US$65 Million Deal Signed with Asian Development Bank
Canberra, ACT, Australia (News4us.com) May 03, 2011
The Export Finance and Insurance Corporation (EFIC) has signed a landmark US$65 million risk-sharing agreement with the Asian Development Bank (ADB) that will expand the Australian banking sector’s capacity to support exports to the fast-growing markets of Bangladesh, Pakistan and Sri Lanka.
EFIC, the Australian Government’s export credit agency, will assume up to 50 per cent of the risk when the ADB guarantees a letter of credit under ADB’s existing Trade Finance Program. This has the potential to increase, by up to $65million, the guarantee facility made available by ADB to Australian banks when confirming letters of credit issued by eligible banks in the region.
Australian exporters will be better able to meet growing demand in these markets with confidence that their payments are protected by a confirmed letter of credit.
“We’re delighted to work with ADB on its first risk-sharing agreement with an export credit agency,” said Andrea Govaert, EFIC’s Executive Director, SME and Mid-Market. “By supporting ADB, we are helping to expand opportunities for trade from Australia and enable much needed supplies to be delivered to these countries.”
Importantly, exporters are able to benefit from the arrangement without any changes to current processes as transactions between the banks and EFIC are done seamlessly behind the scenes. When exporters request their bank to confirm a letter of credit from a bank in one of the three countries, their bank is able to apply to the ADB for a guarantee on the confirmation. With EFIC’s backing, ADB will now have the ability to approve up to $65million worth of additional credit, facilitating further trade in the three countries.
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