City Bank secures $30m foreign fund
CDC Group, the development finance institution and impact investor of the United Kingdom, has extended a trade finance loan of $30 million to City Bank.
The private commercial bank recently signed an agreement with CDC Group to secure the fund.
CDC's investment will enable City Bank to extend foreign currency trade credit to local lenders, importers and exporters and is expected to generate up to $100 million in additional trade every year, according to a press release.
The loan will strengthen City Bank's ability to meet the needs of its more than 17 million clients in the retail and small-and-medium-enterprise (SME) segments, facilitating increased trade and supporting key sectors of Bangladesh's economy.
M Rehan Rashid, country director of CDC Group, said the loan to City Bank, which marks CDC's first direct trade finance loan to a local issuing bank, will further enhance the supply of trade finance in the region. "We are thrilled that this commitment will support Bangladesh's banking sector and enhance our ability to bring a deeper impact to local and regional value chains," he added.
Sheikh Mohammad Maroof, additional managing director of City Bank, said the loan will help facilitate trade finance through UPAS LCs, which in turn will enable corporations and SMEs to optimise working capital management at competitive rates.
UPAS stands for Usance Payable at Sight. UPAS letter of credit is a usance LC where payment is made on a sight basis to the exporter, but the payment of the buyer will be made to the issuing bank at the usance term.
The bank will assist businesses in meeting exporters' requirements of payment at sight and clients' needs for timely goods receipt while enhancing overall competitiveness in international commercial activities, Maroof said.
Robert Chatterton Dickson, the British high commissioner to Bangladesh, welcomed CDC's first-ever direct trade finance loan to a bank in the country.
"This transaction is a significant step forward in the UK-Bangladesh economic partnership, further broadening our offer of financing instruments beyond grant finance," he added.