The Inter-American Development Bank (IADB) has launched its US$400mn regional trade finance facilitation programme (TFFP) with the signing of confirming bank agreements with 16 international banks as “founding partner banks”.

The TFFP is designed to assist economic reactivation and growth in Latin America and the Caribbean by counteracting the effects of volatile international capital flows through maintaining and even increasing the availability of short to medium-term funding for international trade. The programme is also expected to contribute to an increase in intra-regional and extra-regional trade.

By adopting a programme similar to those adopted by other regional multilateral development banks, such as the European Bank for Reconstruction and Development and Asian Development Bank, the IADB says it is contributing to the strengthening of the globally integrated network of correspondent banking relationships, thus levelling the playing field for international trade.

The TFFP will establish credit lines to provide coverage for participating banks in IADB borrowing member countries (issuing banks) on their individual trade-related transactions with international banks (confirming banks) to support credit transactions for exporters and importers in Latin America and Caribbean.

Under the TFFP, the IADB will issue guarantees in the form of standby letters of credit in favor of confirming banks to support up to 90% of their exposure to issuing banks on individual eligible transactions that could have tenors of up to three years.

The founding partner Banks are: ABN Amro, American Express, Banca Intesa, Banco do Brasil, Banesto, Bank of America, Bank of Tokyo-Mitsubishi, BNP Paribas, DnB Nor Bank, Itaà Group,  Scotiabank, Standard Chartered, Sumitomo Mitsui Banking Corp, Toronto Dominion, Unibanco, and Wachovia.

The IADB is establishing lines of credit with banks in the Latin American and Caribbean countries (issuing banks) and expected to initiate operations under the programm by the end of April.