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       Written evidence submitted by Standard Chartered Bank

 

 

3rd February 2023

 

 

Ms Sarah Champion MP

Chair, International Development Committee

House of Commons

London SW1A 0AA

 

Dear Ms Champion,

              On behalf of Standard Chartered Bank, I am delighted to respond to the International Development Committee’s call for evidence on the UK’s strategy towards development finance institutions as part of your current inquiry.

1.              Standard Chartered Bank was established in 1853 and is one of the UK’s largest banks. Our core purpose is to drive commerce and prosperity through our unique diversity, and we deliver this through a network of 85,000 staff and presence in 59 markets. Our businesses serve two client segments (Commercial, Corporate and Institutional Banking and Consumer, Private and Business Banking) across three regions (Europe and Americas, Africa and the Middle East, and Asia). Within our Commercial, Corporate and Institutional Banking business we support over 50,000 clients ranging from local corporations and medium-sized enterprises to governments, banks and investors.

2.              The relationship between Standard Chartered Bank and British International Investment (BII) is strong, longstanding and one that we are very proud of. Our purpose is closely aligned with that of BII, which is to generate sustainable, productive and inclusive economic growth. Our footprint overlaps with that of BII to a very significant extent, and as such we are natural partners in a large number of countries.

3.                In our experience, BII’s strategic outlook is very forward leaning in addressing a number of the most important international development challenges of our times, including climate change and gender equality which are the anchors of their current strategy. Their rigorous new impact scoring methodology – which applies to both individual investments and the organisation’s overall performance - is industry-leading. We believe that BII are also ahead of their peers in the way they have factored sustainability into all aspects of the organisation’s operations, with sustainable finance playing a key role in their own financial management.

4.              Over the years, Standard Chartered has worked with BII on wide range of areas. We currently have a flagship Master Risk Participation Agreement which enables SCB to provide hundreds of millions of dollars of trade finance lending to local banks across Africa and South Asia, and which is very well utilised in local markets. This builds on a history of similar agreements, including a 2016 USD 80m risk participation agreement to support businesses in Sierra Leone to weather the impact of the Ebola crisis. The latter was a prime example of BII moving swiftly to respond to external events, as both sides mobilised extremely quickly to ensure funds were channeled to the area of need in as short a time frame as possible.

5.              Our experience of establishing and managing these agreements and other programmes with BII is that they have extremely thorough internal process related to due diligence and risk management. As SCB is the bank that onboards the end beneficiaries of the funds under the programmes, BII review SCB’s own processes to ensure that they are robust and meet industry standards. This applies not just to credit risk assessment, but also KYC, financial crime risk, sustainability and environmental and social risk management standards. Once a programme is up and running, SCB provide regular monthly reporting to BII on programme utilisation, at both individual borrower level and country level. There is a shared strong risk management culture, with ongoing dialogue ensuring prompt action can be taken as needed on any potential issues.

6.                             Our collaboration with BII enables Standard Chartered to maximise the use of our own balance sheet and increase the financing available for local businesses, supporting economic development. This is a prime example of how blended finance and public-private partnership can unlock international development through driving growth and inclusion. We continue to look for new opportunities to collaborate, through extensive regular engagement both at the centre and on the ground in local markets.

7.              The current macroeconomic environment makes this engagement especially important. Many emerging market economies are facing significant challenges, with slowing growth and a stronger US dollar affecting inward investments. BII have a crucial counter-cyclical role in supporting ongoing capital flows in to markets where traditional investors have become more cautious. While we applaud BII’s increased focus on the most fragile countries in the world, we would encourage them to also ensure that they continue to focus on some of the larger African and Asian countries where their investment makes a meaningful difference. In these places, BII’s support in driving inclusive, productive and sustainable growth is more important than ever.

Yours Sincerely

Saif Malik

Global Head of Global Subsidiaries &

Head of Client Coverage, United Kingdom

 

 

 

 

 

 

 

 

 

 

 

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