(The following press release from the African Development Bank was
received by e-mail. The sender verified the statement.)
AfDB Approves US $200-million Risk Participation Facility to Standard
TUNIS, Tunisia, February 26, 2013/ -- The Board of Directors of the African
Development Bank (AfDB) (http://www.afdb.org) approved on Wednesday,
February 20 an unfunded US $200-million Risk Participation Agreement (RPA)
with Standard Chartered Bank (SCB). The facility will help address critical
market demand for trade finance in Africa by providing support for trade in
vital economic sectors such as agribusiness and manufacturing. Moreover, it
will foster financial sector development, regional integration, and
contribute to government revenue generation.
The RPA between the two banks will allow them to share the default risk on a
portfolio of qualifying trade transactions originated by issuing banks in
Africa and confirmed by SCB. As a 50/50 risk sharing arrangement, SCB will
match AfDB's undertaking in every transaction, thereby creating a maximum
portfolio of up to US $400 million. The Risk Participation Agreement will be
for a period of three years.
The majority of African banks have small capital bases which constrain their
ability to obtain adequate trade limits from international confirming banks
and to undertake sizeable transactions that have significant development
impact. Secondly, despite the growth in trade risk distribution globally,
local banks in Africa have not significantly benefitted from this growth.
The AfDB's value added lies in the use of its "AAA" rating to share trade
risk and expand the trade finance capacity of banks in Africa, thereby
expanding trade and strengthening regional integration. This facility will
result in the provision of significant support to African banks and SMEs.
Counting roll-overs, it will facilitate approximately US $2.4 billion of
trade in intermediate and finished goods, raw materials and equipment to
support economic growth.
The facility is in line with AfDB's Regional Member Countries' priorities to
promote trade and in accordance with the African political objectives as
reaffirmed during the 18th African Union Ordinary Session held in January
2012. It also aligns with the Bank's Regional Integration Strategy, which
seeks to consolidate the Bank's engagement in trade finance in Africa.
Distributed by the African Press Organization on behalf of the African
About Standard Chartered Bank (SCB)
Standard Chartered Bank is a universal banking group headquartered in London
and strategically focused on Asia, Africa and the Middle East. It is a
leading provider of trade finance in Africa and was named Best Trade Bank in
Africa in 2011 (Trade and Forfaiting Review Awards 2011). SCB captures
significant trade flows along the various trade corridors and facilitated
over US $10 billion of trade in Africa in 2011 alone. It has 15 African
subsidiaries and over 200 correspondent banking relationships in Africa. SCB
has a long term rating of A1 (Moody's) and AA- (Fitch and S&P). For further
information, please visit: http://www.standardchartered.com
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