Wednesday, June 17, 2009

Citi and World Bank Group’s IFC In $1.25 Billion Partnership to Drive Trade Growth in Emerging Markets

Citi announced that it has entered into a Memorandum of Understanding with IFC, a member of the World Bank Group, to work on the development of a $1.25 billion funding facility. Intended to stimulate the growth of trade in the emerging markets over a three-year timeframe, this funding is expected to support estimated trade flows of up to $7.5 billion (through the origination of $1.25 billion six times over during the three-year period). As a starting point, Citi will provide 60% or $750 million, and IFC and other development agencies will purchase participations for the other 40%, or $500 million in the aggregate, for trade assets averaging a tenor of 180 days. This agreement will represent a key extension of The Global Trade Liquidity Program (GTLP), which is an initiative led by the World Bank Group. The GTLP brings together governments, international development agencies and private sector banks to support trade finance to importers and exporters in the emerging markets.

Under this facility, Citi will use the funding to originate trade finance transactions from emerging market banks in Asia, Latin America, Central and Eastern Europe, the Middle East and Africa, allowing these banks to extend financing to local importers and exporters. This in turn will help stimulate country and regional commerce. "We are very pleased to be establishing this important partnership with IFC to stimulate the recovery and growth of global trade in the emerging markets," said Francesco Vanni d'Archirafi, Chief Executive Officer of Citi's Global Transaction Services business. "Citi has been a trusted partner to banks, corporations and the public sector across the emerging markets for many decades, and through our collaboration with IFC as well as our other development and export credit agency partners around the globe, we are firmly committed to restoring the flow of trade and commerce financing around the world."

"Global trade is facing serious challenges in today's financial environment, given the shortage of liquidity worldwide," said Lars Thunell, IFC Executive Vice President and CEO. "This program benefits small businesses in developing countries, which are a major source of jobs and have been hard hit by the global financial crisis. We appreciate Citi's leadership and look forward to working with them on this key initiative."

Global Transaction Services, a division of Citi’s Institutional Clients Group offers integrated cash management, trade, and securities and fund services to multinational corporations, financial institutions and public sector organizations around the world. With a network spanning over 100 countries, Citi's Global Transaction Services supports over 65,000 clients. As of the 1st quarter of 2009, it held on average $278 billion in liability balances under administration, and $10.3 trillion in assets under custody and trust.