HSBC and IFC Join Forces for Trade Financing

By Selena Li

HONG KONG (Reuters) – HSBC and the World Bank's International Finance Corporation (IFC) will jointly provide funding for trade transactions valued at up to $1 billion, aiming to fill the financing gap for emerging market trade.

On Thursday, IFC and HSBC announced they will equally share the risk on a portfolio of trade-related assets held by emerging-market banks in 20 countries across Africa, Asia, Latin America, and the Middle East, according to a joint statement.

The deal aims to support cross-border trade and bolster exports in critical industries, as economies are facing geopolitical tensions and trade barriers that could create supply chain uncertainties and threaten economic growth.

Riccardo Puliti, IFC's regional vice president for Asia Pacific, stated, "There is a substantial and ongoing trade-finance gap in emerging markets in the Asia-Pacific region."

Demand for trade finance significantly exceeds supply, especially in emerging markets, with the global trade finance gap last estimated at $2.5 trillion, according to an Asian Development Bank report.

Aditya Gahlaut, co-head of global trade solutions, 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."

The new facility operates under IFC's Global Trade Liquidity Program, which has supported over $80 billion in global trade volume through nearly 30,000 transactions in the past 20 years.

(This story has been refiled to make markets plural in the headline)