Washington, D.C., June 6, 2014—
IFC, a member of the World Bank Group, is providing credit-risk protection
to Crédit Agricole Corporate and Investment Bank on a $2 billion portfolio
of business involving clients in developing countries.
Under the transaction—known as a credit-risk
transfer—IFC will provide a $90 million guarantee on a $2 billion portfolio
of assets related to emerging markets. The portfolio contains a variety
of asset classes, such as trade and commodity finance for both corporate
and financial borrowers.
This is IFC’s largest structured-finance
transaction. It is also the first of its kind by any bank globally to mitigate
credit risk across a variety of asset classes and borrower groups related
to emerging markets.
The deal reflects IFC's commitment to
private sector development, which is essential for ending poverty and boosting
shared prosperity. It will help expand access to finance and increase business
opportunities in emerging markets. New international capital requirements
are putting on pressure on banks to scale back financing—especially for
businesses in emerging markets. IFC aims to alleviate that pressure, in
part through innovative transactions such as this.
Banks use credit-risk-transfer transactions,
also known as synthetic securitizations, to lower risk weights on existing
asset exposures. Unlike a conventional securitization in which assets are
sold to investors, in credit-risk-transfer transactions they remain on
a bank’s balance sheet and third-party investors such as IFC assume some
risk associated with these assets to free up regulatory capital.
“Prudently structured credit-risk-transfer
transactions are an efficient way for IFC and other investors to enable
more bank lending across a variety of economic sectors and help boost growth
in emerging markets,” said Georgina Baker, Director of IFC’s Trade and
Supply Chain Department. “This is especially important at a time
when banks need alternative solutions to meet higher regulatory capital
requirements and also expand credit and opportunities for businesses where
they are needed most.”
Régis Monfront, Deputy Chief Executive
Officer at Crédit Agricole CIB said: “This transaction offers a clear
sign of our commitment to our clients’ activities in emerging markets.
The participation of IFC in this transaction, which supports the real economy,
is of great value to us.”
IFC, a member of the World Bank Group,
is the largest global development institution focused exclusively on the
private sector. Working with private enterprises in more than 100 countries,
we use our capital, expertise, and influence to help eliminate extreme
poverty and promote shared prosperity. In FY13, our investments climbed
to an all-time high of nearly $25 billion, leveraging the power of the
private sector to create jobs and tackle the world’s most pressing development
challenges. For more information, visit www.ifc.org
About Crédit Agricole Corporate and
Crédit Agricole CIB is the Corporate
and Investment Banking arm of the Crédit Agricole Group, the world’s fifth
largest bank by total assets (The Banker, July 2013). Crédit Agricole CIB
offers its clients a comprehensive range of products and services in capital
markets, investment banking, structured finance and corporate banking.
The Corporate and Investment Bank is structured around five major divisions:
Coverage & International Network
Optimisation & Distribution
The Bank provides support to clients
in large international markets through its network with a presence in major
countries in Europe, America, Asia and the Middle East.
For more information, please visit its
website at www.ca-cib.com.