Growth in regulation impacting lending, along with rapid globalization have put pressure on capital providers’ due diligence capabilities. Pair this with the inherent complexity of trade and project finance transactions and it is clear why many capital providers are now choosing to outsource their due diligence. Matt Reed, Associate Director at RedRidge Diligence Services, explains the trends in the sector.
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Businesses and their banks are changing the way they approach trade finance and working capital management. The days where large corporates would implement individual products such as factoring or forfaiting to address isolated challenges are coming to an end. In their place, momentum is gathering for a more holistic approach, where corporates map out a wholesale plan to address their working capital needs and draw on a diverse toolbox of products to do so.
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Correspondent banking is evolving. Once a predominantly payments network, it is now developing into a ‘relationships network’ – with banks looking to facilitate seamless interactions between clients by connecting them on purpose-built digital platforms.
Corporate-to-corporate trading platform we.trade is already live and improving the way businesses trade with one another, and there is potential to take this further by combining we.trade with a corporate-to-bank initiative, such as the Trade Information Network – enriching interactions between buyers and suppliers through proactive support from a broad network of banks.
This could offer the best of both worlds. Corporates would achieve greater transparency when it comes to securing contracts, while banks would have the opportunity to introduce value-added services throughout the transaction process.
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Deutsche Bank has signed a memorandum of understanding (MOU) with the Standard Bank of South Africa, agreeing cooperation under the US Department of Agriculture’s GSM-102 initiative. Standard Bank will now be one of the preferred issuing banks of letters of credit for eligible emerging markets seeking to import certain agricultural products from the US.
The finalisation of the GSM 102 agreement places Standard Bank as one of the preferred issuing banks to the US Department of Agriculture’s Commodity Credit Corporation, along with 10 other financial institutions from across the Middle East and Africa region.
Following Moorgate outreach, the MOU signing was covered by TXF, Global Trade Magazine, Trade Finance Analytics and GTR.
The Global Supply Chain Finance Forum – an initiative comprising the ICC Banking Commission, BAFT, EBA, FCI and ITFA – has appointed Christian Hausherr, European Product Head of Supply Chain Finance at Deutsche Bank, as its Chair.
The GSCFF was established in 2014 to develop, publish and champion a set of commonly agreed standard market definitions for Supply Chain Finance. In turn, Hausherr – as a recognised expert in the field of SCF – has taken a leading role in the drafting of the GSCFF’s Standard Definitions for Techniques of Supply Chain Finance, as well as the Wolfsberg/ICC/BAFT Trade Finance Principles.
The news was covered by GTR, TXF, TRF News, Supply Chain Digital, SCF Briefing, Finextra, Fintech Finance, Financial IT, Fintech Insight.
Christopher Ash, the Managing Director of ExWorks Capital UK describes how trade finance in the Middle East is at an inflexion point. As the discipline innovates and evolves, it becomes a tool to help businesses grow, rather than being a heavy weight in the firm’s debt repayment schedule. There’s still much to be done but also much to gain. Ash outlines some exciting developments that are driving change throughout the region.
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The International Chamber of Commerce Banking Commission has partnered with Global Credit Data (GCD), in order to strengthen analysis within the ICC Trade Register, the banking industry’s leading source for risks in global trade and export finance.
The ICC Trade Register, established in 2011, is one of the few comprehensive sources to provide an objective and transparent view of the credit risk profile and characteristics of trade and export finance. In turn, GCD will now oversee the collection of credit-related data from ICC Trade Register member banks, in order to help provide more granular data and detailed benchmarking reports to members
The news was covered by TXF, TRF, Finextra, Specialist Banking, Business Post Nigeria, The Paypers, Trade Arabia, Payment Week, PYMNTS, Fintech Finance, Fintech Insight.
In an article for Documentary Credit World, Olivier Paul, ICC Banking Commission Head of Policy, explains that banks are increasingly embracing supply chain finance solutions and digitalisation of the trade finance sector.
Expanding on findings from the ICC’s 10th Global Survey on Trade Finance, Paul says that the overall outlook for trade finance generally, and supply chain finance specifically, is one of growth and optimism, despite regulatory and compliance concerns.
The full article can be read in the June edition of Documentary Credit World, pages 22-24.
In an article for African Review, Doina Buruiana, Project Manager at the ICC Banking Commission, discusses the drivers behind the unmet demand for trade finance, which is estimated to stand between US$110bn and US$120bn in Africa.
Buruiana explains that although banks in Africa are providing increasing amounts of trade finance, obstacles remain in the way of growth, namely those of regulation and compliance.
To read the full article on pages 20-21 of African Review’s July edition, click here.
In an article for Treasury Management International, ICC Banking Commission’s Head of Policy Olivier Paul expands on results from the ICC’s 10th Global Survey on Trade Finance.
Findings from the survey, which gathered responses from over 250 banks in 91 countries, revealed that while traditional trade finance provision is on the up, there is now a corresponding growth in SCF. What’s more, most banks are taking steps towards embracing digitalisation, with over 60% of respondents indicating they have implemented or are in the process of implementing technology solutions as part of their trade finance processes.
The full article can be read here.