The International Finance Corporation (IFC) plans to invest up to 750 million euros ($866 million) in an unfunded risk-sharing facility with Deutsche Bank to support trade finance transactions involving emerging market banks, according to a project disclosure.
Known as GTLP DB Global, the project will cover a portfolio of at least 1 billion euros in trade finance assets between Deutsche Bank and emerging market issuing banks (EMIBs), giving importers and exporters across developing markets greater access to trade finance.
According to the IFC, “by sustaining DB’s ability to provide trade finance services despite major macroeconomic challenges, the Project is intended to address the global trade finance gap and increase and/or maintain access to trade finance” for emerging market issuing banks and the businesses they serve.
The Washington-based lender said the facility will also “promote both global and regional financial and economic integration by increasing the delivery of trade finance through EMIBs,” while potentially expanding their correspondent banking networks. It is expected to strengthen Deutsche Bank’s capacity for climate finance as well.
Headquartered in Frankfurt, Deutsche Bank operates in more than 70 markets worldwide, serving corporations, governments, institutional investors and individuals.
The facility will support short-term trade finance activities and is classified as an FI-3 investment under the IFC Sustainability Policy. All transactions must comply with the IFC’s exclusion list and additional restrictions, including those covering coal and non-RSPO-certified palm oil.
The project will also rule out transactions involving “significant environmental and social concerns, including involuntary resettlement, risks of adverse impacts on Indigenous Peoples, significant risks to or impacts on the environment, community health and safety, biodiversity, cultural heritage, or significant occupational health and safety risks.”
The IFC “will retain the ability to exclude or suspend Emerging Market Issuing Banks (EMIBs) from participating in the Project based on their environmental and social performance and their ability to implement IFC environmental and social requirements.” Each transaction will be reviewed against the IFC’s environmental and social standards before coverage is provided.