Manila-based lender Asian Development Bank (ADB) and Standard Chartered Bank have entered into a partnership to support the supply chain financing of small and medium enterprises (SMEs) in Asia.
In a statement, Standard Chartered said that this is the first agreement of its kind under ADB’s recently launched Supply Chain Finance (SCF) program, which is expected to finance more than $800 million in supply chain transactions.
It added that most of the transactions under the SCF program will be directed through SMEs that are supplying large companies with materials for intermediate and final production, as well as retail sales.
Under the agreement, ADB and Standard Chartered will share the risk in the transactions that will in turn support the development of intra Asia supply chains, as well as supply chains between Asia and other regions of the world.
Steven Beck, ADB head of Trade Finance, said that market gaps for supply chain finance impede economic growth and job creation, “so
it’s imperative that ADB get into this space.”
“ADB is very pleased to sign this agreement with Standard Chartered to close market gaps in support of SME development and job creation in developing Asia,” Beck added.
The ADB’s SCF program, which has an “AAA” credit rating, complements its successful Trade Finance Program (TFP).
While ADB’s TFP fills market gaps by providing guarantees and loans to banks, the SCF program will take commercial corporate risk and improve liquidity within the supply chains.
“We are delighted to be partnering with ADB for its first supply chain risk-sharing program. This partnership is a testament to our strength in financing trade and our commitment to supporting trade flows—the lifeblood of the global economy,” said Joshua Cohen, global head, Liability and RWA Management at Standard Chartered.
As part of the Clinton Global Initiative, Standard Chartered said that it has also pledged to increase SME lending by approximately 45 percent in its footprint markets of Asia, Africa, and the Middle East over the next five years.
“Today’s announcement builds on its commitment to offer continued flow of credit to SMEs, a sector that’s vital to fuelling economic growth across the bank’s footprint markets,” the private bank said.