48463 - GTLP HSBC Asia

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Summary of Investment Information

Project Number

48463

Company Name

GTLP HSBC Asia

Date SPI Disclosed

Nov 28, 2023

Country

World Region

Region

Global

Projected Board Date

Jan 22, 2024

Environmental Category

FI-3 - No Impact

Status

Active

Last Updated Date

Nov 27, 2024

Department

Global Trade & Supply Chain

Industry

Financial Markets

Previous Events

Approved : May 16, 2024
Signed : Nov 21, 2024
Invested : Jun 27, 2025

Sector

Commercial Banking - Trade and Supply Chain

Project Description

The proposed GTLP project is a 50%-50% risk sharing facility with HSBC Asia (“HSBC Asia” or the “Bank”) on a portfolio of trade-related assets for up to US$1.0 billion, with an IFC investment of up to US$500 million (the “Project”). The Project is expected to include a funded tranche of up to US$400 million, and an unfunded tranche of up to US$100 million. Reallocations between the funded and the unfunded components within the maximum IFC risk amount of US$500 million limit are allowed at IFC’s discretion. The Project will have an availability period of three years and a runoff period of up to one year, while the underlying trade assets will have a maximum tenor of one year. The Project will include a 20 percent target allocation for climate-linked trade transactions on a best-efforts basis.

Associated Advisory Engagement

N/A

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee	100.0
Loan	400.0
Equity

Development Impact

The Project addresses the persistent global trade finance gap in Emerging Markets and Developing Economies, which is currently estimated to have topped US$2.5 trillion. The global volatility caused by the COVID-19 pandemic and the global economic consequences of Russia’s invasion of Ukraine (such as high inflation, supply chain disruptions, decreased or negative economic growth, and food insecurity, etc.) have contributed to the worsening of the trade finance gap across the globe. This volatility is also causing severe reduction in economic activity, trade disruptions, and liquidity constraints. Through the Project, IFC will work with HSBC Asia to address this gap by providing trade finance to the HSBC’s network of EMIBs. EMIBs will further benefit from the maintenance and expansion of their trade finance lines with HSBC Asia to support their client importers and exporters who are the ultimate beneficiaries. The Project’s 20 percent climate target seeks to support HSBC Asia’s commitment to extending climate-linked trade finance across its network of EMIBs, on a best-efforts basis, which is an important feature for EMIBs in countries such as Bangladesh, India, Indonesia, and Vietnam, where the financing deficit for climate mitigation and adaptation is significant. By supporting climate-smart trade transactions, the proposed GTLP will help reduce climate-linked risks for the financial sector, since banks are often heavily exposed to the GHG footprint of key export-oriented sectors mainly through lending and trade finance.

The project shall furnish HSBC Asia with effective trade risk mitigation that enables the Bank to support more trade finance in EMDEs than it would otherwise have been able to. The proposed GTLP highlights IFC’s countercyclical role in allowing HSBC Asia to provide trade finance support for its network EMIBs at a time of challenging macroeconomic conditions, including severe US dollars liquidity constraints faced by countries like Bangladesh. These macroeconomic headwinds and the uneven pace of post COVID-19 recovery observed across Asia, have made the risk-return profile of investments in local financial institutions unattractive to international lenders, adversely affecting local banking systems’ ability to access FCY financing. In this context, IFC’s investment helps maintain and expand the availability of trade finance for HSBC to deepen relationships with EMIBs across many EMDEs, primarily in Asia.

E&S Category Rationale / Risks and Mitigation

This Project will support short-term trade finance activities. In accordance with the IFC Sustainability Policy, the project is classified as FI-3. 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, palm oil-related activities (other than RSPO certified), among others. 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, (d) risk of significant retrenchment or (e) 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 the IFC's requirements with respect to the underlying traded goods 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

The Hong Kong and Shanghai Banking Corporation
Mark OW
Senior Vice President
+65 6658 9978
Mark.ow@hsbc.com.sg
Global Trade & Receivables FinanceThe Hong Kong and Shanghai Banking Corporation Limited10 Marina Boulevard, Marina Bay Financial Centre Tower 2, Level 44, Singapore 018983
www.hsbc.com

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