The Inter-American Development Bank closed on September 26, 2007 the first transaction in Peru under its Trade Finance Facilitation Program (TFFP) with Banco Interamericano de Finanzas S.A. (BIF). Under this transaction, the IDB has extended its guarantee to cover a documentary credit used for the import of a generator and other equipment for electricity generation from Brazil, by a Peruvian company active in the agricultural sector. Facilitating this intra-regional trade transaction, the IDB issued its guarantee in favor of the Brazilian Banco Itaú BBA S.A.
“Being part of the TFFP network has enabled us to close this transaction directly with Banco Itaú BBA, marking the beginning of a new relationship with that Brazilian bank. The TFFP team’s efforts and Banco Itaú BBA’s quick response were key for making this deal happen", said Raul Baltar, CEO of Banco Interamericano de Finanzas S.A.
The approximately US$4.5 million, 1.4 years tenor deal facilitating the import of equipment from Brazil will allow the Peruvian agricultural company to increase its electricity generation capacity, in order to fully cover its energy needs going forward.
“There has been a noticeable increase in interest from banks in the region to join and use the TFFP as Confirming Banks, especially to enable them to take risks involving tenors above one year - needed mainly in transactions involving capital goods, but also for international guarantees, such as performance or advance payment bonds.”, added Joao Vianei da Silva, Senior Trade Finance Officer of IDB’s TFFP team.
“We are very happy to have supported this direct trade finance transaction, establishing a new intra-regional banking relationship and facilitating the import of capital goods needed in local production. It is a perfect example of how the TFFP intends to add value.”, stressed Ulrike Aulestia Vargas, TFFP Trade Finance Officer.
TFFP
Launched and rolled-out in 2005, the TFFP is an effective tool for the IDB to support economic growth through the expansion of financing available for international trade activities of Latin American and Caribbean countries. The TFFP currently comprises a network of about 100 Confirming Banks belonging to 50 different international banking groups in over 31 countries, and 29 Issuing Banks in 14 LAC countries with almost US$530 million in approved credit lines. To date, the IDB has issued guarantees for approximately US$160 million in support of more than 200 individual international trade transactions totaling US$220 million.
BANCO INTERAMERICANO DE FINANZAS S.A. (BIF)
BIF is a medium-sized Peruvian commercial bank owned by the Spanish IF Group. The bank offers a full range of multiple banking services, specifically targeting medium-sized corporations and individual clients, and with an increasing presence in commercial loans, mortgage loans and trade finance. BIF’s operations have increased over the last years, registering total assets of US$999 million and total deposits US$716 million as of July 2007.