GBTI late last year forged a partnership with the International Finance Corporation (IFC) in the form of a trade finance facility aimed at lowering the cost of external trade through ‘Triple A’ backing, allowing numerous banks to facilitate letters of credit to businesses.
And to date, a third of the bank’s customers have come on board to access easier, less costly financing for the purpose of trade. This is according to Head of Credit Shaleeza Shaw, who said that the uptake in the services by  customers should climb to 50 percent by the next quarter, since the interest is there.
Through this facility, the GBTI is offering to importers IFC-backed letters of credit through numerous banks across continents, thereby allowing importers to access financing for their imports at rates more competitive than ever before. The IFC is the private sector arm of the World Bank.
The programme offers confirming banks partial or full guarantees to cover payment risks on banks in the emerging markets. These guarantees are transaction-specific and apply to letters of credit, trade-related promissory notes and bills of exchange, bid and performance bonds, advance payment guarantees, and suppliers’ credits for the import of capital goods. In addition, IFC provides funding to banks for short-term pre-export financing.
The IFC, in preparation for the partnership with GBTI, put the local bank through a rigorous due-diligence and it confirmed that GBTI, one of the largest banking institutions in Guyana, is strong, sound and well managed.
Speaking at the launch of the facility in February, CEO of GBTI, John Tracey said the IFC would help the bank to develop a risk-based model of management that few banks in the Caribbean have now.
“As another arrow in the quiver of the IFC meant to bring assistance to the private sector, we can do no less than to view this facility as the IFC views it – to benefit the ultimate recipients more than to benefit the banks. Fortunately, GBTI can afford to do this,” he said.
Tracey had said that all of the commercial banks in Guyana are in a healthy state and should be willing to give support to the business sector. He noted therefore that Guyanese businesses are in a very favourable position.
He said that with the excess liquidity in the financial system so high and growing, the rates of interest and advances are at an all-time low and are heading towards single-digit figures.
Tracey noted that the effects of increased competition in the sector, which the government intended by opening up the sector in 1994, giving licences to two banks, may have taken a while to be seen. However, he said most banks are now experiencing a narrowing of the interest rate spread and therefore a downward pressure on profits.