IFC, a member of the World Bank Group, and Sumitomo Mitsui Banking Corporation (SMBC) have announced a combined investment of $1billion in IFC’s Global Trade Liquidity Program (GTLP), designed to help fill the gap in emerging markets as many banks continue to reduce their trade finance lines. The program provides much-needed financing, helping banks to increase their credit limits, manage risk and support trade by small and medium sized businesses in challenging emerging markets.
The deal, the second tranche under the GTLP SMBC facility signed in March 2016, is expected to provide up to US$7.0 billion in trade finance over its 3-year term. The portfolio is global in scope, and is anticipated to cover about 100 emerging markets issuing banks in about 20 countries, including some of the world’s poorest and most fragile. GTLP has proven to be a highly effective means of providing financing, helping banks to derisk and facilitate emerging markets trade, especially for underserved importers and exporters.
“Trade is essential to achieve economic growth, a key driver of job creation and poverty reduction in the emerging markets. Along with this initiative, we’re working with SMBC on other aspects in trade finance space and look to cement our collaboration to deepen trade financing into some of the world’s poorest countries,” Hyung Ahn, IFC’s Global Head of Trade and Commodity Finance.
Over the years, SMBC has proven to be an excellent IFC partner with positive collaborations in treasury operations, syndications, and trade finance. SMBC has been among the most active banks under IFC’s Global Trade Finance Program and ranks highly in IFC’s syndications B loan program.
“We are very delighted to close this agreement with IFC. Strengthening Origination and Distribution is a key to serving our global customers’ Trade Finance requirements sustainably. Through working with IFC we aim to enhance our trade finance business to support the growing needs in the emerging market,” Masakazu Hasegawa, General Manager of Global Trade Finance Department at SMBC.
GTLP was originally established in 2009, in response to the global financial crisis and has now supported well over $50 billion worth of trade. GTLP is a portfolio-based trade finance initiative that combines the efforts of IFC and commercial utilization banks, such as SMBC, to quickly support trade finance involving emerging markets. Under the risk-sharing model, IFC invests in pools of eligible trade transactions issued by Emerging Markets Issuing Banks for up to 50 percent participation, with the remaining amount held by the private sector utilization banks.
Source: IFC. Read full information.
30 June, 2017
