The ADB has partnered with Standard Chartered in a supply chain finance risk-sharing agreement – the first such arrangement in the development bank’s new SCF programme.

The agreement will support supply chain financing in Asia and is expected to finance more than US$800mn in transactions, the risk of which will be shared by the two banks. The majority of the financing will be directed through SMEs supplying large companies with materials for production, as well as retail sales.

The ADB’s SCF programme was approved by its board in late 2012.

“Since the board decision, we structured the programme, created template legal agreements, set in place back-office capabilities and negotiated our first agreement with Standard Chartered,” Steven Beck, ADB’s head of trade finance tells GTR.

The programme runs in association with the bank’s trade finance programme (TFP). However, while the TFP provides guarantees and loans to banks, the SCF programme will take corporate commercial risk and improve liquidity within the supply chains.

“Market gaps for supply chain finance impede economic growth and job creation, so it’s imperative that ADB get into this space,” adds Beck. “ADB is very pleased to sign this agreement with Standard Chartered to close market gaps in support of SME development and job creation in developing Asia.”