UK development finance fund CDC Group has committed to a $30 million trade finance loan to Bangladesh’s Prime Bank.
The loan facility, which will enable Prime Bank to extend more foreign currency trade credit at longer tenors to local businesses, is expected to generate up to $60 million in additional trade each year in sectors such as manufacturing, garments, and food and agriculture.
The systemic liquidity is also expected to increase Prime Bank’s ability to meet local corporates’ US dollar funding needs, thereby bolstering import and export activities and helping to support the continued growth of Bangladesh’s economy.
M. Rehan Rashid, country director for Bangladesh at CDC Group, said:
“We are pleased to be deepening our support for Bangladesh through our trade finance facility, which allows us to remain agile in responding to the critical funding gap in the market.
Combatting the adverse effect of the pandemic on trade activities and economic growth calls for collaboration and stable investments in the form of counter-cyclical funding, which is bespoke to the needs of local businesses and suited to countries’ economic structure.
We are thrilled to be backing a key Bangladeshi financial institution that will help accelerate capital support to local communities, boost businesses and economic opportunities, and facilitate the country’s post-crisis recovery.”
Prime Bank said the availability of greater capital will support its clients’ ability to import raw materials and capital equipment, which will in turn create and sustain more jobs, and increase access to goods and services for Bangladeshi consumers.
In addition to its financial commitment, CDC will also work with Prime Bank to help strengthen the bank’s capacity to identify and manage social and environmental risk factors in its operations.
Hassan O. Rashid, managing director and CEO of Prime Bank, said:
“This collaboration shall enable Prime Bank to address the needs of corporate and SME clients in the post-COVID business environment.
Furthermore, the alliance shall provide liquidity support to our international trade business and help us to migrate some of the best international practices to strengthen our corporate governance.”
CDC Group is the UK’s state-owned bilateral development fund, and it has over 70 years’ experience of supporting sustainable, long-term growth for businesses in Africa and South Asia.
At present, it has investments in over 1,000 businesses in emerging economies, and total assets of over $9.3 billion.
In 2020, CDC committed over $1.5 billion in funding to businesses in Africa and Asia, and aims to invest up to $1.75 billion in 2021.
Prime Bank is a second-generation, private commercial bank that was founded in 1995.
Headquartered in Dhaka, Prime Bank is ‘AA’ rated. It has 146 branches and 170 ATM locations nationwide, and over 3,200 employees.