OREANDA-NEWS. December 11, 2009. In June 2009, the European Bank for Reconstruction and Development (EBRD) issued a guarantee through its Trade Facilitation Programme (TFP) for the purpose of importing soil cultivating machinery, reported the press-centre of EBRD.

This guarantee was in two tranches covered by a EUR 1,756,338.60 letter of credit issued by CENTER INVEST Bank, Rostov-on-Don in Russia and confirmed by National City Bank. Subsequent to the confirmation National City Bank was merged into PNC Bank, National Association ("PNC"). PNC, based in Pittsburgh, USA, is successor to National City Bank.

This transaction is part of a larger deal to facilitate the import of agricultural machinery from the USA to Russia. The main parties to the transaction are the exporter, Krause Corporation (1916), a company in Kansas USA specialising in production agricultural equipment and the importer, Agrotekhnodar LLC located in Russia.

“The guarantee for import of agricultural machinery is a good example of transactions facilitated through the TFP in Russia. In times of crises, when most foreign confirming banks have restricted availability of credit lines for smaller banks in Russia, the TFP is often the only solution to route certain trade” said Rudolf Putz, TFP Operation Leader at the EBRD.

In order to compensate for the lack of available trade limits from the commercial market, this year alone, almost 235 transactions worth EUR 204 million have been supported by the EBRD’s TFP programme in Russia, thus providing additional benefits to the trade finance market.

The EBRD's TFP promotes foreign trade with Central and Eastern Europe and the Commonwealth of Independent States. Through the programme, the EBRD provides guarantees to international confirming banks. In so doing, it takes the political and commercial payment risk of transactions undertaken by issuing banks in the countries where the EBRD operates. The programme can guarantee any genuine trade transaction associated with exports from, imports to, and between the EBRD's countries of operations. Within the TFP, there are 115 issuing banks participating in the programme in the Bank's region of operations along with over 700 confirming banks throughout the world. Since the start of the programme in 1999, TFP has facilitated more than 8,500 transactions totalling to the amount of almost EUR 6 billion.