Standard Chartered Bank and the OPEC Fund for International Development (OFID), a multilateral development financial institution, have expanded their Trade Finance Portfolio Risk Participation Programme from $500 million to $1 billion. The programme was initially signed in 2009 to help encourage more trade financing in emerging and developing countries.
The original programme generated an estimated incremental trade of $2 billion annually and the renewed agreement is expected to generate incremental trade volume up to $4 billion per year. The number of banks that will benefit from the programme has increased from 80 in 18 emerging and developing countries to 150 in more than 25 countries, benefitting around 20,000 clients. The renewed agreement has been expanded to include more financial institution trade products, which offer greater efficiency to obligor banks, providing access to trade finance without the complexities of documentary credit.
“Building on the success of the initial OFID programme, this increase allows us to expand our capacity to support the growth of world trade flows and provide additional credit capacity for more banks to support trade transactions,” said George Nast, global head of products for transaction banking at Standard Chartered. “In times of increasing uncertainty, we want to continuously encourage global trade, the lifeblood of the global economy, and continuously facilitate trade relationships and trade flows.”
Under the renewed agreement, OFID will provide guarantees against trade obligations of local banks in developing countries to improve capacity levels and increase confidence in local and regional trade flows, while Standard Chartered will originate and act as a distribution agent.
“OFID sees the programme as part of its strategy for scaling up support to its beneficiary countries to help alleviate difficulties relating to accessing credit in these days of credit disruption,” said Suleiman Jasir Al-Herbish, director general of OFID.