Trade Finance News, Updates & Trend Across the Globe

Are Logistic Companies Waking up to Trade Finance?

The logistics industry has a complex structure of players that enable products sourced globally to get to the last mile destination. There are freight forwarders, Regional and Global Ocean Carriers, air freight, Non Vessel owning 3PLs and others that provide a range of services.

Most logistic providers have not progressed with supply chain finance solutions. Until recently, UPS was the only game in town. Few people know that UPS bought a bank back in 2001, First International Bancorp, and got into the factoring business. Today, they focus on three finance solutions:

Source: http://spendmatters.com/tfmatters/logistic-companies-waking-trade-finance/

Hong Kong, Singapore to Collaborate on DLT Trade Finance Platform

Hong Kong’s banking regulator and de facto central bank has announced a new collaboration with Singapore aimed to digitize trade finance using distributed ledger technology (DLT).

Making the announcement today at a fintech event, the CEO of the Hong Kong Monetary Authority (HKMA), Norman Chan Tak-lam, said the joint project with the Monetary Authority of Singapore (MAS) will focus on a DLT proof-of-concept called the Hong Kong Trade Finance Platform (HKTFP).

Already having seen involvement from seven Hong Kong-based banks, the project is designed to digitize trade documents and reduce risk and fraud in the industry. Ultimately, the authorities plan the creation of a cross-border infrastructure that would serve as a bridge between HKTFP and a similar trade platform in Singapore.

Source: https://www.coindesk.com/hong-kong-singapore-to-collaborate-on-dlt-trade-finance-platform/

Corda for Cargo: R3 Inks Another Trade Finance Partnership

In its latest effort to use distributed ledgers to modernize the paper-intensive business of trade finance, R3 has agreed to work with Bolero on an electronic bill of lading service.

Announced Monday, the partnership follows R3’s pilot with Japanese financial giant Mizuho to digitize letters of credit and bills of lading, and a trade finance app developed by 11 international banks using the consortium’s Corda platform.
R3’s newest partner, the U.K.-based Bolero, already offers an electronic bill of lading and title registry, with a common legal framework, but the reach of that service will be extended by developing an oracle on Corda, the companies said.
Part of R3’s broader mission is to “help connect digital islands,” Todd McDonald, a co-founder and head of partnerships at R3, told CoinDesk.

Source: https://www.coindesk.com/corda-cargo-r3-inks-another-trade-finance-partnership/

Global Trade Finance Market Research Report 2017-2022

Bharat Book Bureau announces the addition of the report “Global Trade Finance Market Research Report 2017-2022 by Players, Regions, Product Types & Applications [https://www.bharatbook.com/business-market-research-reports-952808/global-trade-finance-players-regions-product-types-applications.html ] ” to its offering.

Summary

The global Trade Finance market is valued at XX million USD in 2016 and is expected to reach XX million USD by the end of 2022, growing at a CAGR of XX% between 2016 and 2022. This report offers an overview of the market trends, drivers, and barriers with respect to the Trade Finance market. It also provides a detailed overview of the market of different regions across United States, Europe, China, Japan, India, Southeast Asia and Others. The report categorizes Trade Finance market by By Activity, By Scope, and application. Detailed analysis of key players, along with key growth strategies adopted by them is also covered in this report on Trade Finance market is valued at XX million USD in 2016 and is expected to reach XX million USD by the end of 2022, growing at a CAGR of XX% between 2016 and 2022.

Source: https://www.marketwatch.com/story/global-trade-finance-market-research-report-2017-2022-2017-10-25-102033131

BNY Mellon becomes partner bank in ADB’s Trade Finance Program

BNY Mellon has become a partner bank in the Asian Development Bank’s (ADB) Trade Finance Program (TFP).

The agreement, made official at a signing ceremony during Sibos, covers a range of trade finance instruments, including loans and guarantees, and will allow BNY Mellon to continue its strong growth in Asian trade services by facilitating support to a wider range of customers, including small- and medium-sized enterprises (SMEs).

Backed by the ADB’s AAA credit rating, the TFP enables companies throughout Asia to engage in import and export activities through the provision of loans and guarantees by ADB’s partner banks. Since 2009, the program has supported over 9,200 SMEs across developing Asia – totaling over 13,000 transactions valued at over $25.5 billion. Sectors range from commodities and capital goods, to medical supplies and consumer goods.

Source: https://www.fx-mm.com/news/70907/bny-mellon-becomes-partner-bank-tfp/

Africa drives Access Bank’s trade finance growth

The Access Bank UK Limited, a wholly-owned subsidiary of Access Bank Plc, a Nigerian Stock Exchange-listed company, has witnessed strong growth in its trade finance business linking the Middle East region with Nigeria and other sub-Saharan markets, Jamie Simmonds, CEO of The Access Bank UK told Gulf News in an interview.

The bank which began its Dubai operations from the Dubai International Financial Centre (DIFC) in 2015 said the DIFC office has become a regional business hub for the bank, attracting trade finance deals from across the Middle East and from Asia.

The bank works on a five-year plan and matches the liability side of the balance sheet with planned asset growth. In addition to the capital raised from its parent, the liability side is significantly supported by customer balances, Simmonds said.
Source: http://gulfnews.com/business/sectors/banking/africa-drives-access-bank-s-trade-finance-growth-1.2106124

Trade finance needed to foster intra-African trade

East and southern Africa leads in intra-African trade with the highest share of between 18 and 19 percent, which reflects Common Market for Eastern and Southern Africa (COMESA) and Southern African Development Community’s (SADC) effective agenda in consolidating trade and development in Africa.
North Africa and Central Africa have the lowest share of intra-African trade of 5.3 and 2.1 percent, respectively.

This information is contained in the Trade Finance in Africa Survey Report by the African Development Bank Group published in September 2017, which tracks the changes that have occurred in the trade finance market in Africa during the period 2013-2014.

Source: https://southernafrican.news/2017/10/27/trade-finance-needed-to-foster-intra-african-trade/

De-risking in trade finance: time to act

As financial authorities express concern about de-risking in correspondent banking, a similar phenomenon is emerging in trade finance, driven by the high costs of KYC compliance.

There is a danger that some banks in some regions, such as Africa, will have difficulty connecting to the trade finance world. Banks need to collaborate to help corporate clients to connect with their customers and address the still unsatisfied demand for international trade services.

De-risking is a hot topic in the cash clearing universe as some correspondent banks withdraw from certain countries, currencies, or products to control costs and risk. At the same time, de-risking is becoming a phenomenon in the trade universe for the same reasons.

Banks’ correspondent relationships are conducted via Swift’s global network, which numbers 11,000 banks in 200 countries. Via Relationship Management Application (RMA) keys, banks can connect with each other. The RMA is a Swift-mandated filter that enables financial institutions to define which counterparties can send them FIN messages. Any unwanted traffic is blocked at the sender level, reducing the operational risks associated with handling unwanted messages and providing a first line of defence against fraud. RMA Plus, a more granular version of RMA, goes one step further by letting institutions specify which message type(s) they want to receive from, and send to, each of their counterparties.

Source: http://www.bankingtech.com/1034352/de-risking-in-trade-finance-time-to-act/

Hopes raised as first African bank joins trade finance fintech platform

South Africa’s Standard Bank has become the first African bank to join CCRManager’s digital trade finance platform, a global project to ease trade and supply chain finance distribution.

CCRManager (CCRM), a fintech firm backed by the Monetary Authority of Singapore, launched its platform earlier in the year, as previously reported by GTR.

Thirteen banks across 11 countries are already members of the platform, transacting live deals. These include Bank of China, DBS Bank, ICICI Bank, Swiss Re Corporate Solutions, UniCredit, BBVA, Yes Bank and now Standard Bank. The remaining banks are based in Japan, Hong Kong, Middle East and UK, but have not been named.

Source: https://www.gtreview.com/news/africa/hopes-raised-as-first-african-bank-joins-trade-finance-fintech-platform/

Sponsored roundtable: Assessing India’s trade finance scene

GTR: The current government of India has been taking steps to make trading and transacting simpler and easier. How do you assess the progress that’s been made on that front?

Somasekhar: In India, we have a robust foreign trade policy compared to three decades earlier. When we see the foreign trade policy, many of the items are becoming freely importable. The documentation part of the foreign trade policy has gradually been simplified over a period of time. Previously, we had around 21 to 25 documents that a customer had to submit to the authorities. Today, it has been reduced to seven or eight documents. There has been simplification of documents over the past several years in this regard.

One issue is with physical documents. Although many of the banks have completed their digitalisation process, the synchrony with customs was not available and is now being looked into. The customer gives the documents to the bank. In some cases, the bank has an interface with the customer systems, but banks in turn do not have an interface with the customs offices. This maintains the need for the physical documents to ensure that we adhere to the guidelines of customs or the regulator.

Verma: The Export Data Processing and Monitoring System (EDPMS) and Import Data Processing and Monitoring System (IDPMS) are great developments on that front. What did not happen in the last five decades has happened in the last two and a half years. It is a great change that I see. While there are a few teething issues, we believe that it is a great step in the right direction.

Somasekhar: We agree it is a positive step. Compared to 20 or 30 years back when banks were generally dealing in physical documents today, we are able to at least see them in the system once the data is uploaded by customs. We can be sure that goods have come into the country or gone out of the country. But still, there are some bottlenecks. For example, when goods are delivered in manual ports, there is no entry in the EDPMS or the IDPMS immediately but only at a later date.

Source: https://www.gtreview.com/news/asia/sponsored-roundtable-assessing-indias-trade-finance-scene/

Trade Finance News, Update & Trends Around The World

Bank Of America Merrill Lynch Supports Blockchain Innovation For Trade Finance

In an interview released on September 22, 2017, Peter Jameson, co-head of product management, GTS EMEA at Bank of America Merrill Lynch, spoke on the merits of blockchain technology and what it can bring to trade finance.

Jameson’s take on blockchain technology is optimistic and he thinks it can provide immediate benefits. He said, “The distributed nature of blockchain means that you could quite easily move from a place where a lot of things have to happen in sequence to a technology where a lot of the players involved in the transaction can do what they need to do all at the same time.” The so-called atomic swap, or instantaneous exchange of ownership, can easily be facilitated by blockchain-based settlement systems and executable distributed code contracts (also called smart contracts). Jameson said this capability is very powerful, given “the slow nature of some of the trade transactions today.”

Source: https://www.ethnews.com/bank-of-america-merrill-lynch-supports-blockchain-innovation-for-trade-finance

ICOs: the next goldmine for trade finance lenders?

An increasing number of non-bank lenders are looking to initial coin offerings (ICOs) as a source of funds for trade finance lending.

ICOs – also referred to as token sales – are unregulated means of crowdfunding, using cryptocurrency. In theory, through an ICO, you can raise money from anybody, anywhere in the world.

This is done by issuing digital tokens. Early backers are usually motivated by a prospective return on their investment, as a startup’s success would often translate into a higher token value.

For trade finance lenders, it offers access to an unorthodox – and, theoretically, unlimited – pool of investors in a market that is booming. In July, a report by research firm Autonomous found that startups had raised in total a record US$1.27bn in the first half of 2017 through ICOs, while the top four ICOs of the year, according to research firm Smith and Crown, have to date raised US$660mn between them.

Source: https://www.gtreview.com/news/fintech/icos-the-next-goldmine-for-trade-finance-lenders/

The C-Suite Challenges of a Trade Finance Bank

An insight into the challenges that plague the C-Suite of a bank determined to lead the trade finance business. Is Digitization the answer?

Trade Finance has been a well established and important business for Banks and Financial Institutions. Hardly any domestic or international Trade activity can take place safely and successfully without some form of trade financing, in fact as much as 80% of annual global merchandise trade is enabled through some form of trade financing. This financing can range from traditional instruments like Letters of Credit, Bank Guarantees to a more contemporary form of open account based supply chain financing.

Source: https://www.finextra.com/blogposting/14522/the-c-suite-challenges-of-a-trade-finance-bank

Trade Finance Revenues Slip $2.8 Billion At Top Banks

Top banking firms across the globe saw a $2.8 billion decline in transaction banking revenues in the first half of the year, marking a seven-year low for this area of banking, finds a new report from analysis firm Coalition.

Reports Tuesday (Sept. 19) revealed news that global transaction banking revenues jumped 4 percent year over year, hitting $18.6 billion for the first half of the year. The Americas and Asia led the increase, which also enjoyed a spike thanks to cash management revenues, which saw $11 billion in revenues in H1, a 7 percent increase and a six-year high. Coalition analysts pointed to an increase in deposit productivity.

Citigroup, HSBC and JPMorgan led the transaction banking and cash management increases, researchers noted. But the drop in trade finance reflected a decline in commodities trade finance, with corporate customers reducing activity, especially in Asia, the report found.

Source: https://www.pymnts.com/news/b2b-payments/2017/coalition-says-trade-finance-revenues-fell-2-8-billion/

Trade finance fund may be an answer as Fed, ECB prepare to unwind

As the US Federal Reserve (Fed) and the European Central Bank (ECB) prepare to unwind their easy money policy, which was in place since the financial crisis almost a decade ago, funds which are into trade finance among others may benefit.

With a rebound expected in global trade, and as banks become vary to finance companies in need of working capital, alternative sources like trade finance funds are gaining prominence even as analysts are expecting turbulent times in stock markets, which have been hitting record highs amid growing risks including geopolitical tensions and rising global debt.

“It’s a [Trade Finance] fund that will benefit from rising rates. In a rising rate scenario, equities and bonds take a beating, and this [trade finance] is an investment in the real economy,” said Doug Bitcon, head of credit strategies at Rasmala.

Souce: http://gulfnews.com/business/sectors/markets/trade-finance-fund-may-be-an-answer-as-fed-ecb-prepare-to-unwind-1.2094114

ABN Amro implements CBA trade finance front-end across global operations

Norwegian software vendor Commercial Banking Applications (CBA), today announced that ABN AMRO will be implementing the new IBAS Customer Front-End System for Trade Finance across its global operations as part of a project to offer additional functionality to customers, increase efficiency and reduce total cost of ownership.

The new IBAS front-end interfaces seamlessly with CBA’s IBAS Global Trade Finance Factory (IBAS GTF) mid- and back office solution. IBAS GTF is already being used by ABN AMRO to manage its trade finance operations across Europe, Asia Pacific and North America. The bank expects to put the new IBAS front-end into production in Q4 2017, replacing Surecomp’s allNETT solution in the Netherlands and manual processes elsewhere.

Source: https://www.finextra.com/pressarticle/70735/abn-amro-implements-cba-trade-finance-front-end-across-global-operations

Trade finance revenues hit seven-year low

Global trade finance revenues reached their lowest level in seven years, with a 5% decline year-on-year for the first half of 2017.

Total trade finance revenues for the ten largest global transaction banks (Bank of America Merrill Lynch, Barclays, BNP Paribas, CITI, Deutsche Bank, HSBC, JP Morgan, Société Générale, Standard Chartered and Wells Fargo) fell to US$2.8bn compared to US$2.9bn in the same period last year, according to the latest report by analytics company Coalition, which monitors bank activity.

Trade finance revenues comprise of traditional trade finance such as LCs as well as structured trade finance products. Structured trade finance revenue declined significantly, driven by reduced commodity trade finance activity across all regions, Coalition’s research director Eric Li tells GTR.

Source: https://www.gtreview.com/news/global/trade-finance-revenues-hit-seven-year-low/

DIGITALISATION AND TRADE FINANCE: WHAT’S NEXT?

Globalisation and the proliferation of technology have transformed the business world as we know it. But digitalisation is a priority for one industry in particular: trade finance. Greater use of technology could bring numerous benefits to the industry and even help plug the trade-finance financing gap—estimated at US$1.6 trillion by the Asian Development Bank (ADB).

As the ICC (International Chamber of Commerce) Banking Commission’s latest Global Survey on Trade Finance highlights, however, this is also a sector that has yet to fully realise the benefits of new technology. Fortunately, there is plenty that can be done to accelerate the digitalisation of the industry.

Source: https://internationalbanker.com/finance/digitalisation-trade-finance-whats-next/

AfDB, UBAF to Co-Sponsor Seminar on International Trade Finance

The African Development Bank (AfDB), in partnership with the Union de Banques Arabes et Françaises (UBAF), will co-sponsor a seminar on international trade finance in Abidjan, Côte d’Ivoire, from 3 – 5 October 2017.

Representatives of banking institutions from Côte d’Ivoire, Mali, Benin, Burkina Faso, Guinea, Togo, Senegal, Chad, Gabon and Niger will take part in this event, with the goal of improving their professional practice in international trade finance. Issues related to specific foreign trade financial products and the risks associated with managing these operations will be addressed.

This seminar will enable participants master trade finance issues, particularly documentary credit and standby letters of credit. It will also provide information on issues involved and characteristics of various trade finance products, including credit risk, conformity, communication and tools through practical case studies of traditional and structured transactions for commodities financing.

Source: https://www.newsghana.com.gh/afdb-ubaf-to-co-sponsor-seminar-on-international-trade-finance/

Commerzbank names Asia trade finance head

Deepan Dagur has been named head of trade finance and cash management, Asia, at Comerzbank.

Dagur is based in Singapore, reporting to Nick Johnson, regional board member for Asia, and March Kirchhoff, global head of trade finance and cash management.

He replaces Brigitte Volz, who took over a new role in the operational development group. He joins from ANZ, where he spent five years in various senior transaction banking roles. He previously worked with Standard Chartered, consultancy Bain and Company, investment bank Salomon Smith Barney and UBS Warburg.

Source: https://www.gtreview.com/news/on-the-move/commerzbank-names-asia-trade-finance-head/

$1.5 Trillion Trade Finance Gap Persists Despite Fintech Breakthroughs

Businesses of all sizes continue to struggle to access sufficient credit, resulting in a global trade finance gap of $1.5 trillion in 2016, according to an Asian Development Bank (ADB) Brief released on September 5. Developing Asia’s share of the trade finance gap was 40% of the global total.

In its fifth annual study, 2017 Trade Finance Gaps, Growth, and Jobs Survey, ADB quantifies market gaps for trade finance and explores their impact on growth and jobs through a survey of over 515 banks and 1,336 firms from 103 countries. While the global trade finance gap stabilized in 2016 compared to the 2015 record high of $1.6 trillion, it still translated to missed growth opportunities and job creation.

“A sizeable trade finance gap is a drag on trade, growth, and job creation,” said Steven Beck, Head of Trade Finance at ADB. “We hope the results of the survey will encourage private and public sectors to ramp up collaborative efforts to improve businesses’ access to trade finance. Our Trade Finance Program (TFP) is here to assist and address these market gaps.”

Source: https://www.finchannel.com/business/67518-1-5-trillion-trade-finance-gap-persists-despite-fintech-breakthroughs

THE TRADE FINANCE GAP STANDS AT U$1.5 TRILLION. WHAT CAN CFOS DO?

What is happening to global trade?

There are three forces driving the US$1.5 trillion trade finance gap:

  • High number of rejected trade finance applications from the Asia Pacific (APAC) region
  • High rejection rate of applications from SMEs and midcap organizations
  • Reduced lending by banks to SMEs due to perceived risk (Know-Your-Customer issues) and declining profitability in trade financing

Taking a deeper dive into the trade-finance shortfall, the ADB report says Asia and Pacific are continuing to drive this gap. The general lack of trade finance provision is due to a high number of rejected applications – against the backdrop of the largest number of proposals/requests made for trade finance (see chart below).

It’s likely to be the perceived risk of emerging market financing that is driving this shortfall.

Source: https://www.cfoinnovation.com/story/13635/trade-finance-gap-stands-u15-trillion-what-can-cfos-do?destination

 

Adam Smith Associates offers trade & commodity finance related services & solutions to its domestic and international clients. Above news update and trends are sourced from internet and are purely meant for reading on the related subject and for information. Adam Smith Associate is not responsible for any of the content and nor it is meant for any commercial benefits

 

Trade Finance News & Updates Around The World

Trade finance gap narrows amid minimal fintech impact

The global trade finance gap has fallen from US$1.6tn to US$1.5tn, but the impact of fintech has been minimal to date.

The latest annual survey from the Asian Development Bank (ADB) finds that many of the perennial issues persist, such as funding gaps in emerging markets, hugely disproportionate rejection rates for small businesses and a rise in non-bank lending.

But despite the industry’s zeal for digitisation, just 20% of firms reporting have used digital finance platforms. In line with global trends, peer-to-peer lending is the most-used fintech model (23%).

And while 80% of banks surveyed said fintech will reduce compliance costs and 66% said that it will enhance their ability to assess SME risk, the rejection rate of SMEs continues to rise.

Source: https://www.gtreview.com/news/global/trade-finance-gap-narrows-amid-minimal-fintech-impact/

Jamii Bora bank introduces trade finance to support entrepreneurs

Jamii Bora provides trade finance that supports enterprises and entrepreneurs by providing practical and flexible financial services that are tailor made to customers’ needs. Trade finance offers insurance Premium Financing, Overdraft facility, Letters of Credit, Bora Customs Duty Facility, LPO Financing, Invoice Discounting, Bid Bond, Performance Bond, and Advance Payment Guarantee.

Trade finance targets contractors, Suppliers, Manufacturers, Retailers, Wholesalers, Distributors, Insurance brokers, Insurance companies, importers, and exporters.

Source:  https://www.standardmedia.co.ke/article/2001253766/jamii-bora-bank-introduces-trade-finance-to-support-entrepreneurs

Trade Finance Endures, And Overcomes, Banks’ Slow-Moving Innovation

A few years ago, Sameer Sehgal, the new CEO of trade finance firm Traydstream, said he probably wouldn’t have agreed that banks are playing a role in the innovation of the industry.

But trade finance is the target for massive disruption thanks to technologies like blockchain and robotics, Sehgal told PYMNTS, and banks are finally perking up to the need for progress.

Still, it’s not enough. Recent estimates from the Asian Development Bank pegged the global trade finance gap at $1.5 trillion in 2016, with SMBs bearing the brunt of that lack of financing for their global trade initiatives. Despite efforts from the FinTech community, the gap remains, and automation is far from ubiquitous, Sehgal said.

“Trade finance, in large part, hasn’t changed, even in centuries,” he explained. “The inefficiencies of processes are glaring — humongous.”

Source: http://www.pymnts.com/news/b2b-payments/2017/traydstream-talks-trade-finance-innovation/

Global trade finance gap stands at $1.5tr in 2016: ADB

Businesses of all sizes continue to struggle to access sufficient credit, resulting in a global trade finance gap of $1.5 trillion in 2016, according to an Asian Development Bank (ADB) brief released on Tuesday.

Developing Asia’s share of the trade finance gap was 40% of the global total, the brief added. In its fifth annual study, 2017 Trade Finance Gaps, Growth, and Jobs Survey, ADB quantifies market gaps for trade finance and explores their impact on growth and jobs through a survey of over 515 banks and 1,336 firms from 103 countries.

While the global trade finance gap stabilised in 2016 compared to the 2015 record high of $1.6 trillion, it still translated into missed growth opportunities and job creation.

Source: https://tribune.com.pk/story/1498745/global-trade-finance-gap-stands-1-5tr-2016-adb/

Tunisia: UIB gets USD 10-million trade finance line from EBRD

In the framework of the implementation of its 2017-2020 development strategy supported by its activity and its offers for companies and SMEs, the “Union Internationale de banques” (UIB) announced the signing of a Trade Finance Partnership Agreement with the European Bank for Reconstruction and Development (EBRD).

This line, totaling $ 10 million (equivalent to 24.4 million dinars), is intended to cover issues of guarantees maturing up to 3 years and financing pre-export and post-import transactions.

This agreement consolidates and broadens the UIB’s partnership with EBRD inaugurated on the conclusion on June 22 of a credit line dedicated to the financing of SMEs and mid-size enterprises in the amount of € 40 million and a maturity of 7 years.

Source: https://africanmanager.com/site_eng/tunisia-uib-gets-usd-10-million-trade-finance-line-from-ebrd/?v=947d7d61cd9a

Bank of Georgia Signs $75 Million Trade Finance Facility with ADB, IFC, Citibank

Bank of Georgia has signed a $75 million one-year Club Trade Finance Facility (Club Trade Facility) arranged by Citi with the Asian Development Bank (ADB) and the International Finance Corporation (IFC), a member of the World Bank Group.

This is the fourth Club Trade Facility arranged by Citi for Bank of Georgia, which attracted several international investors during the syndication.

Bank of Georgia is a leading Georgian bank, based on total assets (33.8% market share), total loans (31.5% market share), and client deposits (31.5% market share) as of 30 June 2017.

Proceeds of this year’s Club Trade Facility will support import and export transactions for top corporate customers of Bank of Georgia, increasing the volume and value of trade transactions in Georgia’s key economic sectors, including agribusiness, transportation, and energy.

Source: https://www.finchannel.com/business/banksandservices/67411-bank-of-georgia-signs-75-million-trade-finance-facility-with-adb-ifc-citibank

A view from the ICC: Changing times call for a collaborative approach

The International Chamber of Commerce (ICC) Banking Commission’s new head of policy, Olivier Paul, discusses how the Banking Commission’s role will be critical as the trade finance industry adapts to unprecedented change.

There are some fundamental challenges ahead for trade finance: involving the regulatory landscape, the technological evolution of our industry and the vital inclusion of new non-bank sources of liquidity. These changes will involve everyone, meaning we will all need to adapt, including the ICC Banking Commission, where I recently became head of policy.

Yet I remain optimistic. For trade finance as a discipline, I am convinced that its best years are ahead of it, as long as we can embrace the future and view change as part of an evolutionary process rather than an existential threat. In fact, I see the Banking Commission’s role as vital for preparing the industry for that future, as well as being an advocate and influencer of the changes underway.

Just 20 years ago the most important role for the Banking Commission was rule-making, with advocacy a second, though still important, function. Since the 2008 financial crisis, however, these roles have been reversed, with advocacy of trade finance now the Banking Commission’s most critical function

Source: https://www.gtreview.com/news/global/commentary-changing-times-call-for-a-collaborative-approach/

White Oak Commercial Finance Provides $20MM Factoring Facility to Luxury Goods Distributor

White Oak Commercial Finance, LLC (WOCF), one of the nation’s leading financiers serving the middle market, announced today that it has provided a $20 million dollarfactoring facility to a distributor of luxury and branded apparel, accessories, handbags and watches. The proceeds will provide working capital to purchase inventory, manage account payables, and repay existing debt.

“White Oak Commercial Finance has a deep history in retail financing, having provided designers, importers and manufacturers of retail goods with access to growth and working capital for nearly 30 years,” said Robert Grbic, President and Chief Executive Officer, WOCF. “With strong historical profits and seasoned management team, this luxury goods distributor is an ideal company to finance.”

Source: http://markets.businessinsider.com/news/stocks/White-Oak-Commercial-Finance-Provides-20MM-Factoring-Facility-to-Luxury-Goods-Distributor-1002361682

Blockchain and invoice finance: an early benefit analysis

Blockchain technology is generating huge amounts of hype across a number of industries – perhaps none more so than financial services. One area of finance that has received less attention to date is invoice financing. However, as we explain in this article, blockchain has the potential to revolutionise invoice financing, for the benefit of suppliers, debtors and financial institutions alike.

To start with it will be useful to briefly summarise what blockchain actually is. For a more detailed explanation of the Blockchain technology and some of the legal considerations with its adoption, see our introduction to blockchain.

Source: https://www.lexology.com/library/detail.aspx?g=a5e664eb-041c-42cd-9511-5ad1aac70c46

 

Adam Smith Associates offers trade & commodity finance related services & solutions to its domestic and international clients. Above news update and trends are sourced from internet and are purely meant for reading on the related subject and for information. Adam Smith Associate is not responsible for any of the content and nor it is meant for any commercial benefits

 

 

News & Updates On Trade Finance Around The World

Trade finance moves toward digitization

R3, the blockchain-focused consortium of banks and tech developers, has developed an app on its DLT Corda platform focused on trade finance. The app will work in the same way as standard letters of credit, in recognition of how effective these are at mitigating risks. It was developed with a specific test group of 12 mainly Asian and European banks, including Bangkok Bank, HSBC, Intesa Sanpaolo, and Mizuho.

The banks are now looking to pilot the app with clients, and hope to make it widely available from 2018. The app development group includes tech platform CGI, which was able to bring in its own trade finance domain knowledge and work with the banks to capture the best generic industry practice for implementation within the app, and design the user interface

Source: https://www.euromoney.com/article/b14khbrfy340jh/trade-finance-moves-toward-digitization?copyrightInfo=true

Fintech Firms Nimbly Moving Into Rather Massive Global Trade Financing Market

The ongoing digital transformation of business-to-business (B2B) payments has been well chronicled by Mercator Advisory Group. Part of that transformation can be found in the advancement of alternative cash cycle finance capabilities, led by nonbank financial technology (fintech) vendors during the past 10 year.

There is much debate about the actual opportunity for supply chain finance, probably as much as is there is confusion around the definitions. In the view of Mercator Advisory Group, the market is globally robust with a more than trillion dollars of estimated available open account financing still ripe for working capital improvements on either side of the supply chain.

Source: https://www.benzinga.com/pressreleases/17/09/p10007162/fintech-firms-nimbly-moving-into-rather-massive-global-trade-financing

Trade finance startup Traydstream names Citi veteran Sameer Sehgal CEO

London-based (Trade Finance) FinTech firm, Traydstream has appointed Citi Bank’s ex – Head of Trade for Europe, Middle-East & Africa (EMEA), Sameer Sehgal, as its Chief Executive Officer (CEO). He brings over 22 years’ expertise in Trade, having held several senior roles over the years.

Traydstream’s Co-Founder and Chief Operating Officer (COO), Uzair Bawany, said of the hire, “In Sameer we have one of the leading figures in global Trade Finance; his appointment is invaluable to us in charting a course for the exciting future for our business”. Sehgal will lead Traydstream through a crucial period for the company, with its first programmes beginning with banks over the third and fourth financial quarters of 2017.

Source: https://www.finextra.com/pressarticle/70524/trade-finance-startup-traydstream-names-citi-veteran-sameer-sehgal-ceo
Bank of Georgia seals US$75mn trade finance facility

Bank of Georgia has signed a US$75mn trade finance club deal. The one-year facility was arranged by Citi with Asian Development Bank (ADB) and IFC. ADB supported the facility with a guarantee through its trade finance programme (TFP), and IFC provided funding through its global trade liquidity programme (GTLP), together with Citi.
This is the fourth such deal arranged by Citi for Bank of Georgia.

The funds will be used to support import and export transactions for corporate clients in key sectors including agribusiness, transportation and energy.

“We are pleased to be at the forefront of providing much-needed trade finance products to our corporate and SME clients. The facility will not only diversify and strengthen our client base, but also serve to contribute to sustainable economic growth in Georgia,” says Bank of Georgia CEO Kaha Kiknavelidze.

Source: https://www.gtreview.com/news/europe/bank-of-georgia-seals-us75mn-trade-finance-facility/

Maersk seeks role in trade finance as banks retreat

Maersk Line, the world’s biggest container shipper, is venturing into trade finance, as it seeks to fill a lending gap left by indebted banks pulling out of the crisis-hit shipping industry.

Moving into traditional bank territory and further down the shipping value chain, Maersk Line, part of A.P. Moller-Maersk (MAERSKb.CO), is offering to finance shipments and remove the paper trail from financing deals.

Maersk says it has no need to ask for collateral – one of the biggest headaches for banks and customers in trade finance deals – because it is carrying the goods on its vessels.

Source: https://www.reuters.com/article/us-maersk-results-trade-finance/maersk-seeks-role-in-trade-finance-as-banks-retreat-idUSKCN1AW1E5

U.N. role in world finance
GROWING global interdependence poses greater challenges to policymakers on a wide range of issues and for countries at all levels of development.

Yet, the new mechanisms and arrangements put in place over the past four decades have not been adequate to the growing challenges of coherence and coordination of global economic policymaking. Recent financial crises have exposed some such gaps and weaknesses.

Although sometimes seemingly slow, the United Nations (UN) has long had a clear advantage in driving legitimate discussion on reform because of its more inclusive and open governance. Lop-sided influence in the current international financial system is a principal reason why many countries lack confidence in existing arrangements.

Rebuilding confidence in such arrangements will require that all parties feel they have a stake in the reform agenda. But the UN is also suited to drive the discussion because of its long tradition of reliable work on international economic issues.

Source: https://www.nst.com.my/opinion/columnists/2017/09/275431/un-role-world-finance

TradeCap Closes $500K Trade Finance Facility With Colorado Toy Company

TradeCap announced the recent closing of a $500,000 Trade Finance Facility with a fast growing,
Colorado based toy company.
The Company experienced exponential growth in FY 2016 and sales through 2Q2017 had already surpassed that of the prior year. In the midst of booking orders for its upcoming holiday season, the Company received a sizeable order from a new customer. The increased order was incremental to the normal seasonal needs and created an inventory finance need over and above what the Company’s existing working capital base could support.
Source: http://www.abladvisor.com/press-releases/12478/tradecap-closes-500k-trade-finance-facility-with-colorado-toy-company

Afreximbank, finance professionals to meet on structured trade finance

The African Export-Import Bank’s (Afreximbank) says it is committed to boosting African trade by enhancing the capacity of African professionals on international trade and trade-related project financing issues.

The bank said that as part of its efforts in this regard, it is organising a workshop for stakeholders on Structured Trade Finance in Cape Verde from Nov. 6 to Nov. 9.

The bank said in a statement in Lagos that the workshop was being organised in collaboration with the Ministry of Finance of Cape Verde.

The statement quoted Dr Benedict Oramah, President of Afreximbank, as saying that the workshop was also an important platform for African bankers and other trade finance practitioners to make major contributions that would boost African trade.

Source: http://thenationonlineng.net/afreximbank-finance-professionals-to-meet-on-structured-trade-finance/
Trade Trends: Blockchain provides opportunity for ‘radical’ trade automation

It’s no secret that the process of global trade is overly manual and could be made more efficient if both the corporations that import and export and the governments that regulate trade were to implement better platforms and processes
.
The open-source, distributed ledgers known as blockchains are now mature enough to be considered as a viable part of the technology stack for global trade. While implementing it now would be like going to the supermarket via a space shuttle, blockchains are an increasingly relevant part of conversations that surround trade technology, and trade practitioners should take note.

Blockchain was originally designed to support the development of Bitcoin by an individual or group using the pseudonym Satoshi Nakamoto. Blockchain maintains permanent, tamper-proof lists of records, bundles them into blocks, and chains them together where they are distributed through a peer-to-peer network. When changes are made to the information, or ledger, those changes are recorded across the blockchain.

Source: http://www.americanshipper.com/main/news/trade-trends-blockchain-provides-opportunity-for-r-68819.aspx

BBVA joins Singapore-based trade finance platform
BBVA has recently joined the Singapore-based Capital and Credit Risk Manager (CCRM) platform as a full member bank.

CCRM is a Digital Market Place providing a secondary market for trade and working capital risks, owned by Tin Hill Capital and supported with a grant from the Monetary Authority of Singapore (MAS) Financial Sector Development Fund.

The trade finance asset distribution business helps improve portfolio risk and efficiency by releasing liquidity, as well as enhancing service to clients. The market-place model of participation of the different financial entities in the platform facilitates benchmarking and negotiation and will help create a sufficient critical mass in this secondary market.

Source: https://www.finextra.com/pressarticle/70321/bbva-joins-singapore-based-trade-finance-platform

UAE Exchange in talks with blockchain brand Ripple

One of the UAE’s oldest money exchange houses says it is in talks with US blockchain start-up Ripple, over a tie-up to streamline payments.

UAE Exchange is eyeing a deal with Ripple to help it introduce real time, cross-border payments using blockchain technology.

Blockchain is an electronic transaction-processing and archive system that allows parties to track information in a secure network with no need for third-party verification.

It is the underlying technology that facilitates the use of virtual currencies or ‘crypto-currencies’, such as Bitcoin and Bitcoin Cash, which are becoming increasingly popular around the world.

UAE Exchange claims incorporating blockchain into its processes would help it cut the speed and cost of money transfers for its customers. The remittance house has already invested in two other blockchain-related companies within the past six months.

Source: http://www.arabianbusiness.com/content/377336-uae-exchange-in-talks-with-blockchain-brand-ripple

Two senior staff leave Mitigram to set up advisory firm

Chris Hyde and Jaime Gimeno have left Swedish fintech company Mitigram to found Avant Trade Solutions, a trade finance advisory firm.

The firm will help corporates and banks navigate the rapidly expanding fintech domain, while also helping fintech firms steer the complex world of trade finance.

Source: https://www.gtreview.com/news/on-the-move/two-senior-staff-leave-mitigram-to-set-up-advisory-firm/

Adam Smith Associates offers trade & commodity finance related services & solutions to its domestic and international clients. Above news update and trends are sourced from internet and are purely meant for reading on the related subject and for information. Adam Smith Associate is not responsible for any of the content and nor it is meant for any commercial benefits

 

News & Updates Around The World On Trade Finance

HashCash Redefines Global Trade Finance with HC TRADE built on Ethereum Blockchain

HashCash® today introduced HC Trade Finance, a blockchain technology product that brings a breakthrough for global banks and financial organizations in the business of financing corporate trade.

Traditionally, the business processes around financing a corporate trade activity is a paper intensive process. The risk of fraud is typically high for the financial organization underwriting it. Manual processing of documents also leads to reconciliation or book keeping inconsistencies and audit hassles. This soars up cost for the financial organization and creates barriers to supply chain financing for corporates.

All this in turn leads to inefficient working capital management and affects the overall economic output.

Source: https://www.benzinga.com/pressreleases/17/08/p9958908/hashcash-redefines-global-trade-finance-with-hc-trade-built-on-ethereum

Deutsche Bank to beef up trade finance in emerging markets

Deutsche Bank plans to beef up its trade finance business in the developing world, creating new jobs and investing in technology, it said on Wednesday.

The focus is on Africa, Latin America, the Middle East, Asia, and central and eastern Europe, Germany’s largest bank said. It plans to hire between 20 and 30 people for those locations and will invest “a middle two digit million euro figure” in information technology over the next three years, it said.

Daniel Schmand, who heads the bank’s trade finance division, told journalists that he sees unmet demand for trade financing in particular for small and medium-sized companies.

Source: https://www.reuters.com/article/us-deutsche-bank-emerging-idUSKCN1AW0WP

Video: What to do and not to do in trade finance transactions

https://www.txfnews.com/News/Article/2938/Video-What-to-do-and-not-to-do-in-trade-finance-transactions

Bangladesh secures trade finance and infra packages

Development banks have extended infrastructure and trade finance packages to Bangladesh. The Asian Development Bank (ADB) approved a US$200mn loan package to improve the country’s urban infrastructure, while the International Finance Corporation (IFC) has signed a US$40mn working capital loan with Bank Asia, a local lender.

In the case of the ADB, the finance will fund 600km of road builds and improvements, 300km of drains and install 180km of pipes for water supply, with 60,000 metered household connections. It will fund priority infrastructure in the pourashava (municipalities) of Bangladesh, where populations are dense and facilities are generally basic and overstretched.

Source: https://www.gtreview.com/news/asia/bangladesh-secures-trade-finance-and-infra-packages/

UN endorses ICC Uniform Rules for Forfaiting

In a historic moment, the ICC Uniform Rules for Forfaiting—ICC Publication no. 800 (“URF 800”)—were officially endorsed by the United Nations Commission on International Trade Law (UNCITRAL) in its 50th plenary session held in Vienna on 14 July 2017.

Forfaiting is a trade financing technique based on without recourse discounting of an instrument representing an exporter’s receivables payable at a future date, such instrument evidencing a payment claim or a debt obligation of an importer or a bank / financial institution pursuant to a letter of credit, standby letter of credit, guarantee, aval, bill of exchange or a promissory note created under an export transaction.

The URF 800 are the first ever global rules for forfaiting—the result of three-and-a-half years of joint effort by ICC and the International Trade and Forfaiting Association (ITFA)—developed after taking into account feedback from major trade finance banks, forfaiting companies and exporters. The aim of URF 800 is to create a standard set of rules that can be applied within the forfaiting markets worldwide.

Source: https://iccwbo.org/media-wall/news-speeches/un-endorses-icc-uniform-rules-forfaiting-urf-800/

HSBC and IBM develop cognitive trade finance tool

HSBC and IBM have developed a cognitive solution to automate and digitise trade finance documentation.

The solution, which is already in use in Hong Kong and the UAE, uses IBM robotics technology to analyse documents, digitising and extracting the relevant data before feeding it into HSBC’s transaction processing systems.

The aim is to remove the labour intensity from trade finance. HSBC’s global trade and receivables financing (GTRF) team processes more than US$500bn in documentary trade each year, meaning more than 100 million pages must be manually reviewed and processed.

Source: https://www.gtreview.com/news/global/hsbc-and-ibm-develop-cognitive-trade-finance-tool/

A GAP IN GLOBAL TRADE FINANCE OF AROUND $1.6 TRILLION PER YEAR

Latest survey results and analyses by the Asian Development Bank (ADB) point to a gap in global trade finance of around US$1.6 trillion annually—much of it in developing markets, particularly in Asian developing countries. The concern is that, according to “2017 Rethinking Trade & Finance”, the latest report of the International Chamber of Commerce (ICC): “It is increasingly clear that banks will be unable to materially close this gap in Trade Financing, and that there is a misalignment in the availability of funds and liquidity”.

With worldwide trade developing at a fast speed, trade finance is the “oil in the engine” of international commerce and tool number one for treasury managers. The banking sector has recovered from the last financial crisis, and liquidity seems to no longer be an issue.

However, banking regulations have pushed banks to fund the needs of supposedly less risky multinationals and large corporates in developing countries. Risk-weighted asset regulation within Basel II, along with capital-adequacy ratio or solvency ratio requirements, have driven banks out of the micro, small and sometimes even medium-sized enterprise (MSME) segment. Banks are being challenged by capacity constraints, developed protectionist rhetoric coupled with trade-restrictive initiatives in key G20 economies, which are having a dampening effect on expectations of trade-driven growth and leading to a slowdown in import-based economic activity globally.

Source: https://corporatefinance.co/finance/gap-global-trade-finance-around-1-6-trillion-per-year-2/

Maersk seeks role in trade finance as banks retreat

Maersk, the world’s biggest container shipper, is venturing into trade finance, as it seeks to fill a lending gap left by indebted banks pulling out of the crisis-hit shipping industry.

Moving into traditional bank territory and further down the shipping value chain, Maersk Line, part of A.P. Moller-Maersk , is offering to finance shipments and remove the paper trail from financing deals.

Maersk says it has no need to ask for collateral – one of the biggest headaches for banks and customers in trade finance deals – because it is carrying the goods on its vessels.

Source:  http://timesofindia.indiatimes.com/business/international-business/maersk-seeks-role-in-trade-finance-as-banks-retreat/articleshow/60087830.cms

Adam Smith Associates offers trade & commodity finance related services & solutions to its domestic and international clients. Above news update and trends are sourced from internet and are purely meant for reading on the related subject and for information. Adam Smith Associate is not responsible for any of the content and nor it is meant for any commercial benefits

Trade Finance News & Updates Around The World

Eleven banks have passed a major milestone in the digitisation of documentary trade finance.

They have developed a prototype application on R3’s distributed ledger platform, Corda, that has the potential to significantly reduce inefficiencies and costs by streamlining the processing of sight letters of credit.

Bangkok Bank, BBVA, BNP Paribas, HSBC, ING, Intesa Sanpaolo, Mizuho, RBS, Scotiabank, SEB and U.S. Bank have been collaborating with R3 and technology partner CGI over the last year on numerous trade finance projects, building and testing applications. Using lessons learnt from these projects, the group has now developed a trade finance application on Corda that incorporates shippers and carriers. Several R3 member institutions now intend to pilot the platform with the goal of making it widely available in 2018.

Source: https://www.finextra.com/pressarticle/70297/eleven-banks-develop-trade-finance-app-on-r3s-corda-dlt-platform

HSBC and IBM use robotics to speed up trade financing

HSBC has partnered with technology group IBM to bring the traditionally paper-heavy trade financing process into the digital age.

The initiative is the latest effort to make trade transactions, which HSBC said can involve as many as 15 different 40-page documents, more efficient.

The UK bank is working with IBM to use advanced robotics to identify, digitise and extract data from such documents and feed this into its own transaction processing systems.

Natalie Blyth, HSBC’s head of global trade and receivables finance, said: “By digitising this process we will make transactions quicker and safer for both buyers and suppliers, leading our industry forwards, and we will reduce compliance risks through an enhanced ability to manage huge volumes of data.”

Source: https://www.fnlondon.com/articles/hsbc-and-ibm-use-robotics-to-speed-up-trade-financing-20170810

HFC Boosts Trade Finance

Knowledge on trade finance is very important for Banks.

This was the comment made by the acting chief executive officer HFC Bank in Fiji Raj Sharma at the HFC Bank and Asian Development Bank (ADB) trade finance client seminar at Tanoa Waterfront Hotel in Lautoka yesterday.

He said the seminar would enhance the knowledge of their customers to know about trade finance facilities offered by HFC Bank. “This year we have signed an agreement with ADB under this trade finance facility,” Mr Sharma said. “This means with ADB, it gives us a window to have access to over 200 banks globally.” He added: “Trade finance facility has a lot of advantages and we as a local bank would have difficulty to setup a corresponding relationship with other banks.

“We have learnt about trade finance facilities in terms of letters of credit that could be given to the customers, opening of account.

Source: http://fijisun.com.fj/2017/08/08/hfc-boosts-trade-finance/

Adam Smith Associates offers trade & commodity finance related services & solutions to its domestic and international clients. Above news update and trends are sourced from internet and are purely meant for reading on the related subject and for information. Adam Smith Associate is not responsible for any of the content and nor it is meant for any commercial benefits

 

Amazon & Facebook – technical analysis report

Amazon sold off from the upper end of the channel after wave 5 and is below both the averages.

FACEBOOK

Facebook – a 5 wave advance maybe complete with the channel.

Adam Smith Associates offers trade & commodity finance related services & solutions to its domestic and international clients. Views expressed in this article are purely of the author – Mr Rohit Srivastava – a leading technical analyst. Visit www.adamsmith.tv for services offered by Adam Smith Associates Pvt Ltd

Trade Finance News Updates & Trends Around The World

Do more to boost Islamic trade finance

AS the World Trade Organisation (WTO) reaffirmed commitment to its Aid for Trade initiative at its 2017 Global Review in Geneva this month, the outlook for global trade over the next two years is indeed mixed.

WTO is forecasting that global trade will expand by 2.4 per cent this year and between 2.1 to four per cent next year, reflecting the continued uncertainty and risks associated with a stuttering global economy underpinned by low commodity prices, albeit slightly improving this year, which in turn has had a dampening effect on trade finance.

Trade and SMEs (small- and medium-sized enterprises) are regarded as the backbone of any self-respecting economy. Trade is a significant determinant and function of sustainable development. Not surprisingly, the theme of WTO’s Geneva gathering was “Promoting Trade, Inclusiveness and Connectivity for Sustainable Development”.

Source: https://www.nst.com.my/opinion/columnists/2017/07/261175/do-more-boost-islamic-trade-finance

A GAP IN GLOBAL TRADE FINANCE OF AROUND $1.6 TRILLION PER YEAR

Latest survey results and analyses by the Asian Development Bank (ADB) point to a gap in global trade finance of around US$1.6 trillion annually—much of it in developing markets, particularly in Asian developing countries. The concern is that, according to “2017 Rethinking Trade & Finance”, the latest report of the International Chamber of Commerce (ICC): “It is increasingly clear that banks will be unable to materially close this gap in Trade Financing, and that there is a misalignment in the availability of funds and liquidity”.

With worldwide trade developing at a fast speed, trade finance is the “oil in the engine” of international commerce, and tool number one for treasury managers. The banking sector has recovered from the last financial crisis, and liquidity seems to no longer be an issue. 

Source: https://corporatefinance.co/finance/gap-global-trade-finance-around-1-6-trillion-per-year/

Banking Commission Survey confirms trade finance supply/demand imbalance

The International Chamber of Commerce (ICC) Banking Commission has released its 2017 report entitled Rethinking Trade and Finance. Based on the Global Survey on Trade Finance – with 255 responses from banks located in 98 countries, as well as insight and commentary from expert contributors – the report is the most comprehensive gauge of the trends and outlook of the global trade finance industry.

Now in its ninth year – 2017’s Survey marks a significant change in both emphasis and presentation. The aim is to provide both enhanced context – highlighting the potential strategic and tactical implications for the industry – and to be more forward looking. The approach is aided by the launch of a new Editorial Board comprising senior specialists and practitioners, supported through contributions from a wider range of partners across global trade.

The Report – emphasising ICC’s and the Banking Commission’s support of open, rules-based and inclusive multilateral trade – encompasses four major sections of content linked to the pillars of the Banking Commission’s strategy. It focuses on the state of the trade finance market; trade and supply chain finance; policy, advocacy and inclusiveness around global trade; and digitalisation and the state of FinTech. The 2017 Survey’s findings show that:

  • Some 61% of banks report more demand than supply for trade finance in the global market. ICC Banking Commission and the Asian Development Bank estimate the level of unmet demand for trade finance stands at over US$1.6 trillion a year – a figure now officially recognised by the United Nations General Assembly.
  • Only a minority (21%) see traditional trade finance showing growth in the future. However, overall trade finance revenues have increased, with ICC partner The Boston Consulting Group’s trade finance model (included in the report) predicting revenue growth of around 4.7% a year.
  • Over 68% of respondents point to compliance and regulatory requirements as having the highest adverse impact on trade finance in the short-term, while only 11% pointed to capital constraints as a matter of significant concern.
  • Some 50% expect most of trade flow processes to be digitised by 2027 – while an almost equal portion expect the evolution to take from 10-25 years. In addition, nearly 44% of respondents identify digitalisation and technology as priority areas of focus – including FinTech and fast-emerging platforms.
  • While there is optimism with respect to the digitalisation of trade finance, only 12% of respondents perceive a degree of market uptake and nearly 40% see limited progress in this area – with almost 18% reporting that technical capabilities and technology are ahead of trade finance business practice.
  • The discourse around FinTechs is evolving from competition to collaboration, with only 1.4% of respondents viewing the competitive offering of FinTechs as a threat to banks’ positions as the key providers of trade finance.
  • More than one-third of respondents consider supply chain finance a high priority and predict significant growth, and over 21% view it as under analysis and consideration.
  • Over 57% report an improvement of their operational risk management and reduced error rates, while only 2.7% note a slight deterioration.
  • Some 46% identify multinational and large corporates as the highest priority client segment for their trade finance business, with a quarter favouring middle market clients and less than 20% identifying Micro, Small and Medium Enterprises (MSMEs).
  • Some 57% of respondents believe traditional trade finance will exhibit little or no growth – while 22% think it will decline outright year-on-year.
  • Cost control pressures are considered the biggest challenge facing trade finance units. These are cited by 23% of respondents, followed closely by the availability of specialist skills (21%), and limits posed by traditional technologies (18%).
  • The report highlights the key role that correspondent banks play in global trade and economic activity, with IMF data indicating that the volume of correspondent banking relationships grew by almost 30% between 2011 and 2015.

Source: https://iccwbo.org/media-wall/news-speeches/banking-commission-survey-confirms-trade-finance-supplydemand-imbalance/

Commerzbank steps up focus on trade finance transformation

Commerzbank is to work with the Fraunhofer-Institute for Material Flow and Logistics (IML) in Dortmund to test and develop new scenarios for digitisation of trade and supply chain finance using distributed ledgers and the Internet of Things.

Commerzbank says new concepts in digital trade finance based around distributed ledger technology, IoT and smart contracts constitute the basis for new trade ecosystems, new supply chain finance concepts, faster transaction processing and new solutions in working capital management.

Bernd Laber, group executive trade finance & cash management corporate clients, Commerzbank, comments: “We are working on several projects and in a number of consortiums also with other international banks on the digitisation of bank products and bank services, and on applications for blockchain technologies. As a corporate bank the focus on future supply chains of our customers is of paramount importance and we will develop this in co-operation with Fraunhofer Institute.“

Source: https://www.finextra.com/newsarticle/30785/commerzbank-steps-up-focus-on-trade-finance-transformation

Adam Smith Associates offers trade & commodity finance related services & solutions to its domestic and international clients. Above news update and trends are sourced from internet and are purely meant for reading on the related subject and for information. Adam Smith Associate is not responsible for any of the content and nor it is meant for any commercial benefits

Trade Finance Updates From Around The World

UK Government Recruits Big Banks For SME Trade Finance

As part of a broader effort to keep the economy strong post-Brexit, the United Kingdom has reportedly reached a deal with the nation’s largest banks to provide trade finance to SMEs that are exporting overseas.

According to The Financial Times on Wednesday (July 12), Barclays, HSBC, Lloyds, RBS and Santander are partnering with the United Kingdom to extend trade finance to exporting small businesses (SMBs) and their suppliers. Trade secretary Liam Fox said the move aims to make access to capital easier for those SMEs and their suppliers as the nation works to catch up to other EU markets, like Germany, by boosting exports.

Reports said the agreement will see the government giving banks a guarantee to reduce some of the risk of lending to SMBs. Government body U.K. Export Finance will take on 80 percent of the risk of the loan or bon

Source: http://www.pymnts.com/news/b2b-payments/2017/uk-recruits-big-banks-for-sme-trade-finance/

Digitalising Trade Finance: the time to act is now

While digitalisation of banking processes has been gathering pace in many areas – from Retail Banking to Payments processing – Trade Finance has been lagging in its digital journey. Recent research from the International Chamber of Commerce found that just 7% of respondents said digitalisation was “widespread”.

Trade Finance has always been paper-intensive, from letters of credit to bills of lading. Although slow moving, the system worked and the need to innovate was not there. Until now the technology solutions deployed by banks to handle the Trade Finance processes have generally been hardcoded – making it difficult to customise or react quickly and innovatively to changing market requirements.

Source: https://www.finextra.com/blogposting/14291/digitalising-trade-finance-the-time-to-act-is-now

The Growth Of Cryptocurrency: India Versus Global Trends

The Government Of India Is Looking To Legalise Cryptocurrency Such As Bitcoin.

There is a growing consensus that cryptocurrencies will certainly play a crucial role in the way we deal with money. In April 2017, the total market cap for all cryptocurrencies, combined, was slightly higher than $25 Bn. The same market cap shot up by 300% and touched $100 Bn within 60 days. It is already widely reported that cryptocurrency, as an asset class, is set to outpace all other asset classes in relative growth.

Source: https://inc42.com/resources/growth-cryptocurrency-india/

Trade and Commodity Finance News Trend Around the World

 ICC Banking Commission launches working group on digitalisation of trade finance
The ICC Banking Commission has launched a working group to coordinate all work relating to the digitalisation of trade finance. The group aims to help the trade finance industry accelerate its progress towards greater digitalisation.

The trade finance industry is undergoing a massive transformation – from time-consuming and cumbersome manual processes involving paper-based instruments such as Letters of Credit to an automated and digitised future.

Source: https://iccwbo.org/media-wall/news-speeches/icc-banking-commission-launches-working-group-digitalisation-trade-finance/

Maersk ventures into trade finance
To make overseas exports easier for Indian companies, especially SMEs, Denmark-based AP Moller – Maersk, one of the largest container shipping companies globally, has set up a new business vertical, Maersk Trade Finance.

In a nutshell, Maersk Trade Finance is a digital platform with pre-shipment and post shipment credit facilities. It enables exporters – manufacturers or traders – to not only get the cargo shipping services online but also apply for funds that can be used either to pay for the shipment or to invest in new orders

Source: http://www.thehindubusinessline.com/economy/logistics/maersk/article9717910.ece

International Chamber of Commerce calls for UN action to address S$1.6 trillion trade finance gap in SMEs globally
The International Chamber of Commerce (ICC) has called for action from United Nations to address the US$1.6 trillion trade finance gap in the Small and Medium Enterprise (SME) sector globally.

Highlighting that short-term financing is an essential tool to support small business growth and sustainability, ICC said yet a growing trade finance shortfall hurts companies and countries that need it the most.

World trade relies heavily on reliable sources of financing—both long-term (for capital investments) and short-term. The latter—commonly referred to as “trade finance”—is the basis on which a significant proportion of world trade operates.

Source: http://knnindia.co.in/news/newsdetails/global/international-chamber-of-commerce-calls-for-un-action-to-address-s16-trillion-trade-finance-gap-in-smes-globally

Belarusbank seals deal with EDB on $40m loan for trade financing
The Eurasian Development Bank (EDB) and ASB Belarusbank signed an agreement on financing foreign trade operations of Belarusbank clients in the EDB member states, BelTA learned from the EDB official website. The relevant agreement was signed by EDB Managing Director for Assets and Liabilities Dmitry Ladikov-Royev and ASB Belarusbank Executive Director Viktor Perepelitsa, the post on the website reads.

http://eng.belta.by/economics/view/belarusbank-seals-deal-with-edb-on-40m-loan-for-trade-financing-102073-2017/

Chinese Banks Pained By Shifting Position In Global Trade Finance
China’s corporate banking sector is getting hit with a bit of a setback as more companies look outside China for supply chain financing.

New research from East and Partners, released this week, discovered that CFOs the world over are changing their supply  chain financing practices as they plan to reduce the number of banks from which they access this type of financing. Currently, companies surveyed use an average of 14 supply chain financing banks, researchers said.

Source: http://www.pymnts.com/news/2017/china-corporate-banking-supply-chain-trade-finance/

ADB seals first trade finance deal in Fiji
The Asian Development Bank (ADB) has signed its first trade finance deals in Fiji, with two agreements with the Home Finance Company (HFC Bank).

A revolving credit facility and a credit guarantee facility are worth a combined US$4mn and will help HFC support local exporters in key areas such as sugar, copra and other agricultural goods.

http://www.gtreview.com/news/asia/adb-seals-first-trade-finance-deal-in-fiji/

Adam Smith Associates offers trade & commodity finance related services & solutions to its domestic and international clients. Views expressed in this article are purely of the author – Mr Rohit Srivastava – a leading technical analyst. Visit www.adamsmith.tv for services offered by Adam Smith Associates Pvt Ltd