ETDB is a regional financial institution established under the auspices of Economic Cooperation Organization (ECO) to promote socio-economic development and intra-regional trade amongst ECO member states. Its strategic objectives are:

a)      To become a driving force of economic development in member states;

The Bank would follow the principle of making financing decisions based on a project’s economic value and contribution to the social and economic development of the member state. Due emphasis would be given to the initiatives / projects that augment employment generation and poverty alleviation efforts of member states.

b)     To act as a catalyst in increasing the intra-regional trade and fostering the economic linkages among its member states;

The Bank will provide suitable trade finance products to prospective clients in order to expand trade activities in the region. Improving trade relations will foster cooperation among member countries. The Bank aims to become one of the primary financial institution in supporting trade and related infrastructure in the region.

c)      To form alliances with local/international financial institutions for promoting investments in ECO Member states;

The Bank plans to collaborate with other multilateral development banks and financial institutions in order to promote investment in the region. Cooperation opportunities in terms of finance and technical know-how will be sought with other multilateral development banks including the World Bank Group, Islamic Development Bank, Asian Development Bank, and European Bank of Reconstruction and Development in various sectors.

d)     To develop suitable financial products and tools for meeting investment needs in member states;

The Bank would develop products enabling eligible companies to broaden their access to foreign and domestic capital markets. Beginning with trade and corporate finance products, ETDB’s portfolio would include guarantees, equity and project finance as well.

e)      To establish a robust risk management framework to mitigate related risks such as money laundering, fraud, corruption, etc;

The Bank aims to build and strengthen its reputation of a trustworthy financial institution operating in an emerging market environment. To this end, the Bank would strongly protect itself from reputational risks by following rigorous anti-money laundering and anti-corruption policies and training its staff accordingly. Other possible risks would be carefully studied for in-time preventive measures and strong corporate risk management policies would be adopted.

Key Products

Keeping in view its evolving capacity and capital base, the Bank would be offering, to both public and private sectors, diversified products. This would include:

a)      Credit lines for Banking and Non-Banking Financial Institutions.

b)      Trade Financing.

c)      Corporate Financing.

d)      Project Financing.

e)      Co-financing.

f)       Equity Financing.

g)      Special Funds.

Credit Lines for Banking and Non-banking Financial Institutions.

The Bank would provide support to banking and non-banking institutions in member states to support and encourage investments in high priority sectors such as Small and Medium Enterprises (SMEs), export financing particularly for growth in trade in the region.

Trade Finance

Trade finance facilities would be offered in all sectors with the aim of:

·         Assisting developmental efforts in member countries by extending financing facility for importing goods which are essential for their economic development;

·         Promoting direct trade among the member countries;

·         Encouraging export of goods of ECO countries destined for both member and non member countries.

Corporate Finance

The Bank would cater to the working capital and other funding requirements of corporate clients in member countries. This would focus on entities operating in the priority sectors identified in relevant country strategy reports. The aim would be to support and develop enterprises that would contribute towards improving competitiveness of respective economies.

Project Finance

The Bank plans to finance, in member countries, industrial, infrastructural, and agri-business projects, both in the public and private sectors, which would contribute towards economic development of these countries. A major part of this financing would be through loans extended to projects and enterprises. The Bank would strive to implement best industry practices in a transparent manner by fully observing corporate governance rules. The guiding principle would remain that the potential projects should be financially viable and operationally feasible for the Bank to commit its resources.

Co-Financing Operations

In the medium to long term, the Bank aims to put greater emphasis on tapping additional sources of finance to support its operations. This would allow it to substantially augment its resource base and extend its services and operations. Co-financing has been identified as a preferred option for this purpose.

Co-financing would be performed at two levels: commercial co-financing for private sector projects with commercial banks, e.g. through syndication; and official co-financing with export credit and investment-insurance agencies, and international institutions such as development banks and bilateral donors through their national development assistance programmes.

Equity Financing

The Bank aims to provide equity investments to facilitate the launching of new ventures or the privatization of state-owned enterprises. It aims to get involved in provision of capital for innovative and productive industrial and agro-industrial projects that are economically and financially feasible. The Bank plans to hold a minority shareholder position in the companies in which it invests. The underlying principle is to generate enough confidence in the equity markets for other investors to contribute to equity offering strengthening the capital base of the enterprise. It would not normally be the largest shareholder in a project and would encourage other financiers to participate in the financing of such companies/enterprises.

Special Funds

In the long run, the Bank would consider operating Special Funds for financing projects in identified regions and sectors.

In the initial phase, the Bank would engage in relatively smaller and shorter term lending. To lower potential risks and use the available assets in an efficient manner, financing of large scale projects would generally be handled through consortiums. Growing operations and the increase in the number and size of the transactions would enable the Bank to gather sector know-how and develop internal capacity. The initial phase would lead to receiving a good credit rating from international rating institutions and raising capital from international markets. This would enable the Bank to lend for bigger projects over a longer period of time. Project financing would also be initiated including evaluation of co-financing opportunities with other financial institutions.

Country Operations

Iran

In Iran, the Bank’s operations would focus primarily in energy, transportation, manufacturing, and agriculture sectors. Automotive products, transport related equipments, agricultural products and related machinery would provide opportunities for trade financing operations. On the other hand, corporate and project finance product lines may concentrate on energy projects, transportation, manufacturing and rural development projects.

Pakistan

Pakistan’s growing private sector led by manufacturing may benefit from the Bank’s trade finance products to increase its presence in other ECO member countries. Transportation, energy and agriculture may present opportunities for trade finance where as corporate and project finance operations may focus on energy, construction, transportation, and agriculture sectors. In addition, financial services sector may offer opportunities for equity financing upon completion of the initial 5 year period.

Turkey

The Bank’s trade finance operations in Turkey would initially concentrate on manufacturing, agribusiness and transportation sectors. Particularly, manufacturing sector will benefit from trade finance products designed to support Turkey’s trade with Iran and Pakistan. Subsequently, corporate and project finance business lines will find opportunities in the areas of energy, manufacturing, tourism and rural development to support the country’s economic growth.

Goals and Milestones

In order to achieve these objectives, the Bank has set itself following strategic goals for 2007-2012:

a)      Membership base will be expanded to include other ECO region countries as shareholders in the Bank.

Following its successful operations, the Bank expects accession of new ECO members to its fold. This would also increase the paid in capital of the Bank allowing the organization to further expand its operations and reach.

b)      Assessment of an investment grade credit rating is targeted within 3 to 5 years from the date of start of its operations.

The Bank aims to obtain and maintain a credit rating that would allow to access capital resources from international and domestic capital markets on favourable terms.

c)      Capital base would be strengthened and further developed.

All the capital payments of the member countries are aimed to be completed by July 2011, for a total of SDR 300 Million. Capital base would be further strengthened through shareholder’s capital from new members as well as raising funds externally from other institutions.