DBS has become the first bank in Southeast Asia to join a global trade programme run by the International Finance Corporation (IFC), in a US$500mn deal to support trade in emerging markets.

The IFC, the financing arm of the World Bank, will share half the risk on a portfolio of trade assets with issuing banks in emerging markets, according to the IFC website.

Singapore-headquartered DBS says the deal will help it provide more trade finance, with faster turnaround times, to new and existing clients trading in emerging markets.

“The facility covers trade finance products that facilitate the import and export of goods or services to or from an emerging market,” says DBS’ group head of global transaction services product management Sriram Muthukrishnan. “These can include letters of credit, guarantees and partnering banks in emerging markets to extend trade facilities to their local importers and exporters.”

Countries covered by the facility include Bangladesh, Brazil, Chile, India, Indonesia, the Philippines and Vietnam.

The facility has a tenor of three years, with a runoff period of up to one year, the IFC website shows. It was approved by the IFC in August 2023 and signed on March 26 this year.

Just under a quarter of the facility will be dedicated to “climate-eligible” trade transactions, the two institutions say, such as “the trading of renewable energy equipment, energy efficient equipment and climate-smart agriculture certified commodities”.

It is the first time the IFC has made an investment with a Southeast Asian lender under its Global Trade Liquidity Programme – one of several IFC schemes to support trade finance in emerging markets, which suffer from a shortage of available finance due to higher perceived risks. The agreement also marks the first time the IFC and DBS have collaborated on a long-term investment.

“In today’s interconnected world, the importance of supply chains cannot be overstated, as they are the foundation upon which successful businesses and thriving economies are built,” says the IFC’s director of trade and supply chain finance Nathalie Louat.

“We believe that IFC’s partnership with DBS will unlock opportunities for more businesses to reach new markets and expand their operations, fostering economic growth.”

The agreement is the first to be launched following a memorandum of understanding signed last year by the IFC and Enterprise Singapore, a government body set up to promote overseas expansion and trade by Singapore companies.