IFC & ABN AMRO TRADE ENHANCEMENT FACILITY
6 Pakistani Banks to participate
By AMANULLAH BASHAR
Nov 06 - 12, 2000
The International Finance Corporation (IFC) and ABN AMRO Bank have signed a $100 million trade enhancement facility with six local banks. The facility is aimed at enhancing the trade finance available to private sector in Pakistan.
The facility is spanned over a period of 24 months. The amount may be increased to $600 million provided the project produced positive results.
Under the facility terms, IFC and ABN AMRO Bank will co-guarantee the L/C confirmations issued by the six participating banks up to the total facility limit of $100 million.
Giving the background of the project, Muhammad Aurangzeb, Country Manager of ABN AMRO Bank, Pakistan said that businesses in Pakistan have limited access to trade finance from local and international commercial banks. The 2-year revolving facility will give them better access to letters of credit, confirmations and bankers' acceptances by guaranteeing documentary credits originating from selected commercial banks. The facility will initially include six top-tier Pakistani banks including Habib Bank Limited, Muslim Commercial Bank Limited, Askari Bank Limited, Soneri Bank Limited, Bank AL Habib and ABN AMRO's branch in Pakistan. All six local banks participated in the signing ceremony.
Speaking on the occasion Bernard Pasquier, IFC's Director for South Asia said that project will help restore trade finance flows to the private sector in Pakistan at a time when such finance is urgently needed. The investment will help build confidence in the banking sector and through it, IFC can reach many smaller businesses in Pakistan. IFC is also considering participating in other projects that will help strengthen Pakistan's economy and restore investor confidence.
Replying to a question regarding investment climate in Pakistan especially from foreign quarters, the IFC director said, "outlook is positive. He felt that there is a large opportunities available for domestic and foreign investors in Pakistan. Signing of "trade enhance facility" gives a signal that Pakistan is open for business. Various economic reforms introduced by the present government have started showing results hence things are improving". "So far the outcome of the economic policies is encouraging, however I am not here to predict about the future" The government policies fell short in certain areas which still require some improvement. Level playing field was something which his opinion was missing especially in the financial sector which need the attention of the policy makers to attract more foreign investment, he felt.
Zakir Mahmud, President HBL while giving his views regarding the project expressed the confidence that the agreement would give an encouraging signal to the rest of the world regarding business stability and opportunities in Pakistan. "It is not the size or pricing of the facility, it is presence of International financial institutions in Pakistan business scenario which actually matters", he said.
Safar Ali Lakhani, president of Soneri Bank however said that pricing of this trade facility must be competitive to make it a success. Otherwise such financing facilities are already available in Pakistan.
Qaiser Shaikh, a prominent businessman was of the view that the arrival of IFC and ABN AMRO for enhancing trade financing is a good sign and hopefully is instrumental in building up Pakistan image in the business circles abroad.
Muhammad Aurangzeb, Country Manager of ABN AMRO Bank Pakistan while commenting on the project observed that this facility re-iterates ABN AMRO's unwavering presence in the country and its inveterate position as a leading international correspondent to local banks in Pakistan. Present since 1948 as one of the oldest foreign banks, ABN AMRO has swiftly grown to assert itself as a premium provider of diversified financial services to corporate and retail customers. The Bank has been a forerunner in the development of the financial market and in the progress of the corporate and public sectors in Pakistan, Aurangzeb observed. Its strength lies in providing the highest levels of service to both its consumers and corporate customers.
He said that mission of IFC, part of the World Bank Group, is to promote private sector investment in developing countries which will help reduce poverty and improve people's lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets and provides technical assistance and advice to governments and businesses.
The International Finance Corporation (IFC) and ABN AMRO Bank signed a US$100 million trade enhancement facility with six local banks, to enhance the availability of trade finance to private sector Pakistani businesses. Photo shows (From L to R) Georgina Baker, IFC Washington; Aftab Manzoor, President, Muslim Commercial Bank; Zakir Mahmud, President, Habib Bank Limited; Bernard Pasquier, IFC's Director for South Asia; Muhammad Aurangzeb, Country Manager, ABN AMRO Bank Pakistan; Kaleemur Rahman, President, Askari Commercial Bank; Safar Ali Lakhani, President, Soneri Bank Limited; Abbas Habib, President, Bank AL Habib and Raj Daryanani, ABN AMRO Bank, Chicago; after the signing ceremony.