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 seen by CrowdFund Insider.
The proposed GTLP DB Global project will cover an underlying portfolio of at least 1 billion euros in trade finance assets between Deutsche Bank and emerging market issuing banks (EMIBs), with the aim of increasing access to trade finance for importers and exporters across developing markets.
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 added that the facility is also intended to “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.
The project is also expected to increase Deutsche Bank’s capacity to support climate finance.
Headquartered in Frankfurt, Deutsche Bank operates in more than 70 markets worldwide, providing financial products and services to corporations, governments, institutional investors and individuals.
The facility will support short-term trade finance activities and has been classified as an FI-3 investment under the IFC Sustainability Policy.
The IFC said transactions financed under the project must comply with its exclusion list and additional restrictions, including activities involving coal and non-RSPO-certified palm oil.
The project will also exclude 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 added it “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.”
It will also review each underlying transaction to ensure compliance with its environmental and social standards before coverage is provided.
