Standard Chartered and International Financial Corporation (IFC), a member of the World Bank Group, have established a US$1.0 billion facility to boost trade finance in emerging markets, helping to sustain trade flows in developing countries and narrow the gap in global trade finance.
The initiative 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 risk-sharing arrangement is expected to enable over US$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 US$1.5 trillion global trade finance gap at a time when some banks are exiting the trade space.
The partnership builds on 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, including some of the world’s poorest countries. This 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 Senior Director of IFC’s Financial Institutions Group, Paulo de Bolle. “This facility is a unique partnership that can help counter de-risking trends in developing countries and support real-sector demand for trade finance.”
“As a leader in trade finance connecting our clients across the world’s most dynamic corridors, 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,” said Nicolas Langlois, Global Head of Trade Distribution, Standard Chartered.