The trade finance programme of the World Bank’s International Finance Corporation (IFC) aims to match emerging market banks that require financing for their corporate clients’ trading activity with lenders who are looking for partners in those markets but wish to have the security that IFC involvement offers. In boom years, when lenders are in expansionary mode, taking on such an arrangement is an easy choice. In recessionary years, and at a time when the leading trade finance banks have limited liquidity and are subject to heavier capital constraints, the search for new markets or partners tends to come much further down the agenda for banks, with or without the assistance of the IFC.
Antonio Alves, the head of the IFC’s short-term lending division for Latin America, has seen such changes happen from up close. He says: “Before [the crisis], it would take us three to four calls [to find lender banks]; now we need to make between 10 and 20 calls.”
