$1.25 billion in credit to be provided by Citi and IFC

Citigroup along with International Finance Corp, a private sector arm of the World Bank, are establishing a $1.25 billion partnership for capitalizing on the opportunities arising from the scarcity of credit. Under their plan Citi is to provide $750 million to banks in Asia, the Middle East, Africa and Latin America over a three-year period. As for IFC, in association with other participating organizations it will invest up to $500 million.

With this move Citi wants to outstrip its rivals by pioneering the opportunities arising from lack of credit in the capital markets, which has driven up the price of trade finance. The bank expects the total funding to support up to $7.5 billion in trade flows over the three years as the loans will be short term and the funds will be reinvested once borrowers repay

"While this is a lucrative business for Citi, our goal is, hopefully, that prices will go down as more funds are made available," said John Ahearn, head of trade finance at Citi.