The Asian Development Bank and reinsurer Swiss Re announced an agreement on Wednesday to boost regional trade by guaranteeing financing risks for exporters and importer in poor countries.
The guarantee means banks can be more comfortable lending to these companies, which need short-term funds to pay for their import-export activities, boosting trade.
Under the agreement, Swiss Re will insure $250 million of financing conducted through the ADB's trade finance programme, which provides guarantees and loans — within 24 hours — through more than 200 banks.
The pact is the first time that Zurich-based Swiss Re has provided insurance via a trade programme run by a multilateral development bank, while it is also the first time the ADB has offset risk with a private insurance firm.
'Many other Asian nations find it difficult to export or import key goods because they struggle to get the trade finance they need from international and local banks,' an ADB statement said.
To bridge the gap, the ADB has been providing guarantees to banks to enable them to lend to export and import firms in countries where financing is difficult to get because of perceived risks.
The ADB said its agreement with Swiss Re would allow it to provide more support to countries that need it most.
The ADB said its trade financing programme supported 783 transactions worth $2.8 billion last year, with banks in Bangladesh, Vietnam, Pakistan, Sri Lanka and Nepal among the most active users of the facility.
Source : New Age
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