HSBC and IFC Introduce $1 Billion Trade Finance Programme for Emerging Markets

In a significant move to address the global trade finance gap, HSBC and the International Finance Corporation (IFC) have announced a partnership to fund trade transactions valued at up to $1 billion. The initiative aims to bolster emerging market economies by addressing their critical trade financing needs.

Under this agreement, HSBC and International Finance Corporation (IFC) will share equal risk on a portfolio of trade-related assets held by banks in 20 emerging market nations, spanning regions such as Africa, Asia, Latin America, and the Middle East.

Key Highlights of the Initiative

Bridging the Trade Finance Gap

The programme seeks to bridge the substantial trade finance gap in emerging markets, particularly in Asia-Pacific. According to Riccardo Puliti, IFC’s Regional Vice President for Asia Pacific:

"There is a substantial and ongoing trade-finance gap in emerging markets in the Asia-Pacific region."

Supporting Global Trade and Exports

By facilitating cross-border trade and strengthening exports in critical industries, the programme addresses geopolitical tensions and trade barriers threatening supply chains and economic growth.

The global trade finance gap is estimated at $2.5 trillion, according to a report by the Asian Development Bank (ADB). Addressing this deficit is crucial for economic stability and supply chain continuity.

Enhancing Growth and Sustainability

Aditya Gahlaut, Co-Head of Global Trade Solutions for Asia Pacific at HSBC, emphasized:

"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."

Leveraging IFC’s Global Trade Liquidity Program

The initiative operates under the umbrella of IFC's Global Trade Liquidity Program, which has played a pivotal role in supporting over $80 billion in global trade volumes through nearly 30,000 transactions over the past 20 years. This programme builds upon a proven track record of success in facilitating trade finance in underserved markets.

Why This Matters for Emerging Markets

Emerging markets often face a significant disparity between demand and supply for trade finance, impeding their economic growth. This collaboration between HSBC and IFC is poised to empower local banks and businesses in emerging economies, enabling them to engage more effectively in international trade.

About HSBC

HSBC Holdings plc is one of the largest and most renowned financial institutions globally, headquartered in London, United Kingdom. With a rich history dating back to its founding in 1865 in Hong Kong and Shanghai, HSBC operates as a universal bank offering a broad range of financial services to individuals, businesses, and institutions.

Key Facts About HSBC:

1. Global Presence: HSBC serves over 40 million customers through a network that spans 64 countries and territories across Europe, Asia, North America, Latin America, and the Middle East.

2. Core Business Segments:

   • Wealth and Personal Banking: Offers financial planning, investment, and banking solutions.

   • Commercial Banking: Provides business banking services, trade finance, and lending.

   • Global Banking and Markets: Specializes in investment banking, risk management, and capital financing.

3. Focus on Sustainability: HSBC is committed to financing the transition to a sustainable economy. It has pledged to achieve net zero in its operations and supply chain by 2030 and its portfolio of financed emissions by 2050.

4. Innovative Solutions: The bank emphasizes digital transformation to enhance customer experience and streamline operations.

Why HSBC is a Key Player in Trade Finance

HSBC's extensive expertise in global trade and finance, combined with its commitment to bridging trade finance gaps, makes it a pivotal institution in fostering international trade, especially in emerging markets. By collaborating with global organizations like the IFC, HSBC reinforces its role in driving economic growth and enabling sustainable trade practices worldwide.

With a legacy of innovation and a global reach, HSBC remains a leader in supporting trade, business, and economic development on an international scale.