HSBC, IFC sign US$1 billion facility to support trade financing in emerging markets

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Partnership will help trade finance get to where it is needed, fuelling a segment that is crucial to job creation and economic growth, lender says

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An aerial photo taken on December 10, 2024, shows a cargo ship loaded with containers leaving Lianyungang Port in east China’s Jiangsu Province. Photo: Xinhua

Cheryl Arcibal

Published: 8:00am, 12 Dec 2024

HSBC and the International Finance Corporation (IFC) signed a US$1-billion partnership to help banks in emerging markets increase their lending to support trade.

The risk-sharing facility between one of Hong Kong’s currency-issuing banks and the private sector financing arm of the World Bank will cover trade-related assets held by banks in 20 countries in Africa, Asia, Latin America and the Middle East.

The facility has been set up under IFC’s global trade liquidity programme (GTLP), which was established to address the growing trade finance gap in emerging markets.

“Trade finance is the fuel that powers the global economic engine,” said Aditya Gahlaut, co-head of global trade solutions for Asia-Pacific at HSBC. “Our partnership with IFC will help ensure that trade finance gets to where it is needed [and] that funding is directed to a segment crucial to job creation and economic growth in many emerging markets.”

Reducing the trade finance gap and improving access to finance will be central to fostering growth and sustainability across Asia and the region’s supply chains, he added.

Over the last three decades, global trade has increased by an average of 5 per cent a year, but demand for trade finance has outpaced supply, particularly in emerging markets.