The International Financial Corporation (IFC) and Standard Chartered Bank (StanChart), a member of the World Bank Group, have established a $1 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 trade flows in emerging markets by allowing both institutions to share the risk of a portfolio of corporate and small and medium-sized enterprises (SME) trade flows equally.
The arrangement is expected to enable over $4 billion in trade finance across markets in Asia, the Middle East, and Africa over three years.
By promoting trade, the facility will help narrow the $1.5 trillion global trade finance gap at a time some banks are exiting the trade space.
The deal 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 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,” he added.
