Both the banks are expected to sell 40% of their new loans to IFC and a consortium of investors
JPMorgan and Germany-based Commerzbank have come forward to provide $2.25 billion funding to the Global Trade Liquidity Program initiated by the International Finance Corporation, a member of the World Bank Group – reported Financial Times. Both the banks will join the US-based banking major Citigroup, which committed $1.25 billion to the trade finance program this June.
It has been reported that the program was designed to improve and maintain a steady trade credit flow to the emerging markets, after an approximate $25 billion trade receivables collapsed in 2008.
According to the program, JP Morgan and Commerzbank are expected to sell 40% of their new loans to IFC and a consortium of investors, forming a new secondary market altogether to facilitate smooth trade flows once again. JP Morgan is said to use major part of its funding under this program across Asia, Eastern Europe and Latin America, while Commerzbank is expected to deploy in sub-Saharan Africa, where it has a significant presence.
Scott Stevenson, manager of the IFC’s global trade finance program, said: “Commercial banks all have their own amounts of exposure that they can take on. By participating in this, they can take on new exposures. It’s much speedier for us to get funds to the market by working through the banks’ networks,” reported the newspaper.