MANILA, PHILIPPINES - Five Philippine banks today signed the country's first trade finance agreements with the Asian Development Bank (ADB), a move that will provide more support to Philippine companies engaged in international trade.

The banks signing the agreements under ADB's Trade Finance Facilitation Program (TFFP) are Allied Banking Corp., Development Bank of the Philippines, Metropolitan Bank and Trust Company, Philippine National Bank, and Rizal Commercial Banking Corp.

Companies in developing countries have struggled to obtain the trade finance they need to export their goods or to import the critical components for the products they manufacture or services they provide. What little trade finance is provided by developing country banks is often channeled to larger companies, with smaller firms missing out.

"In the Philippines, small- and medium-sized firms employ around 77% of all those working in the manufacturing sector. If those firms can access more trade finance, they will be able to expand and employ more workers. That would boost personal incomes and help to reduce the country's poverty levels," said Philip Erquiaga, Director General of ADB's Private Sector Operations Department.

To address the dearth of trade finance, the $1 billion TFFP provides loans and guarantees through, and in conjunction with, international banks and ADB's developing member country banks to support trade transactions in developing nations. Last year, around 55% of the TFFP's portfolio supported international trade conducted by small- and medium-sized enterprises.

In addition to providing the finance, the program links banks and firms in developing economies with their counterparts in other developing and developed economies. This builds relationships and spurs job-creating business opportunities and knowledge sharing that will help banks and their clients in the longer term.

"In today's world, it's critical that companies and banks reach beyond their borders. Such regional and global integration and cooperation helps economies and the people within them to reach their full potential," said Neeraj Jain, ADB's Country Director for the Philippines.

Banks from 61 economies - including 20 from Asia - are now participating in the program, and ADB expects banks from Central Asia and Mongolia to join by April 2010. Signing on to the program means those banks will also be able to swiftly access trade finance if there is a credit crunch in the future, avoiding the difficulties that befell many during the global crisis in 2007-2008.

In 2009, the TFFP provided support for $1.9 billion in trade transactions, 300% more than in 2008. By attracting private sector financing and because the portfolio can roll over once a year, the program could generate $15 billion in trade finance through 2013.

Media Contact