Citi today announced the launch of an industry initiative from its Global Transaction Services business - The Multi-Bank Global Trade Program.
Leveraging its global footprint, this initiative affords Citi an opportunity to address market challenges in partnership with other Trade banks while garnering benefits for clients.
Like Citi, other Trade banks share a willingness to finance the robust and rapidly growing trade flows around the world, yet can be hampered by rising capital costs, stringent regulatory requirements of Basel II (and pending Basel III) and liquidity constraints. This Program would be the first of its kind to provide a group of participating banks with the ability to originate and fund trade finance assets more efficiently through a structured issuance of asset-backed securities and commercial paper. Citi is Lead Arranger and a founding participant for this global initiative.
The Program is being pioneered by Citi to benefit the broader industry. The Multi-Bank Global Trade Program seeks to establish an origination and funding platform for Trade banks with complementary market positions, thereby creating a diversified, granular pool of funded Trade assets. With this collaboration, participating banks would realize the benefits of asset de-recognition, credit relief and lower funding costs, which are difficult to achieve through a stand-alone market execution.
"Each bank may rationalize its participation differently, such as a greater need for capital relief vs. funding and liquidity. However, collaboration among the participating banks, sharing a common goal of creating the most efficient funding platform to support the financing of global trade flows, is ultimately the most important ingredient to achieve success," said Emmeline Wexer, Global Head of Citi's Trade Asset Advisory, within Citi's Global Transaction Services.
John Ahearn, Global Head of Trade at Citi's Global Transaction Services said, "This Multi-Bank Global Trade Program is another way that Citi is supporting the Global Trade market and providing ways Trade banks can grow their trade ffinance portfolio in an efficient and effective way."