BY BAMIDELE FAMOOFO
IFC and HSBC Bank USA are partnering to support trade finance for emerging market issuing banks which will help the flow of critical goods to regions in Latin America, Central Asia, the Middle East, and Africa.
The regions have continue to face financing challenges as a result of COVID-19 and ongoing geopolitical disruptions.
The global trade and liquidity programme is designed to provide a much-needed solution through the partnership and includes a 50-50 percent risk-sharing facility in a portfolio of trade-related assets for up to US$600 million.
This is the first-ever long-term trade engagement between IFC and HSBC, and the partnership will complement IFC’s strategy to leverage HSBC’s broad network to promote trade flows in key markets across the globe. HSBC is the largest trade finance bank globally, and this engagement will hopefully be the first of many future partnerships between IFC and HSBC.
Regional Head of Product and Propositions and Portfolio Management and Distribution for Global Trade and Receivables Finance at HSBC, said Luis Torres, said “HSBC is excited to embark on this programme with IFC. “The Global Trade and Liquidity Programme will enable us to provide further financing opportunities to a segment of the market that requires significant investment. We look forward to expanding the relationship to include further programs targeting the varying needs of Emerging Market trade finance,” he noted.
IFC’s portfolio-based risk participation facilities with global banks provide critical financing support to address trade finance gaps in Emerging Markets whose trade flows have been interrupted and economies squeezed due to the pandemic and surging inflation across the globe. This is accompanied by the pressure for much-needed extended trade terms due to supply chain and logistics delays as well as the need for increased financing limits to support the higher prices of food and critical imports.
“The COVID-19 pandemic led to disrupted supply chains, surging inflation, and overall market anxiety along several value chains,” said Nathalie Louat, Director of Trade and Supply Chain Finance at IFC. “By expanding IFC’s capacity to deliver trade finance using the Global Trade Liquidity Program through an important partner as HSBC, our institutions can help businesses maintain their operations and speed up recovery as the pandemic eases and disrupted value chains rebuild in several key markets.”
The facility will use the Global Trade Liquidity Programme (GTLP) platform, an innovative and well-received trade finance programme launched by IFC in 2009.
