The Inter-American Development Bank (IADB) has closed the first transaction in Ecuador under its Trade Finance Facilitation Program (TFFP) with Ecuadorian bank Banco de Guayaquil. The IADB has extended its guarantee to cover the promissory note used to finance US imports to Ecuador by one of Banco de Guayaquil’s main clients.
The IADB issued this guarantee in favour of Wachovia Bank, thus sharing the risk assumed on the transaction with Banco de Guayaquil.
“We feel proud to be the first issuing bank in Ecuador to have completed a transaction under the TFFP. The process has been easy and agile, which provides us with more incentives to fully promote the facility with our clients,” says Euvenia Touriz, manager of the international division at Banco de Guayaquil.
The US$1mn deal has a tenor of six months and will help support regional trade in the Americas.
Banco de Guayaquil is the second largest bank in Ecuador, having positioned itself with a strong presence in both retail and corporate banking.
The bank has 120 branches and is part of a 1,700 ATM network throughout the country. Banco de Guayaquil is looking to broaden its support of Ecuadorian importers and exporters with the backing of the IADB. The TFFP can provide assistance to extend the bank’s trade financing terms and expand its international funding base among existing and new international correspondent banks.
The Trade Finance Facilitation Program, launched by the IADB in April 2005, is designed to promote economic reactivation and growth throughout Latin America and the Caribbean by increasing funding for international trade. Under the program the IADB issues guarantees to confirming banks to mitigate the risk from eligible issuing banks in export and import contracts with tenors of up to three years.