade flows in emerging markets by allowing IFC and Standard Chartered to share the risk of a portfolio of corporate and small and medium-sized enterprises (SME) trade flows on a 50-50 basis.
The IFC in a statement revealed that the risk-sharing arrangement is expected to enable over $4.0 billion in trade finance across markets in Asia, the Middle East, and Africa over a three-year period.
By promoting trade facilitation, the facility will help narrow the $1.5 trillion global trade finance gap at a time when some banks are exiting the trade space.
The partnership will leverage Standard Chartered’s longstanding presence in emerging markets and leading trade finance capabilities, and IFC’s global reach and market coverage to increase the availability of trade finance in some of the most challenging markets in the world.
The world’s poorest countries are among countries set to benefit from the partnership which will bring trade finance to local and regional companies, some of which are credit-constrained and rely on bank trade facilities to manage cash flows and purchase raw inputs.
“Trade is a key driver of economic growth in emerging markets,” said Paulo de Bolle, Senior Director of IFC’s Financial Institutions Group.
“This facility is a unique partnership that can help counter de-risking trends in developing countries and support real-sector demand for trade finance,” added de Bolle.
On his part, Nicolas Langlois, Global Head of Trade Distribution, Standard Chartered said, “we are committed to facilitating global trade and driving the growth and prosperity of local economies.”
“We are delighted to be partnering with IFC to further our efforts,” added Mr. Langlois
Standard Chartered is a leading international banking group, with around 86,000 employees and a 150-year history in some of the world’s most dynamic markets.
The bank offers financial services to the people and companies driving investment, trade and the creation of wealth across Asia, Africa and the Middle East.
The investment with IFC will thus bolster the bank’s efforts to offer credit facilities to deserving businesses in these regions and thus spur economic growth.