Pakistan's Habib Bank says it expects to benefit from a jointly funded trade advance by JPMorgan and the International Finance Corpration (IFC) set up to help boost trade activities across the Asia-Pacific region.

The funded trade advance is underpinned by the IFC's mainly L/C-based Global Trade Finance Programme (GTFP), which was launched around three years ago.

Trade advance

Habib Bank has raised a US$55 million trade advance to support its corporate clients' international trade activities.

Under the arrangement, Pakistan's largest privately owned bank was able through JPMorgan to refinance a portfolio of trade assets it was holding on its books.

New business

JPMorgan has taken part of the risk, committing US$5 million to the arrangement, while the IFC guarantees the remaining US$50 million.

Habib Bank expects to use the arrangement to win new business with clients located in countries where liquidity is scarce, such as China and India, and it appears L/Cs will feature strongly.

New dimensions

"Most of the trade finance products covered by the programme have been confirmed L/Cs issued by participating issuing banks," says IFC's regional head for trade, Asia and the Middle East, Priyamvada Singh, who adds that this particular arrangement with JPMorgan and Habib Bank features new dimensions.

"With this particular structure with JPMorgan we have been able to provide risk coverage on a portfolio of trade [not traded] assets that an issuing bank was looking to refinance. So through this, we've offered non-traditional trade risk mitigation," she says.

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