The International Finance Corporation (IFC) has agreed to shoulder half the risk on up to US$1bn of HSBC’s trade assets, to help unlock lending in emerging markets.

The assets will be originated by HSBC Asia and include exposures to issuing banks in 20 emerging markets in Africa, Asia, Europe, Latin America and the Middle East, according to an IFC statement and a project description on its website.

The IFC, the financing arm of the World Bank, has for years struck similar deals with other commercial lenders as part of its long-running global trade liquidity programme (GTLP). The IFC and HSBC reached their first long-term trade deal in 2022 through a separate GTLP facility.

HSBC’s trade finance lines to emerging market financial institutions will support those banks’ lending to importing and exporting clients. The facility will allow HSBC to “support more trade finance in emerging markets than it would otherwise have been able to”, the IFC website says.

The facility has an availability period of three years and a runoff period of up to a year, the IFC website shows, and the underlying trade assets have a maximum tenor of 12 months.

The IFC’s share consists of a US$400mn funded tranche and a US$100mn unfunded tranche.

Indirect financing for emerging market banks will help bridge the estimated global trade finance gap of US$2.5tn and overcome US dollar shortages in countries such as Bangladesh, the IFC says.

“There is a substantial and ongoing trade finance gap in emerging markets in the Asia Pacific region and globally that must be addressed by improving access to financing for importers and exporters,” says Riccardo Puliti, the IFC’s regional vice-president for Asia Pacific.

Aditya Gahlaut, HSBC’s co-head of global trade solutions in Asia Pacific, says the “partnership with IFC will help ensure that trade finance gets to where it is needed, that funding is directed to a segment crucial to job creation and economic growth in many emerging markets”.

“Reducing the trade finance gap and improving access to finance will be central to fostering growth and sustainability across Asia and the region’s supply chains,” Gahlaut adds.

The GTLP is one of several trade-focused programmes maintained by the IFC. It has facilitated more than US$80bn in global trade over the past 20 years, the IFC says, and supported more than 400 financial institutions.

Other banks participating in the GTLP include Absa, Citi, DBS, Deutsche Bank, SMBC and Standard Chartered.