EBRD - A new risk sharing facility for the supply chain finance programs
Through the proceeds of the facility, aggregators and their suppliers located in the EBRD’s country of operations will be able to participate in the supply chain finance programs organized by the Citibank Europe Plc and the Citibank NA London Branch.
The European Bank for Reconstruction and Development (EBRD) is launching a €75million project, to be approved on the 9th of June 2022, for an uncommitted funded facility “for the purpose of risk sharing in supply chain finance (SCF) programs” administered by Citibank Europe Plc and Citibank NA London Branch.
Citibank N.A. London branch provides commercial banking services and operates as a subsidiary of Citibank N.A., which is a wholly-owned subsidiary of Citigroup Inc., an American multinational investment bank and financial services corporation headquartered in New York City. While Citibank Europe Plc is the principal European banking subsidiary of Citigroup Inc. and has branches across 21 European countries and one subsidiary. Citigroup Inc. is listed on the New York Stock Exchange.
Aggregators (Anchor Buyers) and their suppliers located in the EBRD’s country of operations will be able to use the proceeds of the facility to participate in the SCF programs organized by the Citibank Europe Plc and the Citibank NA London Branch.
The objective of the sub-projects is to “expand access to affordable and recurring working capital financing solutions for suppliers, including SMEs, in order to strengthen the resilience of supplies chain” in which the operate. Citibank Europe Plc and Citibank NA London Branch will inspect ways of to facilitate the alignment with Environmental, Social, and Governance (ESG) standards of the aggregators, as investors are increasingly apply these factors as part of their analysis process to identify material risks and growth opportunities.
Under the Framework, by sharing the risk of Anchor Buyers through funded and unfunded participations, the EBRD will indirectly be exposed to any environmental and social risks associated with the sub-projects. The procedure was carried out on the environmental and social policies that Citibank Europe Plc and Citibank NA London Branch apply to SCF programs, which were noted to be robust and flexible to remain appropriate to the environmental, health and safety risks posed by such facilities.
The Transition impact is one the principle governing EBRD operations, and its concept argues that a well-functioning market economy should be more than just a set of markets. It should have a set of “desirable” qualities such as be competitive, inclusive, well-governed, environmentally friendly, resilient and integrated. Even though the Transition impact is not assessed at the Facility level, the sub-projects under the Framework will stem from the “competitive”, “inclusive”, “well-governed” or “inclusive” qualities.
The proceeds are supporting, among other things, the implementation of tailored advisory and training activities under the EBRD's Advice for Small Businesses framework, the initiation of sustainable supply chain financing programs that offer financial incentives to suppliers including those from SMEs that meet certain ESG targets, and the provision of technical assistance to eligible Anchor Buyers to facilitate a "top-down" approach to incorporate sustainability and resilience into supply chains that pass through EBRD countries of operation.
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