The TFP works exclusively through banks. The reason for this is two-fold:
- Banks are important intermediaries in trade and ADB does not want to displace them. It wants to support and broaden their ability to act as intermediaries, especially in the most challenging markets;
- ADB does not have the staff and extensive branch network of banks, so from a practical perspective ADB works with financial intermediaries (banks), leveraging resources and complementing respective areas of strength.
Credit Guarantee (CG) - covers up to 100% of bank risk, provided within 24 hours; more than 75% of the TFP’s portfolio is generated through the CG product
Risk Participation Agreement (RPA) - automatically binds the TFP to 50% of bank risk in support of trade transactions
Revolving Credit Facility (RCF) - provides loans directly to banks in the TFP countries of operation to support pre- and post-shipment transactions
Distribution product (Cofinance)
Risk Distribution Agreement (RDA) - the TFP leverages capital resources and credit limits by distributing and sharing risk with insurers, export credit agencies, and other entities
- The TFP created the Trade Finance Register in conjunction with the International Chamber of Commerce (ICC). The register provides annual default and loss rates on global trade finance transactions, helping bank regulators and financial institutions understand and calibrate risk parameters for trade finance. View the International Chamber of Commerce (ICC)-ADB Trade Finance Register.
- The TFP published a “Gap Study” in 2013 to identify and quantify market gaps for trade finance and the impact on economic growth and jobs. Read the ADB Brief - ADB Trade Finance Survey: Major Findings.
- Training and seminars in trade finance and banking to build expertise
- Feedback on annual due diligence sets benchmarks for improvement to strengthen banks