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This is now set to change as the International Finance Corporation (IFC), part of the World Bank, partners with portfolio compression service LMRKTS to help expand its activities in to emerging market (EM) FX.
Portfolio compression is still a relatively new phenomenon in FX, but it has become big business in short order as banks attempt to improve their capital efficiency by eliminating redundant bilateral and multilateral counterparty exposures.
By improving their risk profiles through compression, banks free up capital, which they can then use to lend to small and medium-sized businesses, says Andi Dervishi, global head of fintech investments at IFC.
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