IFC and DBS launch USD 500 million facility to promote trade flows in emerging markets
The facility helps bridge the record USD 2.5 trillion global trade finance gap
20% of the facility will target climate-eligible trade transactions
IFC’s first partnership with a Southeast Asian bank under its Global Trade Liquidity Programme
Sriram Muthukrishnan, Group Head of Global Transaction Services Product Management at DBS, signs the USD 500 million facility with Nathalie Louat, Director of Trade and Supply Chain Finance at IFC. Observing the signing ceremony are (back row from left to right): Simon Ong, Global Head of Financial Institutions Group at DBS, Gina Lim, Director, Financing Ecosystem at Enterprise Singapore and Arnaud Dupoizat, Manager, Financial Institutions Group at IFC East Asia Pacific. (Photo credit: DBS)
The facility includes IFC and DBS sharing the risk equally on a portfolio of trade-related assets of up to USD 500 million. This enhances DBS’ capacity to support more trade financing – such as Letters of Credit – with faster turnaround time to businesses trading with emerging markets counterparts, while better managing risk.
Emerging markets play an important role in achieving a low-carbon future. To accelerate the decarbonisation of trade flows across emerging markets, 20% of the facility will be allocated to climate-eligible trade transactions, such as the trading of renewable energy equipment, energy efficient equipment and climate-smart agriculture certified commodities.
The facility is part of IFC’s GTLP – a product designed to provide a countercyclical solution to the lack of trade financing in emerging markets by helping banks grow their credit limits, manage risk and support trade across developing markets which are often under-served. It is IFC’s first GTLP with a Southeast Asian bank and the first long-term investment project between IFC and DBS.
“As our trade finance exposure to emerging markets continues to grow at pace, we constantly seek innovative ways to support our clients’ evolving requirements. These include a greater focus on strengthening supply chain resilience, diversifying business models, establishing new markets, and capitalising on the significant increase in emerging markets trading and infrastructure activities,” said Sriram Muthukrishnan, Group Head of Global Transaction Services Product Management at DBS Bank. “This partnership with IFC enables us to support more clients with much-needed trade financing, catalyse opportunities for emerging markets businesses, and foster a more secure and sustainable global trade ecosystem."
Despite the critical role trade finance plays in economic progress, persistent trade finance gaps remain across emerging markets, exacerbated in recent years by heightened economic uncertainty. Small and medium-sized enterprises (SMEs) – which are direct beneficiaries of the financing – are particularly impacted, limiting their ability to participate in global commerce.
“In today's interconnected world, the importance of supply chains cannot be overstated, as they are the foundation upon which successful businesses and thriving economies are built,” said Nathalie Louat, Director of Trade and Supply Chain Finance at IFC. “We believe that IFC’s partnership with DBS will unlock opportunities for more businesses to reach new markets and expand their operations, fostering economic growth.”
In 2023, IFC signed a Memorandum of Understanding (MOU) with Enterprise Singapore (EnterpriseSG) to catalyse financing for Singapore enterprises in emerging markets. This is the first financing engagement facilitated under that MOU.
“Enterprise Singapore is committed to supporting the growth of Singapore enterprises globally by providing new financing solutions, and IFC has been a key partner in this effort. Last year, we signed an MOU with IFC to catalyse financing for our enterprises in emerging markets. We are glad to see that this has culminated in this collaboration between DBS and IFC,” said Geoffrey Yeo, Assistant Chief Executive Officer of Enterprise Singapore. “DBS has been an active financing partner in supporting Singapore enterprises’ overseas expansion. We hope to facilitate more of such collaborations in the future.”
Since inception, GTLP has – through global and regional banks – supported more than 400 financial institutions in 69 emerging market countries with over USD 53 billion in global trade volume.
[1] 2023 Trade Finance Gaps, Growth, and Jobs Survey, Asian Development Bank
About DBS
DBS is a leading financial services group in Asia with a presence in 19 markets. Headquartered and listed in Singapore, DBS is in the three key Asian axes of growth: Greater China, Southeast Asia and South Asia. The bank's "AA-" and "Aa1" credit ratings are among the highest in the world.
Recognised for its global leadership, DBS has been named “World’s Best Bank” by Global Finance, “World’s Best Bank” by Euromoney and “Global Bank of the Year” by The Banker. The bank is at the forefront of leveraging digital technology to shape the future of banking, having been named “World’s Best Digital Bank” by Euromoney and the world’s “Most Innovative in Digital Banking” by The Banker. In addition, DBS has been accorded the “Safest Bank in Asia“ award by Global Finance for 15 consecutive years from 2009 to 2023.
DBS provides a full range of services in consumer, SME and corporate banking. As a bank born and bred in Asia, DBS understands the intricacies of doing business in the region’s most dynamic markets.
DBS is committed to building lasting relationships with customers, as it banks the Asian way. Through the DBS Foundation, the bank creates impact beyond banking by supporting businesses for impact: enterprises with a double bottom-line of profit and social and/or environmental impact. DBS Foundation also gives back to society in various ways, including equipping underserved communities with future-ready skills and helping them to build food resilience.
With its extensive network of operations in Asia and emphasis on engaging and empowering its staff, DBS presents exciting career opportunities. For more information, please visit www.dbs.com.
About IFC
IFC—a member of the World Bank—is the largest global development institution focused on the private sector in emerging markets. We work in more than 100 countries, using our capital, expertise, and influence to create markets and opportunities in developing countries. In fiscal year 2023, IFC committed a record $43.7 billion to private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity as economies grapple with the impacts of global compounding crises. For more information, visit www.ifc.org
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