WORLD’S BEST TRADE AND SUPPLY CHAIN FINANCE PROVIDERS 2015

THE POWER OF GLOBAL CONNECTIONS

Presenting the World’s Best Trade Finance Awards for 2015.

Trade banks’ global branch networks comprise a web of international connections that, in many cases, matches corporate trade flows. The ability to handle both sides of a cross-border trade transaction gives a big edge in efficiency to those banks with international and regional networks connected to platforms that can reliably and affordably process trade deals.

As corporations expand into new and unfamiliar markets around the world, they rely on their trade bankers’ knowledge of local markets and the unique requirements these markets present. Banks with broad international networks have capitalized on their global reach to make strong gains in market penetration in the trade finance business, according to Greenwich Associates. Companies, it says, are looking for banks with international networks that match the countries they trade with.

Banks able to handle transactions from end to end have greater efficiency and less risk, says Andrew Grant, consultant at Greenwich Associates. “Many of the banks are weighing the thin margins for trade finance against the increasing capital requirements from Basel III,” Grant says. “We are seeing some banks actively pulling back in certain segments, while others aggressively step in to fill the void.”

The International Chamber of Commerce says some form of trade finance is used to support most trade flows. “Trade growth, especially in emerging markets, cannot be achieved or sustained without the necessary levels of trade finance,” says Kah Chye Tan, chair of the ICC Banking Commission. Last year’s refinements of the Basel III framework will help to keep trade finance affordable to end users by making bank capital requirements more manageable, he says.

The amendments adopted by the Basel Committee on Banking Supervision on the treatment of off-balance-sheet items recognize the intrinsically safe nature of trade finance instruments, including the self-liquidating nature of transactions that support the exchange of goods and services, the ICC says.

There remains a significant global trade finance shortfall, estimated to be as high as $2 trillion, the ICC says. Thus, there is potential for additional trade-based economic growth, provided the financing support is available, it says.

China became the world’s biggest merchandise trader in 2013, with a total of $4.2 trillion of goods imported and exported. The US was second, with $3.9 trillion, followed by Germany and Japan, according to the WTO.

The US Department of Commerce expects world trade volume to increase 5.3% in 2015, up from 3% annual growth in the past two years. HSBC says growth in world trade could accelerate to 8% in 2016, with transport equipment and metals leading the way. Growth in India’s exports is expected to be strong, and China and Vietnam will boost exports to the US significantly, HSBC says.

European corporations are active in more regions than their peers in Asia or North America and need broad network capabilities to meet their needs, Greenwich Associates says. “Companies’ needs in specific countries and regions have expanded to the point at which many of them have begun to hire specialist banks with particular expertise and coverage within target international markets,” says Greenwich Associates consultant Tobias Miarka.

Global Finance editors, with input from industry analysts, corporate executives and technology experts, has selected the best trade finance banks in 91 countries or regions.We polled our corporate readership to increase the accuracy and reliability of the results.

Criteria for choosing the winners included trade-related transaction volume, scope of global coverage, customer service, competitive pricing, risk management and innovative products, services and technology. The winners are those banks that best serve the specialized needs of corporations as they engage in cross-border trade.