Standard Chartered, IFC add US$1bn to boost emerging markets trade

Standard Chartered and the International Financial Corporation (IFC), a member of the World Bank Group, have agreed to continue their trade finance partnership under the Global Trade Liquidity Program (GTLP) to provide a total investment of an additional US$1.0bn.

“Aimed at boosting global trade in emerging markets (EM) by increasing the amount of financing available, the third series of the GTLP comes at an essential time when many global banks are pulling back their support due to increasing compliance costs and higher capital requirements for trade under Basel III,” announced SC.

The bank added that it would use its “strong presence” in EMs and established trade finance capabilities to originate a portfolio of trade finance transactions of up to US$1.0bn through emerging market issuing banks (EMIBs) with the IFC participating up to 50% of the portfolio or up to US$500m. These EMIBs will further extend financing to local importers and exporters in their presence countries to promote global trade.

“Facilitating global trade and commerce is at the core of what we do as an international bank,” said Alex Manson, global head, transaction banking, Standard Chartered. “Renewing this partnership with IFC underscores our commitment to support and promote economic growth and help bridge the global trade finance gap; through GTLP, we expect to provide more than US$5bn to support trade across our footprint over the next three years.”

Originally established in 2009 in response to the global financial crisis, the prior facilities have been well-utilised, supporting over US$10bn combined in total trade, demonstrating significant impact by facilitating a large volume and number of transactions in lower income countries, with about 20% being used to support small and medium enterprises. “The GTLP provides much-needed liquidity, helping commercial utilisation banks to increase their credit limits, manage risk and support trade in challenging emerging markets,” SC added.

Marcos Brujis, global director of the financial institutions group at IFC, added: “Trade is the lifeblood of the global economy, a key driver of growth and job creation and a direct means of reducing poverty. IFC’s partnership with Standard Chartered, and this renewal of the successful GTLP facility, is a key part of IFC’s strategy to boost trade globally, creating new markets and new opportunities for lower income countries.”

The GTLP is a portfolio-based trade finance initiative that combines the efforts of IFC and commercial utilisation banks (UBs), such as Standard Chartered, to boost support for trade finance in emerging markets. It has proven to be a highly effective means of providing financing to facilitate trade within emerging markets and address the lack of trade finance to underserved importers and exporters in developing countries.

Under the risk-sharing model, IFC invests in pools of eligible trade transactions issued by EMIBs for up to a 50% participation or up to US$500m, with the remaining amount held by the private sector UBs.

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