The International Finance Corporation (IFC) and Standard Chartered have agreed to renew and boost their Global Trade Liquidity Programme (GLTP) partnership with an additional US$1bn – in a bid to help boost global trade in emerging markets.
Standard Chartered says it will originate a portfolio of trade finance transactions of up to US$1bn through emerging market issuing banks with the IFC participating in up to 50% of the portfolio, or up to US$500mn. The issuing banks will further extend the financing to local importers and exporters to promote global trade.
The GTLP programme was launched in 2009, and has previously had targeted commitments of US$4bn from public sector sources. The programme is a global initiative that brings together governments, development finance institutions and private sector banks to support trade in developing markets and address the shortage of trade finance resulting from the global financial crisis.
According to the IFC, the program has supported nearly US$20bn of trade since its inception.
Global head of transaction banking at Standard Chartered, Alex Manson, comments: “Renewing this partnership with IFC underscores our commitment to support and promote economic growth and help bridge the global trade finance gap; through GTLP, we expect to provide more than US$5bn to support trade over the next three years.”
The programme facilitates transactions in lower income countries, with about 20% being used to support small and medium enterprises. It provides liquidity to help banks increase their credit limits, manage risk and support trade in challenging emerging markets.
Under the risk-sharing model, IFC invests in pools of eligible trade transactions issued by emerging market issuing banks for up to a 50% share.