JPMorgan and ADB Enter Risk Mitigation Pact to Facilitate Trade in Developing Asia

Hong Kong.- JPMorgan and the Asian Development Bank (ADB) announced today they have entered a risk-sharing agreement that will enhance support for international trade in developing countries in Asia.

The Risk Participation Agreement initiative, which falls under the umbrella of ADB’s Trade Finance Facilitation Program (TFFP), will expand trade finance facilities to selected financial institutions on a risk-sharing basis, with the transactions ranging from short-term letters of credit to tenors that last up to two years.

TFFP plays an important role in ADB’s efforts to develop public-private partnerships through risk mitigation. TFFP works with private-sector financial institutions to support trade in developing countries by sharing the risk of financing and guaranteeing trade transactions. These types of risk-sharing agreements can be particularly important in developing intra-regional trade between smaller developing countries, and in supporting the growth of small and medium-sized enterprises (SMEs) that are involved in international trade.

“We are very pleased to work with JPMorgan to share risk in some of Asia’s lowest income countries to support development through trade,” said S. Chander, Deputy Director General of ADB’s Private Sector Operations. “ADB aims to attract private capital to support development in the poorest countries of Asia. Trade is an important component of economic development and ADB works to achieve this, in part, by developing public-private partnerships that involve risk-sharing arrangements.”

This program will broaden JPMorgan’s risk mitigation capabilities and will enhance the profile of the underlying trade finance transactions as JPMorgan will be able to benefit from ADB’s AAA credit rating.

“We are very excited to be working with ADB on this important initiative and all the new opportunities ahead. Asia’s trade flow remains buoyant and this risk participation agreement enables us to provide our financial institution clients in these emerging markets with more options to meet their trade financing requirements,” said Asif Raza, Managing Director, Asia Pacific Head of Trade Services & Logistics Management, JPMorgan Treasury Services.

The program will be introduced in phases. Phase I will be launched in Pakistan, Bangladesh, and Sri Lanka. Phase II will extend coverage to include financial institutions in Vietnam, the Philippines, and Indonesia. The program will enable both JPMorgan and ADB to continue facilitating the growth of trade business in these countries as well as strengthen relationships with financial institution clients.