As part of an innovative agreement to boost exports and imports in developing Asia, reinsurance giant Swiss Re will insure $250 million of trade finance conducted via the Asian Development Bank’s (ADB) Trade Finance Programme.
The Swiss Re Group, through its commercial insurance unit Swiss Re Corporate Solutions, has provided insurance via a trade programme run by a multilateral development bank and also the first time ADB’s Trade Finance Programme has offset risk with a private insurance company, said statement by the bank received here.
Many Asian nations find it difficult to export or import key goods because they struggle to get the trade finance from international and local banks. ADB’s Trade Finance Programme provides guarantees and loans to banks to enable them to provide trade finance. In 2010, the program supported 783 trade transactions worth $2.8 billion, with banks in Bangladesh, Vietnam, Pakistan, Sri Lanka and Nepal, the five most active users. Demand in the first quarter of 2011 grew at just over 50 per cent year-over-year across Asia, the statement added.
The agreement with Swiss Re Corporate Solutions will allow ADB to provide even more trade finance support to countries that need it most. Transactions under the Trade Finance Programme tend to be short term, usually less than 180 days, so financing can be rolled over. The $250 million in capacity could result in around $500 million in additional trade finance support per year for developing Asia.
