J.P. Morgan and ADB Expand Risk Mitigation Pact To Further Facilitate Trade In Developing Asia
Trade Financing Provided to J.P. Morgan’s Client Banks Will Help Boost Commerce During Challenging Economic Conditions
Hong Kong - J.P. Morgan and the Asian Development Bank (ADB) announced today that they have signed the Credit Guarantee Agreement under ADB’s Trade Finance Facilitation Program (TFFP) to further enhance support for international trade in developing countries in Asia. The expanded partnership is designed to stimulate trade growth by extending trade financing to J.P. Morgan’s financial institution clients in emerging markets. Combined with the Risk Participation Agreement signed last year with ADB, this collaboration will enable J.P. Morgan to expand risk coverage in additional markets such Indonesia, Nepal and the Philippines.
“We are pleased to further broaden our partnership with ADB to help bolster trade flows to a wider range of Asian countries recovering from recent market instability,” said Yanti Agustin, Asia Pacific head of Global Trade Services, J.P. Morgan Treasury Services. “As a pioneering member of ABD’s Trade Finance Facilitation Program, we will continue to build upon our entrenched relationships with financial institutions in Asia Pacific by leveraging this important program to help our clients raise important trade financing.”
Under ADB’s Credit Guarantee Agreement, ADB provides guarantees to confirming banks like J.P. Morgan covering country risk as well as risk on issuing banks’ letters of credit (L/Cs) and other instruments in support of trade. Through the credit guarantee, ADB shares risk with confirming banks to provide comfort to exporting companies that they will in fact get paid for shipments to the most challenging Asian markets.
By using both facilities under the TFFP, J.P. Morgan is better positioned to support regional client banks in providing trade financing to importers and exporters in their countries and helping bolster country and regional commerce during today’s challenging economic conditions. The initiative is expected to have significant development impact by increasing funding for trade of consumer goods, intermediate goods, small machinery and commodities demanded by emerging market enterprises.
“We are very pleased to continue working with J.P. Morgan to support development through trade,” said Philip Erquiaga, Director General of Private Sector Operations at ADB. “Trade is an important component of economic development and ADB works to achieve this, in part, by developing public-private partnerships involving risk-sharing arrangements.”
This program will broaden J.P. Morgan’s risk mitigation capabilities and will enhance the profile of the underlying trade finance transactions as J.P. Morgan will be able to benefit from ADB’s AAA credit rating.
“With Asia recovering from the global economic crisis, this Credit Guarantee Agreement will open new avenues for J.P. Morgan to provide stronger support in financing trade for emerging markets,” said Conor O’Dowd, Global Head of Trade Distribution at J.P. Morgan. “Trade finance has been a core business at J.P. Morgan for more than 100 years. As an international bank offering trade solutions in nearly 40 countries, we have a strong history of supporting our financial institution clients no matter the market conditions. We look forward to collaborating with ADB on this important initiative.”
About J.P. Morgan Treasury Services
The Treasury Services business of J.P. Morgan is a top-ranked, full-service provider of innovative payment, collection, liquidity management, trade finance, commercial card and information solutions to corporations, financial services institutions, middle market companies, small businesses, governments and municipalities worldwide. With more than 50,000 clients and a presence in 39 countries, J.P. Morgan Treasury Services is one of the world’s largest provider of treasury management services and a division of JPMorgan Chase Bank, N.A., member FDIC. More information can be found at www.jpmorgan.com/ts.
About JPMorgan Chase & Co.
JPMorgan Chase & Co. (NYSE: JPM) is a leading global financial services firm with assets of $2 trillion and operations in more than 60 countries. The firm is a leader in investment banking, financial services for consumers, small business and commercial banking, financial transaction processing, asset management and private equity. A component of the Dow Jones Industrial Average, JPMorgan Chase & Co. serves millions of consumers in the United States and many of the world’s most prominent corporate, institutional and government clients under its J.P. Morgan and Chase brands. In Asia Pacific, J.P. Morgan operates through 26 offices in 15 countries and has developed its wholesale banking franchise during a history of almost 160 years in the region. More information about JPMorgan Chase & Co. is available at www.jpmorganchase.com.
About Asian Development Bank (ADB)
ADB, based in Manila, is dedicated to reducing poverty in the Asia and Pacific region through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, it is owned by 67 members - 48 from the region. In 2008, it approved $10.5 billion of loans, $811.4 million of grant projects, and technical assistance amounting to $274.5 million.
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