Standard Chartered Bank has signed a new US$500mn risk-sharing programme with the OPEC Fund for International Development (Ofid), which could generate incremental trade of more than US$2bn a year.
The programme will see Ofid guarantee letters of credit issued by banks in emerging markets to support local companies' trade transactions. Meanwhile, Standard Chartered will confirm the letters and act as the risk originator.
It should help 20,000 corporates access new funding for their transactions. The first phase will cover 80 banks in 18 countries, but this will eventually be expanded to 150 banks across 25 countries in Asia, the Middle East, Latin America and Africa.
The programme was launched in Istanbul during the week of the IMF / World Bank meetings, when Karen Fawcett, Standard Chartered's head of transaction banking, and Suleiman J. Al-Herbish, director-general of Ofid, signed the agreement.
Fawcett told emeafinance that deals such as this "allow us to put far more volume through the existing credit appetite we have". "We’re on the ground, we have appetite for this, but there’s far more demand [for funds] than we can cope with ourselves," she added.
The deal is Standard Chartered’s second with a developmental organisation. In June, it signed a US$1.25bn global trade liquidity programme with the International Finance Corporation to boost trade flows to and from Africa, South Asia, the Middle East and Latin America.
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