IFC, HSBC team up to introduce $1b risk-sharing facility

It is part of IFC's Global Trade Liquidity Programme.

The International Finance Corporation (IFC) and the Hong Kong and Shanghai Banking Corporation Limited (HSBC) have signed a $1b risk-sharing facility designed to help banks in emerging markets increase their lending to support trade. 

The two parties will equally share the risk on a portfolio of trade-related assets, valued at up to $1b, held by emerging-market banks in 20 countries across Asia, Africa, Latin America, and the Middle East. The facility is part of IFC's Global Trade Liquidity Programme (GLTP), established to address the growing trade finance gap in emerging markets. 

Aditya Gahlaut, co-head of global trade solutions in Asia Pacific at HSBC, said the partnership aims to ensure that trade finance reaches where it is needed most, directing funding to a crucial segment for job creation and economic growth in these markets. 

Global trade has increased over the last three decades with a growth rate of 5% annually, yet demand for trade finance outpaces supply, especially in emerging markets, the IFC said. The global trade finance gap was last estimated at $2.5t, it added. 

GLTP has supported over $80b in global trade volume through nearly 30,000 transactions over the past 20 years. It has also assisted more than 400 financial institutions in 74 emerging markets, including 30 International Development Association members and nine conflict-affected countries since its inception.