PBB taps into IFC’s $5-B trade finance program

MANILA, Philippines – Philippine Business Bank (PBB), the financial arm of the Yao Group of Companies, has availed of the $5 billion global trade-finance program (GTFP) of the International Finance Corp. (IFC).

PBB president and CEO Roland Avante said the listed bank is upbeat on its financing agreement with IFC.

“With PBB’s access to IFC’s GTFP, we can encourage more trade at lower financing costs for our clients and reduce risks for counterparty financial institutions through IFC’s guarantee,” Avante said.

The GTFP extends and complements the capacity of banks to deliver trade financing by providing risk mitigation in new or challenging markets where trade financing may be constrained.

The unit of the World Bank would support PBB’s trade-finance business by partially or fully guaranteeing the payment risks of its clients.

 “IFC welcomes PBB as the first Philippine bank in the GTFP. Through the program, IFC hopes to support PBB’s efforts to provide access to finance to its customers, especially the SMEs,” IFC Regional director for East Asia and Pacific Vivek Pathak said.

The program promotes trade among emerging markets, expanding the capacity of banks to ensure liquidity of export-oriented SMEs. Its network enables local financial institutions offer competitive financing by tying up with major international banks.

These guarantees are transaction-specific and may be supported by a variety of underlying instruments such as letters of credit, trade-related promissory notes, accepted drafts, bills of exchange, guarantees, bid and performance bonds, and advance-payment guarantees.

The guarantees are available for all private-sector trade transactions that meet eligibility criteria of IFC.

The program enables the continued flow of trade credit into the market at a time when imports may be critical and the country’s exports can generate much-needed foreign exchange and jobs.

The program has grown its network since 2005 to now include more than 500 partner banks. IFC has provided over 18,000 trade-finance guarantees under GTFP to support over $30 billion in emerging market trade.