JP Morgan and the Opec Fund for International Development (Ofid) have signed a US$200mn risk participation agreement to increase trade finance in developing countries.
Under the agreement, JP Morgan will originate a portfolio of trade finance transactions from selected banks in around 20 developing countries to enable them to support their importer and exporter clients. In turn, Ofid will approve the lines for selected banks and provide strong credit enhancement.
Dani Cotti, global head of trade at JP Morgan told GTR at a press briefing last week that the programme will finance up to US$500mn a year and bring economic progress in the emerging world, regardless of the current market conditions.
“This comes at a time when the Basel III treatment of trade finance has been amended to help promote the trade of goods in the developing world and demonstrates our ongoing commitment to facilitating emerging market trade flows that are critical to sustaining the global recovery,” Cotti adds.
Suleiman Al-Herbish, Ofid’s director general explained to GTR that “Ofid’s plans are not to compete with the private sector or even less, to substitute for it”.
He continued: “Our aim is to act counter-cyclically when needed. Indeed, in the same spirit, we have allocated a great deal of our resources to the development of private sector investments, in markets that are still fraught with concerns for risks and costs of mitigation.”