In order to set the world trade free from the clutches of credit crunch, Citigroup has unveiled a $1.25 billion funding in association with International Finance Corporation – the private sector arm of the World Bank. The alliance is part of a $50 billion global trade finance initiative announced by the World Bank in April 2009, the Financial Times reported.
As per the deal, the US bank will invest $750 million, and IFC and other development organisations will invest $500 million in banks across Asia, the Middle East, Africa and Latin America over the next three years. These local banks will, in turn, offer trade financing to their core clients.
John Ahearn, Head of Trade Finance at Citi, told the Financial Times that “While this is a lucrative business for Citi, our goal is, hopefully, that prices will go down as more funds are made available.” Georgina Baker, Director of global financial markets at IFC said that “These funding partnerships should ease banks’ concerns over the risk of funding trade in emerging markets by reducing the amount of loans they keep on their books.”
