Azeri-based Unibank has been singing the praises of the European Bank of Reconstruction and Development's ( EBRD's) apparently successful Trade Facilitation Programme ( TFP ), which guarantees letter of credit (L/C) business in the former Soviet states of Central and Eastern Europe (DC World News 14 May 2004).

Unibank says its clients are actively using documentary transactions under EBRD schemes and the bank is enjoying a significant amount of additional trade financing business.

Credit values

According to Unibank, guarantees worth US$999,500 and L/Cs worth US$360,300 have been issued since EBRD opened its credit line for the bank.

A total of US$458,000 worth of transactions under EBRD schemes have been written in the first six months of this year according to the bank.

EBRD award

Unibank says that due to the successful realisation of the TFP, it was confirmed as the most actively developing Azeri bank during 2003 in the TFP at the EBRD annual meeting in London.

Wachovia bank, with which the Azeri bank has a correspondent relationship, accepts L/Cs from Unibank. The Azeri bank says it has also secured a new credit line for documentary transactions worth US$2 million from Société Generale and Dresdner Bank.

For a short period of time guarantees and L/Cs worth US$944,000 will be guaranteed under these arrangements according to a Unibank statement.

Successful model

Under the TFP, EBRD provides guarantees to international confirming banks thus the development bank takes the political and commercial payment risk of transactions undertaken by issuing banks in the countries where the bank operates.

Record volumes and values of business were written in 2003 under the TFP, which is now being emulated by the Asian Development Bank's US$150-million Trade Finance Facilitation Programme which aims to boost the trade finance system in the Asia-Pacific region (DC World News, 28 May 2004).

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.