IFC, HSBC ink US$1 billion risk-sharing facility to boost trade financing in emerging markets

The two will equally share the risk on a portfolio of trade-related assets held by emerging-market banks in 20 countries

THE International Finance Corporation (IFC), the World Bank’s private finance arm, and HSBC Holdings announced on Thursday (Dec 12) the signing of a US$1 billion risk-sharing facility to help banks in emerging markets increase lending for trade.

The two will equally share the risk on a portfolio of trade-related assets, valued at up to US$1 billion, held by emerging-market banks in 20 countries across Africa, Asia, Latin America and the Middle East.

The facility has been set up under IFC’s Global Trade Liquidity Programme, which aims to promote capital and trade flows in emerging markets.

Aditya Gahlaut, HSBC co-head of global trade solutions in Asia-Pacific, noted that trade finance is the “fuel that powers the global economic engine”.

“Our partnership with IFC will help ensure that... funding is directed to a segment crucial to job creation and economic growth in many emerging markets,” he said. “Reducing the trade finance gap and improving access to finance will be central to fostering growth and sustainability across Asia and the region’s supply chains.”

IFC regional vice-president for Asia-Pacific Riccardo Puliti added that there is a substantial and ongoing trade-finance gap in emerging markets in the region as well as globally, that must be addressed by improving access to financing for importers and exporters.

“Our strategic collaboration with HSBC aims to support cross-border trade and bolster exports in critical industries, particularly in countries that need it most,” said Puliti.

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