HSBC, World Bank's IFC launch $1bn trade finance programme for emerging markets

HSBC and the World Bank's International Finance Corporation (IFC) will jointly provide funding to trade transactions valued at up to $1 billion, in a move to help fill a gap in financing for emerging market trade.

IFC and HSBC said on Thursday they would equally share the risk on 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 bolster exports in critical industries as economies face geopolitical tensions and trade barriers that could create uncertainty for supply chains and threaten economic growth.

"There is a substantial and ongoing trade-finance gap in emerging markets in the Asia-Pacific region," said Riccardo Puliti, IFC's regional vice president for Asia Pacific, in the statement.

Demand for trade finance far outpaces supply, especially in emerging markets, with the global trade finance gap last estimated at $2.5 trillion, according to a report from the Asian Development Bank.

"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," said Aditya Gahlaut, co-head of global trade solutions, Asia Pacific, at HSBC in the statement.

The new facility is set up under IFC's Global Trade Liquidity Program, which has supported more than $80 billion in global trade volume through nearly 30,000 transactions over the past 20 years.