The programme can guarantee any genuine trade transaction to, from and between the countries of operations.
Guarantees may be used to secure payment of the following instruments issued or guaranteed by participating banks:
letters of credit and standby letters of credit from the issuing bank
deferred payment and "red-clause" letters of credit
advance payment guarantees and bonds, and other payment guarantees
bills of exchange and trade-related promissory notes
bid and performance bonds and other contract guarantees
longer tenors are approved (where appropriate) to cover finance of imported capital equipment and for other term guarantees
other types of trade finance instruments can also be considered
Revolving credit facility
In addition to providing trade finance guarantees, we also extend short-term loans to selected banks and factoring companies in our countries of operations.
These are structured to fund trade-related advances to local companies exclusively for the purpose of pre- and post-shipment finance and other financing of working capital necessary for the performance of foreign trade contracts and domestic and international factoring operations.
Credit agreements are signed between the EBRD and the selected banks and factoring companies. Selection criteria are similar to the criteria used for issuing banks.
We added factoring to our trade programme in order to further support the transfer of innovative trade finance solutions and know-how to our countries of operations.
Through the programme, we also provide financing for domestic factoring activities, in local currencies in a number of countries.
The TFP strengthens the ability of local banks to provide trade financing and gives entrepreneurs in our countries of operations the support they need to expand their import and export trade.
An example of the transition and trade support process promoted by the programme is the export of refrigerators and washing machines from Russia to Tajikistan.
A Tajik bank issued a letter of credit, which was confirmed by a Dutch confirming bank. The EBRD guaranteed up to 100 per cent of the political and commercial payment risk.
Increasingly, banks in our countries of operations are using the TFP as confirming banks rather than only as issuing banks while financing exports to other EBRD countries of operations.