Washington D.C., December 19, 2002—The
International Finance Corporation (IFC), the private sector development
arm of the World Bank Group, today signed an agreement to form a partnership
with Hongkong and Shanghai Banking Corporation Limited (HSBC), that will
establish the US$20 million Philippine Trade Facility (PTF). The facility
will provide medium-sized private local banks active in import trade with
access to increased confirmation limits for letters of credit (LCs) issued
IFC and HSBC have initially selected Asia United Bank and East West Banking
Corporation to participate in the new facility. Asia United Bank President
Abraham Co and East West Bank President Elrey Ramos also signed their respective
tripartite framework agreements today.
Under the PTF, IFC will guarantee 40 percent of the incremental confirmation
facility, enhancing the capability of the selected banks to carry out international
trade transactions. HSBC will take the remaining 60 percent risk.
This trade enhancement program was developed by IFC to assist medium-sized
commercial banks secure higher credit limits for the issuance of confirmed
LCs. IFC has entered into similar agreements with partner banks in Bangladesh,
Indonesia, Korea, and Pakistan. The PTF is the seventh trade facility put
in place by IFC since 1997. These facilities are extended to banks whose
financial conditions exhibit growth potential in financing trade.
HSBC Chief Executive Officer Warner Manning said, “We are pleased to work
with IFC on this program that aims to develop a robust trade services business
in the country by supporting select banks that are trade-focused.”
IFC Country Manager Vipul Bhagat, said, “The establishment of the Philippine
Trade Facility with HSBC is a significant milestone in our work in the
Philippines. The participation of mid-market banks will play a strong role
in increasing the availability of trade finance to importers and exporters.
It is particularly important to maintain trade flows since they contribute
significantly to the level of economic activity in the country. IFC is
playing a catalytic role in this transaction by mobilizing financing through
risk mitigation and credit enhancement and is demonstrating its continuing
confidence in the banking sector.”
HSBC is the founding and a principal member of the HSBC Group. With over
7,000 offices in 81 countries and territories and assets of $746 billion
as of June 30, 2002, HSBC Group is one of the world’s largest banking
and financial services organizations.
IFC has been active in the Philippines for over 25 years. Its financial
commitments in the country amounted to $1.1 billion for IFC’s own account
and $696 million in loan syndications. These investments involve 70 projects
in sectors as diverse as energy, infrastructure, financial markets, agribusiness,
health care, manufacturing, and tourism.
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, and provides technical assistance
and advice to governments and businesses. Since its founding in 1956 through
FY02, IFC has committed more than $34 billion of its own funds and arranged
$21 billion in syndications for 2,825 companies in 140 developing countries.
IFC’s worldwide committed portfolio as of FY02 was $15.1 billion for its
own account and $6.5 billion held for participants in loan syndications.