Greek companies engaged in international activities are expected to benefit from a new EUR 200 million (US$218 million) trade finance partnership between the European Investment Bank (EIB) and HSBC that supports letters of credit (L/Cs) and trade-related guarantees.

The new agreement marks the third expansion of the EIB's Trade Finance Facility (TFF) for Greece, reaching a total of EUR 550 million.

Risk mitigation

The TFF for Greece was the EIB's first ever trade finance facility. Under this instrument the European multilateral development bank set out to provide EUR 500 million in guarantees for foreign banks covering 85 per cent of their risk exposure to their Greek counterparts for L/Cs and other trade finance instruments, to mitigate the risks of non-payment and default.

The new initiative will support trade and export finance services provided by participating Greek banks to local companies and addresses a market gap that continues to restrict international business by Greek companies.

SMEs and midcaps

The TFF, to which HSBC has been a key partner from the outset, was developed especially for small- and medium-sized enterprises (SMEs) and midcaps in Greece and will continue to support L/Cs and trade-related guarantees covering exchange rate, political and payment risks.

Following the new agreement, companies across Greece are expected to benefit from new trade financing provided locally by Eurobank, National Bank of Greece and Piraeus Bank, and guaranteed by the EIB and HSBC, alongside other international banks.

Financing will directly support the trade and export finance services provided by participating Greek banks to local private companies across the country, and Greece is the only country in Europe to benefit from such an initiative.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.