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Trade and Supply Chain Finance Program (TSCFP)

ADB's Trade and Supply Chain Finance Program provides guarantees and loans to partner banks in support of international trade.

Trade Finance

The trade finance (TF) business of the Trade & Supply Chain Finance Program (TSCFP) of ADB fills market gaps for trade finance by providing guarantees and loans to banks. TF continues to grow, supporting billions of dollars of trade throughout the region, which in turn helps create sustainable jobs and economic growth in Asia’s developing countries.

The TSCFP works with over 240 banks in 21 countries to provide companies with the financial support they need to engage in import and export activities in Asia’s most challenging markets. In 2020, the TFP supported 7,187 transactions worth a total of $5.8 billion, including $2.96 billion in co-financing, and helped 2,114 small and medium-sized enterprises. The most active TSCFP countries are Armenia, Bangladesh, Pakistan, Sri Lanka, and Viet Nam.

Trade Finance Financial Products

Trade finance 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)

ADB issues a credit guarantee (CG) in favor of confirming bank covering up to 100% of issuing bank risk within 24 hours of request. More than 75% of Trade Finance Program's portfolio is generated through this product.

Sample transaction:
  • Guarantee to a bank in Germany covering 100% of a $600,000 payment risk on an Azerbaijan bank supporting import of fruit and vegetable drying equipment.

credit guarantee

Revolving Credit Facility

ADB provides loans directly to issuing banks in Trade Finance Program countries of operation to support pre-shipment and post-shipment trade transactions.

Sample transaction:
  • $250,000 trade loan to a Sri Lanka bank to on-lend pre-export finance for the manufacture of garments for export to Europe and India.

risk participation

Funded Risk Participation Agreement (FRPA)

ADB enters into a funded risk participation agreement (FRPA) with an accredited RPA bank allowing such to automatically bind the Trade Finance Program to 50% of issuing bank risk in support of trade transactions.

Sample transaction:
  • 50% risk protection on a $16 million export of telecom equipment from the People’s Republic of China to Bangladesh.

funded risk participation agreement

Unfunded Risk Participation Agreement (URPA)

ADB enters into an unfunded risk participation agreement (URPA) with an accredited RPA bank allowing such to automatically bind the Trade Finance Program to 85% of issuing bank risk in support of trade transactions.

Sample transaction:
  • 85% risk protection on a $20 million export of garment equipment from the Armenia to Georgia.

unfunded risk participation agreement

Risk Distribution (Cofinance)

ADB enters into a risk distribution agreement with insurers, export credit agencies, and other entities developing credit appetite in Trade Finance Program countries distributing and sharing issuing bank risk with them to leverage capital resources and credit limits.

Sample transaction:
  • Cofinance and share risk with distribution partners in all TFP countries.

risk participation

How to Join Trade Finance

Join TF as an Issuing Bank

TF is open to qualified banks located in ADB’s developing member countries. There are no fees to join the program. Eligible issuing banks should sign an Issuing Bank Agreement.

The qualification criteria to be an issuing bank include:

  • positive financial statements
  • strong corporate governance
  • clear and balanced stakeholder structure
  • existing trade finance operations

Advantages in joining TF as an issuing bank include:

  • increases bank’s credit lines
  • expands relationships with correspondent banks
  • reduces cash collateral requirements
  • enhances the ability to maintain or attract new clients
  • provides critical support during times of crisis

Banks interested in participating in the ADB Trade Finance Program as an issuing bank can telephone the TFP team at ADB Headquarters in Manila (+63 2 86326401), or email us.

Join TF as a Confirming Bank

Confirming banks are in a key position to support more business for exporting clients, especially in countries where credit lines are limited.

TF is open to qualified international, regional, and local banks worldwide. Interested banks are required to provide information on their anti–money-laundering (AML) and know-your-client (KYC) policies. Eligible confirming banks should sign a Confirming Bank Agreement. There are no fees to join.

Advantages in joining TF as a confirming bank include:

To join as a confirming bank of TSCFP, please email Pamela Gamilla.

See all Trade and Supply Chain Finance Program contacts.

 

Trade Finance Highlights

Program Highlights

  •  

    Transactions supported

    2020: $5.8 billion

    2009 to 2020: $47.5 billion

  •  

    Cofinancing

    2020: $2.96 billion

    2009 to 2020: $28.1 billion

  •  

    Number of transactions

    2020: 7,187

    2009 to 2020: 33,093

  •  

    SME Transactions

    2020: 2,114

    2009 to 2020: 21,713

Summary

  • Products: Credit Guarantee (CG), Risk Participation Agreement (RPA), and Revolving Credit Facility (RCF)
  • Participants: 240+ partner banks worldwide: 79 Issuing Banks and 168+ Confirming Banks
  • Exposure limits: Participating bank limits vary based on credit assessments
  • Tenor: Maximum 3 years, but average tenor of portfolio is less than 180 days
  • Coverage: Up to 100% per individual transaction under CG and RCF; up to 85% under RPA
  • Types of transactions: Letters of credit, guarantees, discounting, trade loans, and other instruments
  • State-owned banks eligible? Yes, TFP support covers state-owned banks and transactions involving state-owned companies
  • Currencies: US dollar, euro, yen, and RMB

Fast Facts