The EBRD plans to increase the limits on its trade facilitation programme (TFP) from €800mn to €1.5bn for participating banks, to help them cope with the tightening credit conditions caused by the global recession.
The programme aims to strengthen the ability of local banks to provide trade financing and gives entrepreneurs in eastern Europe and the CIS the support they need to expand their import and export trade. In 2008, TFP concluded 1115 transactions and had its best year so far in terms of business volume with €886mn, as banks turned to the EBRD to help them weather the credit crunch.
Director of trade finance at Russian bank VTB, Olga Strekalova, commented, “There is no capacity in the market and the lack of funding is a problem. We need confidence in the market and there the EBRD can help. Volumes are still available and the demand is there, but banks are cautious.”
The banks continue to suffer from low market confidence, although bankers say that deals are still getting done in the trade finance market, unlike in some other areas of the capital markets.
Patrick Brockie from Citigroup, one of the most active confirming banks under the TFP, admits that 2008 has been difficult but in emerging markets it’s “business as usual”. “We’re doing similar volumes as in prior years and we remain active, but tenors of up to five years would be welcome from our perspective. The ability to be more flexible in this environment is very important.”
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