SINGAPORE, July 6, 2011 (AFP) – The Asian Development Bank (ADB) and reinsurer Swiss Re announced an agreement Wednesday to boost regional trade by guaranteeing financing risks for exporters and importer in poor countries. The guarantee means banks can be more comfortable lending to these companies, which need short-term funds to pay for their import-export activities, boosting trade.
Under the agreement, Swiss Re will insure $250 million of financing conducted through the ADB’s trade finance programme, which provides guarantees and loans — within 24 hours — through more than 200 banks.
The pact is the first time that Zurich-based Swiss Re has provided insurance via a trade programme run by a multilateral development bank, while it is also the first time the ADB has offset risk with a private insurance firm.
While Asia’s economy has been growing strongly, the growth was being driven largely by “the exporting prowess of a handful of countries” led by China, the Manila-based ADB said in a statement.
“Many other Asian nations, by contrast, find it difficult to export or import key goods because they struggle to get the trade finance they need from international and local banks,” it said.