The Asian Development Bank (ADB) and Wachovia Bank, a subsidiary of Wells Fargo, have signed a risk-sharing agreement. It is expected to increase trade in developing Asia and lay the foundation for stronger trade and banking relationships in near future.
Reportedly, the agreement, called a Risk Participation Agreement, is a part of the trade financing initiatives under ADB’s $1 billion Trade Finance Facilitation Program (TFFP) that includes commercial and political risk guarantees as well as loans. Under the pact, ADB and Wachovia Bank will share the payment risk associated with trade.
The ADB has added that an increasing number of Asian and international banks are signing on to the program and it expects the number of participating banks and countries covered to grow further during the course of this year.
Philip Erquiaga, director general of the private sector operations department at ADB, said: “Such agreements help to build trust between financing banks in developed and developing economies and result in more support to companies engaged in international trade.”
