Washington, January 7, 2004 - The International
Finance Corporation, the private sector arm of the World Bank Group, and
Standard Chartered Bank have announced the establishment of a new $40 million
trade finance facility that will help Nigerian commercial banks expand
and improve their trade finance services. Over a period of three years,
IFC will provide a guarantee to Standard Chartered Bank for up to $20 million
of the total facility amount of $40 million. IFC’s risk sharing arrangement
will effectively double the participating Nigerian banks’ letter of credit
confirmation capacity with Standard Chartered Bank.
In Nigeria, even sound and reputable banks are affected by international
banks’ inadequate trade finance confirmation lines, which the latter tend
to concentrate on their local subsidiaries. Consequently, transaction costs
remain high for companies, as they have to fund them largely with upfront
cash collateral borrowed at high domestic interest rates.
“The facility will have a major role in increasing the availability and
tenor of trade finance lines to Nigerian banks, helping bring them closer
to the international mainstream,” said Declan Duff, IFC's director for
Global Financial Markets. “The letters of credit confirmed under the facility
will improve financing for local firms, including small and medium-size
companies, helping them develop their business operations,” he added.
“The facility will improve the ability of local banks to provide trade
services,” said Haydée Celaya, IFC’s director for Sub-Saharan Africa.
She noted, “Despite the ongoing development of democracy and a commitment
to market-oriented economic reforms, Nigeria has not been able to attract
a significant level of trade confirmation lines from international commercial
banks. With this facility, IFC will further contribute to building the
reputation of Nigerian banks in international markets and provide continued
support to the country.”
Mr. Simon J. Millett, managing director and chief executive officer of
Standard Chartered Nigeria, welcomed the facility as a major step in improving
access to trade finance in the Nigerian market. He added that the facility
would address the current shortage of letters of credit confirmation lines
for local banks in Nigeria, where Standard Chartered Bank plays an important
role in trade and as a bankers’ bank.
Standard Chartered Bank is one of the world's strongest international banks,
employing 30,000 people in over 500 locations in more than 55 countries
in the Asia Pacific region, South Asia, the Middle East, Africa, the United
Kingdom, and the Americas. The bank is trusted across its network for its
deep local knowledge with global capability, its standards of governance,
and its commitment to making a difference in the communities in which it
operates. With a management team comprising 70 nationalities, it serves
both consumer and wholesale banking customers.
IFC's mission is to promote sustainable private sector investment in developing
countries, helping to reduce poverty and improve people's lives. IFC finances
private sector investments in the developing world, mobilizes capital in
the international financial markets, helps clients improve social and environmental
sustainability, and provides technical assistance and advice to governments
and businesses. From its founding in 1956 through FY03, IFC has committed
more than $37 billion of its own funds and arranged $22 billion in syndications
for 2,990 companies in 140 developing countries. IFC's worldwide committed
portfolio as of FY03 was $16.8 billion for its own account and $6.6 billion
held for participants in loan syndications.