Role of IFIs in Enhancing Global Trade16th Private Sector Meeting for OIC Member Countries

Sharjah, United Arab Emirates

March 19, 2014

The Global Trade Finance Program (GTFP) program provides confirming banks with partial or full guarantees covering payment risk on banks in the emerging markets. These guarantees are transaction specific and apply to:• Letters of credit • Pre-export financing • Trade-related promissory notes and bills of exchange • Bid and performance bonds • Advance payment guarantees • Supplier credits for the import of capital goods The Trade Advisory Program The Trade Advisory Program is an integral component of the GTFP, and is designed to help local banks build their capacity in the areas of trade finance and international trade operations. IFC provides local financial institutions with training and support in order to:

• Upgrade skills in structuring basic and complex trade finance transactions • Improve trade finance risk mitigation techniques • Upgrade the operational and technical skills of the trade finance backoffices • Transfer current international best practices in trade finance to local markets.

Trade Finance at IFC

15 January 20141

Transactional trade Global Trade Finance Program (GTFP)

Trade portfolio and systemic solutions Global Trade Liquidity Program (GTLP) Critical Commodities Finance Program (CCFP) Working Capital Systemic Solutions (WCSS)

Supply chain finance Structured trade commodity finance Global Warehouse Finance Program (GWFP) Global Trade Supplier Finance (GTSF) Distributor finance

Our Products for Global Trade & Supply Chain Solutions

15 January 20142

Our Value Proposition

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Our solutions provide essential working capital to emerging market firms,propelling goods through the economic value chain.

OUR SOLUTIONS

Pre- and

Post-Harvest Financing

Inventory and Warehouse

Receipts FinancingWorking Capital and

Supply ChainFinancing

Pre-ExportFinancing

MARKET NEEDSInputs, Harvest

Storage, Transportation

Raw Materials, Labor, Energy

Export

Launched in 2005, the $5 billion GTFP provides risk mitigation by guaranteeing trade-related payment obligations of more than 275 eligible financial institutions in emerging markets.

PROGRAM FEATURES

AAA-rated – Basel III benefits

Coverage up to 100 percent

Umbrella guarantee covers country and commercial risk

Same-day issuance

Three-year maximum tenor

L/C applicants must be majority private sector

Cumulative Program Statistics Since 2005 (as of December 31, 2013)

Total # / USD of Gtees 17,552 / $28.8B

No. of Issuing Banks 282 in 96 countries

No. of Confirming Banks 254 in 105 countries(1,100+ with affiliates)

TOTAL CLAIMS ZERO

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FY13 GUARANTEES BY REGION (year-to-date; most active countries listed)

Global Trade Finance Program (GTFP)

24%

23%22%

16%

16%

Latin America & the Caribbean1. Brazil2. Honduras

Sub-Saharan Africa1. Nigeria2. Ghana

Asia & Pacific1. Vietnam2. Bangladesh

Europe & Central Asia1. Russia2. Turkey

Middle East & North Africa1. Lebanon2. Pakistan

Breakdown of GTFP Guarantees

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USD Volume by Industry, FY13

Oil, Gas & Chemicals, 27%

Agricultural Products,

Fertilizer & Foodstuff,

24%

Iron, Steel & Metals, 12%

Consumer Goods, 10%

Industrial Goods &Machinery, 7%

Automotive & Parts, 5%

Energy Efficiency, 5%

Telecoms & IT; 2%

Pulp & Paper, 2%

Textiles & Leather; 2%

Plastics & Rubber; 2%

Other; 2%

281 issuing banks in 96 countries Updates at ifc.org/GTFP

SUB-SAHARAN AFRICA31 countries

69 banks

LATIN AMERICA & CARIBBEAN

20 countries 63 banks

MIDDLE EAST & N. AFRICA12 countries

39 banks

EUROPE & CENTRAL ASIA19 countries

63 banks

ASIA & PACIFIC14 countries

47 banks

Current Issuing Bank Coverage

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Benefits to Bank: • Foreign exchange: fills void left by

international commercial banks in the FX market due to concerns over regulatory uncertainty and/or sovereign risk• Risk mitigation: IFC’s AAA rating,

effective in managing the effects of Basel II & III• Ease of administration: deal only

with IFC, as agent

Structure:

• IFC provides funding as agent with co-financing from program partners• One-year traditional “A” loan with

potential to be renewed twice for total of three years• Pricing: 6-month Libor + spread

Focus Areas:• Global: low-income countries where

macro factors create USD constraints• Sectors: SMEs, including export-

oriented enterprises, in need of trade finance and working capital

Program partners co-finance alongside IFC

IFC extends loan to one or more local banks

Local banks extend USD financing to their SME clients to support their working capital needs

Emerging market SMEs

Local bank #1

Program partners

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Under our Working Capital Systemic Solutions, we issue short-term loans to emerging market banks to inject USD liquidity in markets where macro events have led to a USD liquidity squeeze.

Local bank #2

Emerging market SMEs

Working Capital Systemic Solutions (WCSS)

• Supports large cross-border commodity trade using collateral management to support lending at all stages of the supply chain: exporter/producers, trading companies, importer/processors

• Emphasis on strategic commodities, such as energy, soft commodities, and agricultural inputs

• IFC risk-shares by lending in parallel with Bank on underlying assets or by providing credit guarantee

• Bank should have solid track record in managing the transaction flow and can act as the security agent

• Environment & social requirements to be met by facility

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Funding for commodity players and risk mitigation for partner banks

Producers

Partner bank

Financing is secured by pledge of commodities as collateral, assignment of receivables, insurance, cash collection account

Exporter

EXPORT IMPORT

Pre-export financing, inventory-based financing, receivable-based financing

Borrowing base financing: lending against commodity or off-take agreements

Traders Offtakers

Structured Trade Commodity Finance

1. Grain/producestored in third-partywarehouse

2. Warehouse receipts issued by warehouse

4. WHR facility

• Supports banks when lending to the agricultural sector against warehoused commodities

• Banks can support increased use of WR or CMA by trading companies or producers

• Prequalified sub-borrowers

• Funded or unfunded: 50-50 risk sharing

• Facility tenor: one year extendable up to three years

• Average transaction tenor: 4-6 months

Program partners co-finance with funding or counter-guarantees

3. IFC channels funding or guarantees for up to 50% on portfolio of warehouse receiptsBan

k

Program partners

Agricultural producers

Storage company

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Risk mitigation for banks’ food/agriculture portfolio

Global Warehouse Finance Program (GWFP)

• Provides banks with additional credit capacity to support clients’ suppliers from higher-risk countries

• Provides funded and unfunded risk-sharing of up to 100% of a client’s accounts receivable

• IFC may also provide liquidity and discount A/R itself

• A/R is discounted using market-based pricing

• IFC accepts bank proposed discount rate on risk-shared receivables

5. Financier pays discounted invoice

amount

2. Supplier views invoices and

requests early payment of approved invoices

Emerging market

suppliersBuyer SCF

platform

6. Buyer pays full invoice amount on due

date (automated transfers

established)

1. Buyer uploads invoices

(automated process)

Bank

4. IFC provides funding or guarantee coverage

3. Financier accepts early

payment requests

MobilizationProgrampartners

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Funding and risk mitigation for banks’ supply chain finance clientele

Global Trade Supplier Finance (GTSF)

By USD VOLUME1. Deutsche Bank2. J.P.Morgan3. Citibank4. BNP Paribas5. Scotiabank6. Banco Pichincha7. Standard Chartered8. Zenith Bank9. Commerzbank10. BTMU

By NUMBER OF GUARANTEES1. Deutsche Bank2. Citibank 3. J.P.Morgan4. Commerzbank5. BNP Paribas6. KBC7. BTMU8. SMBC9. Banco Pichincha10. ABN Amro

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Leading Confirming Banks

For FY14 Q1

12

• Import Letters of Credit• Standby Letters of Credit• Guarantees

IFC covers the obligation of the issuer of the performance bonds, bid bonds, payment/advance payment guarantees

• Bills of Exchange/ Promissory Notes for Trade IFC covers the obligation of the issuer for pre-export financing or post-

import financing extended by a participating Confirming Bank

IFC Guarantees – Trade Instruments

Global Trade & Supply Chain Solutions

Best Trade Finance Program

Best Development

Finance Institution

Critical CommoditiesFinance Program

Global TradeSupplier Finance

Program

Structured TradeCommodity Finance

IFC guarantee

Goods

ExporterInternation

alBank

(Confirming)

Payment

Importer

InternationalFinance

Corporation

ConfirmL/C

Documents

RequestL/C issuance

Payment

Documents

Payment

Documents

LocalBank

(Issuing)

L/C in favor of exporter

Typical Transaction: Import L/C

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Import Letter of Credit

• L/C issued by Bank of Georgia• Confirmed by Switzerland-

based bank• Tenor: 6 months• Value: USD 5 million• IFC covers: 100%

Switzerland Georgia

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Grains from Switzerland to Georgia

IFC guarantee

Goods

ImporterInternational

BankExporter

Pre-export funding Pre-export funding

LocalBank

Requestpre-export advance

SBLC/PN for pre-export

funding

RequestIFC guarantee for pre-export

loan

InternationalFinance

Corporation

Typical Transaction: Pre-Export Financing

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Brazil

Pre-Export Financing

17

• Promissory note issued by Brazilian bank

• Funded by U.S.-based bank• Tenor: 6 months• Value: USD 3.9 million• IFC covers: 100%

Japan

Sugar from Brazil to Japan

IFC guarantee

Goods

ImporterLocalBankExporter

Post-import funding Post-import funding

InternationalBank

Requestpost-import

funding

SBLC/PN for post-import

funding

RequestIFC guarantee for post-import

loan

InternationalFinance

Corporation

Typical Transaction: Post-Import Financing

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• L/C issued by Techcombank• Funded by Singapore-based

bank• Tenor: 6 months• Value: USD 500K• IFC covers: 100%

China

Vietnam

Post-Import Financing

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Cotton from China to Vietnam