Asia’s estimated $600 billion trade finance gap is an enduring problem – but supporting and facilitating a sophisticated secondary market for trade finance assets may be, at least part of, the solution. UniCredit’s Holger Frank, Head of Global Transaction Banking and Financial Institutions Group, Asia Pacific, and Siow Chin Yeo, Head of Trade Finance, Asia Pacific, opine in The Asian Banker that digital advances are turning this vision into reality.
With compliance issues, regulatory capital requirements and tightening margins restricting banks’ ability to lend to SMEs (who contribute two-thirds of Asia’s trade finance gap), new digital platforms are being developed that offer trade receivables to non-bank investors on a secondary market, argue Frank and Yeo.
CCRManager, which launched in 2017, is one such example. Processing $1.5bn worth of transactions to date, it’s helping to increase bank trade finance lending and, ultimately, boost the Asian economy.
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The South and Southeast Asia region (SSEA) is embarking on many of the world’s most intensive infrastructure projects. The Asian Development Bank estimates that SSEA will spend a total of US$9.5 trillion on infrastructure between 2016 and 2030.
Given this critical period of development, S&P Global Ratings’ director of Asia Pacific Corporate Ratings, Abhishek Dangra, analyses the outlook for the region’s infrastructure players in BRINK Asia.
“We believe infrastructure companies based in Singapore, Malaysia, Thailand and the Philippines,” Dangra writes, “could feature among the most robust market participants.”
Read the article here.
As the Trans-Pacific Partnership (TPP) finds its feet, Agnes Vargas, Regional Head, Greater China & ASEAN at Commerzbank, looks to the Regional Comprehensive Economic Partnership (RCEP) as another means of facilitating trade in the Pacific.
Increased banking regulations and higher compliance costs have led to a culture of de-risking, where many banks have been forced to withdraw from perceived “riskier” markets – with local businesses in developing Asia being particularly affected. Indeed, Asia and the Pacific bears 40% of the US$1.5 trillion global trade finance gap, representing the difficulty that SMEs in the region have in accessing the financing they need.
In a recent article for Asia Outlook, Dominic Broom, Global Head of Trade Business Development, Treasury Services, BNY Mellon, discusses how technology could help banks to address the issue of de-risking. To most effectively develop technological solutions to close the trade finance gap, Dominic says, requires innovation and collaboration between all the players in the trade finance ambit.
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Asia is set to contribute 60% of the world’s economic growth in 2017, driven by growing external demand as well as domestic reforms. Yet, a recent Asian Development Bank (ADB) survey estimates that approximately US$600 billion worth of trade in the region is failing to secure the financing it needs – out of a total US$1.5 trillion of unmet demand worldwide.
Yet despite increasing regulatory challenges, banks are collaborating to help bridge Asia’s trade finance gap, Dominic Broom, Global Head of Trade Business Development, Treasury Services, BNY Mellon explains in TradeReady.
The full commentary article can be read here.
In a signing ceremony that took place at Sibos, BNY Mellon became partner to the Asian Development Bank’s (ADB) Trade Finance Program (TFP). The program enables companies throughout Asia to engage in import and export activities through the provision of loans and guarantees by partner banks, such as BNY Mellon.
Steve Beck, ADB’s Head of Trade Finance, said: “Trade finance is a critical component to Asia’s economic growth and the global economy, especially to small and medium-sized enterprises. To further support interregional and global trade through our Trade Finance Program, it is imperative to partner with global leading banks like BNY Mellon to increase trade and trade finance in Asia. As one of the world’s most respected trade finance banks, we very much welcome this partnership with BNY Mellon.”
News of the partnership can be read at FX-MM, Commercial Payments International, Money Management, Investor Daily, Trade Finance Analytics, TXF News, The World News Network and TMI.
Holger Frank, Head of Global Transaction Banking and Financial Institutions Group, Asia Pacific, and Siow Chin Yeo, Head of Trade Finance, Asia Pacific, at UniCredit, write in GTR how banks, including UniCredit, are working together to address the absence of an efficient and widely-used secondary-market platform for trade finance.
The solution comes in the form of Capital & Credit Risk Manager (CCRManager) – an online platform that enables trade finance providers to sell contracts to a wide range of investors quickly and simply. CCRManager will drastically increase the speed, efficiency and transparency of reselling trade finance contracts, increase banks’ capacity to lend in all geographies and sectors – an innovation that will have positive repercussions across the entire industry.
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In a commentary article for Financier Worldwide, Emma Clark, head of business development at Falcon Group, explains why many Asian corporates have been turning to innovative and alternative sources of financing for their funding needs.
Ongoing bank retrenchment is taking a toll on emerging markets, contributing to the US$692 billion of unmet trade financing in Asia alone. One reason for this is increased regulation – such as Basel III – which requires banks to hold more capital on their balance sheets. In turn, disincentivizing banks from making funds available to all but the highest-rated borrowers.
As effect, there has been a strong institutional response from Export credit agencies (ECAs), regional and multilateral development banks (MDBs), insurers and alternative financiers, like Falcon, to fill the lending gap.
The full article can be read here.
In an interview for The Banker, Natixis’ Global Co-Head of CIB, Marc Vincent and François Riahi, discuss how they created and implemented a new strategy for the bank’s operations – resulting in expanding operations and increasing revenues.
One of the biggest changes made by Mr Riahi and Mr Vincent has been to expand the bank’s originate-to-distribute (OtD) platform – which is now a key element for the bank’s business model. “This allows us to overcome the size of our balance sheet and originate at a level that wouldn’t otherwise be possible,” explained Riahi. The bank has also been working to expand its mergers and acquisitions (M&A) business, which has come from nearly absent in 2012 to generating €100m in revenues in 2016.
Like its expanding in M&A, Natixis’s CIB is also expanding its footprint in Asia-Pacific – which has grown from 5% to 11%. In turn, the co-chief pair seem to be on a clear path to success, with last year’s net CIB revenues up 11% and return-on-equity up by 260 basis points.
The full article can be read here.
Vietnam’s economic development has been driven by its export-led industries, and Myanmar looks set to follow in its footsteps. In a feature for leading Asian finance magazine The Asset, Agnes Vargas, Regional Head of Greater China and ASEAN, explains that continued economic progress in both countries will depend on diversifying trade beyond their traditional partner China and to new markets across the Pacific.