The Inter-American Development Bank announced today the launch of its US$400 million Regional Trade Finance Facilitation Program (TFFP) with the signing of Confirming Bank Agreements with 16 international banks as “Founding Partner Banks”.
The TFFP, approved by the Board of Directors of the IDB in September 2004, is designed to assist economic reactivation and growth in Latin America and the Caribbean by counteracting the effects of volatile international capital flows through maintaining and even increasing the availability of short- to medium-term funding for international trade. The program is also expected to contribute to an increase in intra-regional and extra-regional trade.
By adopting a program that is similar to those adopted by other regional multilateral development banks, such as the European Bank for Reconstruction and Development and the Asian Development Bank, the IDB is contributing to the strengthening of the globally integrated network of correspondent banking relationships, thus leveling the playing field for international trade.
The TFFP will establish credit lines to provide coverage for participating banks in IDB borrowing member countries (Issuing Banks) on their individual trade-related transactions with international banks (Confirming Banks) to support credit transactions for exporters and importers in Latin America and the Caribbean.
Under the TFFP, the IDB will issue guarantees in the form of stand-by letters of credit in favor of Confirming Banks to support up to 90 percent of their exposure to Issuing Banks on individual eligible transactions that could have tenors of up to three years.
Invitations for this launch event were sent to international banks, which were identified by Latin American and Caribbean banks as active confirming banks in the region. The designation of “Founding Partner Banks” took place in recognition of the great interest shown by these banks and their contribution to developing the TFFP. Under the open architecture of the TFFP, the IDB expects more Confirming Banks to participate in the program in the future.
The names of the Founding Partner Banks are as follows: (in alphabetical order) ABN AMRO Bank, American Express Bank, Banca Intesa, Banco do Brasil, Banesto, Bank of America, Bank of Tokyo Mitsubishi, BNP Paribas, DnB NOR Bank, Itaú Group, Scotiabank, Standard Chartered Bank, Sumitomo Mitsui Banking Corporation, Toronto Dominion Bank, Unibanco, and Wachovia Bank.
The IDB is in the process of establishing lines of credit with banks in the Latin American and the Caribbean countries (Issuing Banks) and expects to initiate operations under the program by the end of April.
Among the banks that have made significant contributions to the development of the program over the past months are: ABN AMRO Bank, American Express Bank, Bank of America, BNP Paribas, Standard Chartered Bank, Sumitomo Mitsui Banking Corporation and Wachovia Bank (in alphabetical order).
- Christina MacCulloch