Written by Selena Lee
HONG KONG (Reuters) – HSBC and the World Bank's International Finance Corporation will jointly provide financing for trade transactions worth up to $1 billion, in a move to help fill a gap in emerging market trade financing.
The International Finance Corporation and HSBC said on Thursday that they will equally share risks related to a portfolio of trade-related assets held by emerging market banks in 20 countries in Africa, Asia, Latin America and the Middle East, according to a joint statement.
The deal aims to support cross-border trade and boost exports in vital industries as economies face geopolitical tensions and trade barriers that could create uncertainty about supply chains and threaten economic growth.
“There is a significant and persistent gap in trade financing for emerging markets in the Asia-Pacific region,” Riccardo Poletti, IFC’s regional vice president for Asia and the Pacific, said in the statement.
Demand for trade finance far exceeds supply, especially in emerging markets, where the global trade finance gap was last estimated at $2.5 trillion, according to a report by the Asian Development Bank.
“Reducing the trade finance gap and improving access to finance will be key to enhancing growth and sustainability across Asia and the region’s supply chains,” Aditya Gahlot, co-head of global trade solutions for Asia Pacific at HSBC, said in the statement.
This new facility was established under the IFC's Global Trade Liquidity Programme, which has supported more than $80 billion in global trade volume through nearly 30,000 transactions over the past 20 years.
