JP Morgan and Asian Development Bank (ADB) have signed a credit guarantee agreement under ADB’s Trade Finance Facilitation Program (TFFP), to enhance support for international trade in developing countries in Asia.
The expanded partnership is designed to stimulate trade growth by extending trade financing to JP Morgan’s financial institution clients in emerging markets. Combined with the risk participation agreement signed last year with ADB, this collaboration will enable JP Morgan to expand risk coverage in additional markets such Indonesia, Nepal and the Philippines.
Under its credit guarantee agreement, ADB provides guarantees to confirming banks like JP Morgan covering country risk as well as risk on issuing banks’ letters of credit (L/Cs) and other instruments in support of trade. Through the credit guarantee, ADB shares risk with confirming banks to provide comfort to exporting companies that they will in fact get paid for shipments to the challenging Asian markets.
JP Morgan said that the initiative is expected to have development impact by increasing funding for trade of consumer goods, intermediate goods, small machinery and commodities demanded by emerging market enterprises.
Yanti Agustin, head of global trade services for Asia Pacific at JP Morgan Treasury Services, said: “We are pleased to further broaden our partnership with ADB to help bolster trade flows to a wider range of Asian countries recovering from recent market instability.
“As a pioneering member of ABD’s Trade Finance Facilitation Program, we will continue to build upon our entrenched relationships with financial institutions in Asia Pacific by leveraging this important program to help our clients raise important trade financing.”
Conor O’Dowd, global head of trade distribution at JP Morgan, said: “With Asia recovering from the global economic crisis, this credit guarantee agreement will open new avenues for JP Morgan to provide stronger support in financing trade for emerging markets.”
