Deutsche Bank has become the first global commercial lender to secure a standalone World Bank guarantee platform for a portfolio of trade transactions.
The Multilateral Investment Guarantee Agency (Miga) has created a €1bn platform covering Deutsche Bank’s non-payment risk on trade transactions involving select state-owned banks in emerging markets, according to a July 14 statement.
The platform runs for an initial period of three years with an option for a further three-year extension, Miga’s website showed.
The agency said the financing covered by the guarantees will target “a meaningful share of the trade finance volume” to the poorest countries, those affected by conflict, as well as SMEs and the agricultural, health and water sectors.
“Trade finance is the ‘working capital of nations’ and essential to achieving the job creation and economic inclusion needed to improve lives and livelihoods in our member countries,” said Junaid Kamal Ahmad, Miga’s vice-president of operations.
“Our partnership with Deutsche Bank will help us leverage its extensive geographic reach and experience in trade finance structuring and execution, which aligns with Miga’s goal to mobilise private capital as a multiplier for development finance.”
Global co-head of Deutsche Bank’s corporate bank, Gerald Podobnik, said “applying this portfolio framework positions us to support more client activity, manage risk more efficiently and facilitate trade flows globally”.
The broad platform is different from Miga’s typical trade finance guarantees, which typically provide cover to lenders for transactions with specific countries or obligors, sometimes at the request of governments.
Later this week, Miga is set to approve a US$508mn trade finance guarantee for Pakistan, which will help the country secure financing for critical imports such as oil and LNG, according to Miga’s website.
Miga last month joined a trade finance programme of its sister agency, the International Finance Corporation, with US$500mn in additional capacity to be initially allocated to HSBC.
