Citi, World Bank cut $1.25B trade fund deal

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NEW YORK (Reuters) -- Citigroup Inc. and the private sector arm of the World Bank have struck a deal to offer a $1.25 billion funding facility intended to stimulate emerging markets trade over three years.

The U.S. bank said on Monday it would provide 60%, or about $750 million, while the World Bank arm, International Finance Corp., and other development agencies will purchase participations for the remaining $500 million.

The groups said they expect the funding to support trade flows of up to $7.5 billion. Under the facility, Citi (C, Fortune 500) will provide funding to banks in Asia, Africa, Latin America, Central and Eastern Europe, and the Middle East.

With the partnership, Citi aims to get a lead over competitors by tapping into opportunities arising from lack of credit in the capital markets, which has driven up the price of trade finance, according to the Financial Times.