46812 - GTLP HSBC

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Summary of Investment Information

Project Number

46812

Company Name

GTLP HSBC Bank

Date SPI Disclosed

May 31, 2022

Country

World Region

Region

Global

Projected Board Date

Jun 24, 2022

Environmental Category

FI-3 - No Impact

Status

Pending Approval

Last Updated Date

May 31, 2022

Department

CFGPD - Global Industry, Financial Markets/Trade & Supply Chain, Products

Industry

Financial Markets

Sector

Commercial Banking - Trade and Supply Chain

Project Description

The proposed investment is a 50-50% risk-sharing facility with HSBC Bank USA N.A. (“HSBC” or the “Bank”) in a portfolio of trade-related assets for up to US$600 million with IFC investment of up to US$300 million (up to US$100 million funded and up to US$200 million unfunded) (the “Project”). The Project portfolio will be consisting of emerging market FIs across globe and will include climate eligible transactions (20% of the portfolio on a best effort basis).

The Project will use the Global Trade Liquidity Program (GTLP) platform, an innovative and well-received trade finance program launched by the IFC in 2009, through which IFC will play a countercyclical role during crisis, especially at times when other lending institutions or investors’ appetite may be subdued as negative economic impact is worsening due to multiple macroeconomic factors including COVID-19 related economic downturn, supply chain disruptions and surging inflation.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee	200.0
Loan	100.0
Equity

Development Impact

By sustaining HSBC's ability to provide trade finance services, despite global macroeconomic challenges, the Project is intended to address global trade finance gap and increase and/or maintain access to trade finance for ultimate stakeholders including Emerging Markets Issuing Banks ("EMIBs") and underlying importers and exporters in Emerging Markets. In addition, it is aimed at promoting global financial and economic integration by increasing the delivery of trade finance to EMIBs, resulting in more support of trade activities across markets through a wide geographical coverage and potentially grow the enabling platform of the Correspondent Banking Network.

Financial additionality is derived by IFC’s countercyclical role in assisting HSBC to sustain and expand its support to EMIBs at a time of regional and global macroeconomic challenges and liquidity constraints as a result of COVID-19 and the Russia-Ukraine conflict. IFC’s role will help maintain and expand the availability of trade finance through HSBC’s relationships with EMIBs across many Emerging Markets and Developing Economies (EMDEs) primarily in Asia, LAC and MENA. Specifically, IFC’s additionality is derived from the combination of its: (i) successful experience with rapid crisis response efforts, especially in the trade finance space; (ii) extensive network of banks that support global EMs; (iii) set of programs aimed at investing both large scale and transactional liquidity and capital for trade finance and working capital in EMs; (iv) ability to support private sector clients in addressing liquidity constraints in response to the COVID-19 crisis and in providing critical goods, equipment, and supplies; (v) ability to help clients re-direct supply chains; and (vi) support for continued employment in countries of operation.

E&S Category Rationale / Risks and Mitigation

This Project will support short-term trade finance activities and therefore has been classified as a Category FI-3 project according to IFC Sustainability Policy. The trade finance activities that would be supported by the Project will be required to meet the requirements of IFC Exclusion List and other exclusions such as coal and palm oil-related activities. The Project will not support any activities with significant E&S concerns such as (a) involuntary resettlement, (b) risk of adverse impacts on Indigenous Peoples, (c) significant risks to or impacts on the environment, community health and safety, biodiversity, cultural heritage, or (d) significant occupational health and safety risks. IFC will have the ability to exclude or suspend from participating in the Project any EMIBs based on their E&S performances and ability to implement IFC E&S requirements. Each trade pool will be supported by underlying documentation with the designated bank, and the agreement with HSBC will specify that the underlying traded goods meet IFC requirements and will require HSBC to report on implementation. IFC will also review each underlying transaction to confirm it meets the exclusion criteria.

Contacts

For Inquiries About the Project, Contact

HSBC Bank USA, N.A
Luis Angel Torres
Regional Head – Portfolio Management and Distribution
+ 1 212 525-6653
Luis.x.torres@us.hsbc.com
452 Fifth Avenue, Tower 4, New York City, NY, 10018, USA
www.us.hsbc.com

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