City Bank can now confirm LCs of other banks

Local first generation lender City Bank can now receive risk coverage from the World Bank Group’s International Finance corporation (IFC) to confirm LCs issued by other banks, a development that will boost City Bank’s capabilities to facilitate external trade financing.

“The move will facilitate import and export financing of goods and services of the private sector,” City Bank said in a statement on Tuesday.

This is especially significant during the current Covid-19 pandemic period, where City Bank will be able to cater to a higher volume of trade transactions and the higher trade flow will abate the effects of the crisis, it said.

Sheikh Mohammad Maroof, additional managing director of City Bank, and Rosy Khanna, IFC’s Regional Industry Director, Financial Institutions Group, Asia and Pacific, signed the agreement on behalf of their respective organisations.

Maroof said the arrangement with IFC is a testament to City Bank’s strength and capabilities and this arrangement will further strengthen the bank’s ability in facilitating the country’s trade business.

“Through this agreement, as a first Bangladeshi private commercial bank, City Bank will emerge as a LC confirming bank in the arena of international trade finance, which is a matter of great pride for a Bangladeshi bank,” he said.

Usually, foreign banks, such as Standard Chartered Bangladesh and HSBC confirm LCs of local banks to assure foreign banks and their clients about the payments.

Rosy Khanna said, “Through the GTFP (Global Trade Finance Program) bank network, the City Bank can easily establish working partnerships with a vast number of major international banks and help businesses broaden access to finance, while reducing cash collateral requirements”.

“Bangladeshi businesses whose cash flows have been heavily impacted by Covid-19 will also be able to benefit from a continuous flow of trade credit into the market. This will help in increasing trade, creating jobs, and reducing poverty,” Rosy commented.

IFC launched the GTFP in 2005 to support the development of trade involving emerging economies. Under this program, IFC offers full or partial guarantees to the confirming banks participating in the GTFP, effectively taking on their payment risks. City Bank joined the GTFP program in 2012 as an issuing bank and now it has become a confirming bank.