Banking behemoth Citigroup and the International Finance Corporation (IFC) will be launching a funding tie-up worth $1.25 billion, aimed at boosting global trade flows, says a media report.

"Moves to unblock world trade flows still jammed by the credit crunch have been backed by Citigroup, which on Monday unveils a $1.25 billion funding tie-up with the International Finance Corporation, the private sector arm of the World Bank," the Financial Times said.

As per the deal, Citi would provide $750 million to banks in Asia, the Middle East, Africa and Latin America over a three-year period, it added.

According to the daily, IFC and other participating development organisations would invest up to $500 million in these transactions. The local banks would in turn, extend trade financing to their importer and exporter clients.

"While this is a lucrative business for Citi, our goal is, hopefully, that prices will go down (as more funds are  made available)," head of trade finance at Citi John Ahearn told the Financial Times.

The publication noted that Citi estimates the $1.25 billion would support up to $7.5 billion in trade flows over the three years as the loans would be short-term and the funds would be reinvested once borrowers repay.