EBRD and partners support development of cross-border factoring

The European Bank for Reconstruction and Development (EBRD) is promoting the development of international factoring by supporting cross-border transactions between TBC Bank and Armswissbank in support of ongoing trade between their clients. Both banks are members of FCI, the global representative body for the factoring industry.

These transactions support exports of food commodities from Georgia to Armenia for local production of confectionery. The international factoring arrangement between the two banks was made possible via the FCI’s cross-border factoring platform and, for the first time, supported by EBRD guarantees.

Factoring is an important tool for small businesses where a lack of collateral can be a serious obstacle to growth. This service expands access to finance for small businesses, helps to increase their competitiveness and contributes to the development of local economies.

To date, the EBRD has been supporting factoring through policy dialogue conducted by its Legal Transition Programme, providing investments to factoring companies as well as supporting capacity-building in the area of factoring through the Trade Facilitation Programme (TFP). In this, the EBRD has been cooperating with FCI, which has close to 400 members – banks and factoring companies – in more than 90 countries.

Alexander Saveliev, EBRD Director, Specialised Financial Services and Trade Finance, said: “Factoring is an important tool for the financial sectors in economies where the EBRD operates and has significant potential for development. We have been successfully promoting factoring across the EBRD regions through the capacity-building activities of our Trade Facilitation Programme and have helped many local banks develop factoring as a product for small businesses. We are pleased to support FCI members Armswissbank and TBC Bank with our guarantees for their cross-border factoring business. This is the first time that we are supporting international factoring transactions documented via the FCI’s cross-border factoring platform.”

Anzhela Barseghyan, Head, and Corporate Services Department at Armswissbank, said: “Armswissbank, the only FCI member in Armenia, is the leader in the local factoring market. The development of international factoring through our cooperation with FCI has always been one of the key priorities for our bank. Thanks to fruitful collaboration with TBC Bank and the EBRD, we became the first bank in Armenia to introduce a new factoring solution that enables small businesses involved in international trade to use the same solutions for their cross-border business, too. We thank our Georgian partner TBC Bank for their cooperation and I am convinced that such innovative solutions will stimulate the development of international factoring in Armenia.”

Tamar Khizanishvili, Head, Trade Finance and Factoring Department at TBC Bank, commented: “This first-of-its-kind transaction is yet another testament to our longstanding and fruitful partnership with the EBRD, FCI and Armswissbank. This project brings together two very important areas for our bank: the promotion of exports and the development of trade relations between Georgia and neighbouring countries. We want to express our gratitude and to thank our Armenian partner Armswissbank for their trust and cooperation. As the largest bank in Georgia in terms of capital, we will continue to support and implement innovative projects that are important for the development of the Georgian economy.”

Peter Mulroy, FCI Secretary General, said: “We are honoured to see two FCI members, Armswissbank (a member since 2008) and TBC Bank (a member since 2016) come together with the support of the EBRD to work out a unique cross-border factoring structure. By combining a risk-mitigation guarantee under the EBRD’s TFP and the FCI’s two-factor platform, edifactoring.com, TBC Bank has enhanced protection against non-payment. This innovative structure can be easily replicated by FCI members across the EBRD regions. We congratulate all parties for turning this opportunity into a reality.”

Armswissbank and TBC Bank are part of the EBRD’s Trade Facilitation Programme. The TFP was launched in 1999 to promote foreign trade to, from and among the economies in which the EBRD invests. Through the programme, the EBRD provides guarantees to international confirming banks and short-term loans to selected banks and factoring companies for on-lending to local exporters, importers and distributors. The TFP currently includes more than 100 partner banks in 30 economies where the EBRD operates and more than 800 confirming banks worldwide.

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