IFC, Credit Agricole CIB seal $2bn Synthetic Risk Transfer

The International Finance Corporation and Credit Agricole CIB have closed a Synthetic Risk Transfer transaction that will allow the bank to expand its trade finance activities, and lend an additional $510 million to support health, education and other key services, as well as infrastructure projects, in emerging markets.

The IFC made a $85 million investment in credit risk protection on a $2 billion portfolio of Credit Agricole CIB's emerging market trade finance and corporate loans. In an SRT, investors provide a bank with predetermined credit risk protection for assets on its balance sheet, which in turn frees up regulatory capital that would otherwise have to be allocated by the bank to such assets and can therefore be used to generate new lending.

Credit Agricole CIB is committed to using freed-up capital to make $510 million of what it terms as 'Social Loans' in emerging markets.