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Trade and Supply Chain Finance Program (TSCFP)

TSCFP works to make global trade and supply chains green, resilient, inclusive, transparent, and socially responsible.

Trade Finance (TF)

The TF business of ADB's Trade & Supply Chain Finance Program (TSCFP) 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.

In 2021, TSCFP’s trade finance business supported 6,800 transactions worth a total of $8 billion, including $5.4 billion in co-financing, and helped 2,858 small and medium-sized enterprises, and 2,300 trades between developing Asia countries.

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 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.

Revolving Credit Facility

Unfunded Risk Participation Agreement (URPA)

ADB enters into an 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 Distribution (Cofinance)

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:

  • increased credit lines
  • expanded relationships with correspondent banks
  • reduced cash collateral requirements
  • enhanced ability to maintain or attract new clients
  • critical support during times of crisis

Interested? Reach out to the TFP Team.

  Tel: +63 2 86326401
  Find a relationship manager

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:

  • low-risk access to new and challenging markets
  • expanded geographic coverage to service export clients
  • leverage existing country line and Issuing Bank limits
  • capital relief under Basel
  • valuable market intelligence to help banks move into frontier markets

Interested? Reach out to the TFP Team.

Trade Finance Highlights

2021: By the Numbers

$0 billion

worth of transactions supported
2009-2021: $55.5 billion

$0 billion

in cofinancing
2009-2021: $33.4 billion

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transactions supported
2009-2021: 39,892

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SME transactions supported
2009-2021: 24,571

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