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The Board of Directors of the African Development Bank (AfDB) approved on Wednesday, April 22, 2015 an unfunded US $40 million Risk Participation Agreement (RPA) with Banco Santander S.A. (Santander) to support issuing banks in Africa expand their trade finance operations. The facility will help address critical market demand for trade finance in Africa by providing support for trade in vital economic sectors such as agriculture and manufacturing. It will also foster financial sector development and regional integration, and contribute to government revenue generation.
Most African banks are small and therefore find it difficult to obtain adequate trade finance facilities from international confirming banks to support African importers and exporters. AfDB’s additionality lies in the use of its “AAA” rating to give greater comfort to Santander to take more risk on local banks in Africa and provide them increased trade finance facilities. Through this risk sharing facility Santander will match AfDB’s undertaking in every transaction, thereby creating a trade finance portfolio of at least US $80 million. The facility is expected to support more than US $480 million of trade in Africa over a 3-year period.
This will be the AfDB’s first RPA with a Spanish Bank. Santander is a significant player in the global trade finance market. It has significant presence in many emerging markets and is well positioned to support South-South trade involving Africa. The proposed RPA will therefore enable Santander to increase trade financing in Africa, including post-conflict and transition countries.
About Banco Santander: Banco Santander (SAN.MC, STD.N, BNC.LN) is a retail and commercial bank, based in Spain, with a presence in 10 main markets. Santander is the largest bank in the euro zone by market capitalization. Founded in 1857, Santander had EUR 1.43 trillion in managed funds, 12,950 branches – more than any other international bank – and 185,400 employees at the close of 2014. It is the largest financial group in Spain and Latin America. It also has significant positions in the United Kingdom, Portugal, Germany, Poland and the northeast United States. In Africa, it has equity investments in Attijariwafa Bank Group (Morocco) and Caixa Totta (Angola). In 2014 Santander made an attributable profit of EUR 5,816 million, 39% more than the previous year. For further information please visit: www.santander.com