The EBRD will be able to increase substantially its trade activities across the Commonwealth of Independent States after a group of international insurance underwriters agreed for the first time to back a multi-million dollar EBRD trade programme for the region.

The new €183mn EBRD-led trade facility will be underwritten by Ace Global Markets (AGM), which is leading the group of insurers, and by Catlin Syndicate 2003, XL Syndicate 1209 and Kiln Syndicate 510 at Lloyd’s of London.

Under its Trade Facilitation Programme, the EBRD guarantees local issuing banks, which in turn guarantee local importers. The backing by the syndicate group will enable the EBRD to double its exposure for selected issuing banks in Azerbaijan, Georgia, Moldova, Russia, Tajikistan and Ukraine.

This support is a significant new development in trade finance, says Rudolf Putz, Head of the EBRD’s Trade Facilitation Programme. It will allow the bank to increase its risk-taking capacity to further develop trade across the CIS, which can support economic growth and create jobs, he added.

Julian Edwards, head of political risks and credit at AGM, adds: “This is an important region for Ace and we are proud to be associated with this partnership between the EBRD and the private sector. This policy will enable the EBRD to leverage its capacity to further its development aims in the region. ACE itself is actively involved on the ground in this region and recognizes the area’s significant potential.”

James Cunningham, head of political risks at Marsh, which acted as insurance agents for the EBRD, and led the structuring, placement and syndication of the policy, says: “The EBRD policy is unique in the private insurance market in terms of its custom-built structure, the nature of the underlying risks that are insured, and the high standards put on transparency, best practice and operational procedures.”

Established in 1999, the TFP supports trade to, from and within the EBRD’s 29 countries of operations. It assists issuing banks in building track records with their correspondent confirming banks. This reduces cash collateral requirements and freeing up clients’ working capital by providing guarantees for the payment of various trade finance instruments issued by local banks. The EBRD programme has been a template for other International Financial Institutions now actively involved in trade finance.

Under TFP, the EBRD has facilitated more than 5,400 trade deals worth nearly €3bn. This year the programme is on course for another record year, with business volume expected to exceed last year’s total of more than €500mn. The programme now includes more than 100 issuing banks in the region, with limits exceeding €1bn in total, and 600 confirming banks globally.