(23 November 2012 – Asia) The International Finance Corporation (IFC), the private sector financing arm of the World Bank Group, has increased its funding to support Asian client banks’ trade finance transactions.It raised the funds for its trade finance program by US$2 billion (A$1.9 billion) to a total of US$5 billion to open new credit lines in critical markets in better support of banks’ trade business.
The implementation of Basel III regulatory standards begin next year, meaning the new capital requirements banks need to raise for off-balance sheet contingent capabilities will pose serious challenges for the financial sector.
IFC believes this is likely to have the unintended consequence of making international banks and credit insurers less willing to support trade finance, just when it’s needed most to spur economic growth.
In recent months, IFC has noted an increasing demand for US dollar-denominated trade finance from its emerging-market client banks, boosting global trade flows. Since 2005, the World Bank unit has allotted almost US$25 billion as guarantees in emerging market trade.