Deutsche Bank Teams With World Bank On $1.1 Billion Trade Finance Platform

Deutsche Bank and the World Bank launched a 1-billion-euro (about $1.1 billion) trade finance platform, according to a Tuesday (July 14) press release.

The platform is designed to increase access to trade finance in frontier and emerging markets, the release said.

“Trade finance is the ‘working capital of nations’ and essential to achieving the job creation and economic inclusion needed to improve lives and livelihoods in our member countries,” Junaid Kamal Ahmad, vice president of operations at the World Bank’s Multilateral Investment Guarantee Agency (MIGA), said in the release. “Our partnership with Deutsche Bank will help us leverage its extensive geographic reach and experience in trade finance structuring and execution, which aligns with MIGA’s goal to mobilize private capital as a multiplier for development finance.”

MIGA will provide Deutsche Bank with guarantees “to protect against the risk of non-payment in trade transactions by eligible state-owned banks, which often play a critical role in the import of essential goods or support of underserved client segments in frontier and emerging markets,” the release said.

In joining MIGA’s risk mitigation capacity with Deutsche Bank’s trade finance network and market presence, the platform is expected to help bring trade finance to markets where risk appetite is waning and financing gaps are expanding, according to the release.

“By unlocking trade finance in these markets, the platform supports the World Bank Group’s broader commitment to creating jobs and economic opportunity for people in the world’s most underserved economies,” the release said.

Chief financial officers are rethinking the concept of trade finance as supply chains grow in complexity and capital becomes more expensive.

“What was once a document-heavy compliance function is emerging as a digital discipline tied directly to working capital performance,” PYMNTS reported in February.

For CFOs, the implications go beyond convenience. Digital trade documentation shortens transaction timelines, decreases discrepancies and allows for financing decisions to happen earlier in the supply chain cycle. Companies can access capital while goods are still in transit rather than waiting for documents to be verified after shipment.

While decisions about how companies pay and get paid “were traditionally a secondary issue for most CFOs,” legacy hierarchy is now changing as finance leaders see the working capital implications of strategic B2B payment design, Boost Payment Solutions Founder and CEO Dean M. Leavitt told PYMNTS in February.