The Asian Development Bank (ADB) has signed financing agreements with eight Vietnamese banks aimed at making credit more available for local traders.

The banks will participate in ADB's Trade Finance Facilitation Programme (TFFP), which provides guarantees to confirming banks covering country risk as well as risk on issuing banks' letters of credit (L/Cs) and other trade finance instruments.

New participants

The new participants in the TFFP are Asia Commercial Bank, Military Bank, Saigon Thuong Tin Bank, Techcombank, Vietnam Bank for Agriculture and Rural Development, Vietnam Bank for Industry and Trade, Vietnam Export Import Bank, and Vietnam International Bank.

The ADB expects to sign similar agreements with two more Vietnamese banks shortly.

Through the TFFP, the ADB shares risks with confirming banks to provide assurance to exporters that they will be paid for shipments to the most challenging Asian markets.

Timely agreements

The agreements come at a time when the global crisis has made commercial institutions increasingly reluctant to lend because of the need to shore up their own capital.

This signals a much bigger future role in trade finance provision for international finance institutions such as ADB, the European Bank of Reconstruction and Development, the Inter-American Development Bank and the International Finance Corporation.

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