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Trade Finance Providers
Supply Chain Finance Providers
BEST TRADE FINANCE BANK: HSBC
The Hongkong and Shanghai Banking Corporation was established in 1865 to support trade between China and Europe. Today, UK-based HSBC is the largest foreign bank in China, and it operates at both ends of the top 15 trade corridors in the world.
HSBC was the first international bank to support renminbi trade transactions in six continents. It is able to execute trade deals in renminbi in the more than 50 countries in which it offers trade finance. HSBC expects one-third of China’s trade to be settled in renminbi by the end of this year.
In Britain, HSBC was the first bank to formalize a trade initiative with the British government to advise businesses on export-related matters. HSBC is a principal partner of the government’s “Open to Export” service, which offers support and advice to small and medium-size enterprises.
In Canada, HSBC has the highest import and export market share by volume of documentary credits, according to the Canadian Bankers Association. The bank uses its global network to issue overseas guarantees without having to negotiate prices with other banks.
HSBC merged its trade, supply-chain and receivables financing units four years ago. The bank’s online banking solution, HSBCnet, includes a trade module for initiating transactions, amending documents and accessing current information about trades.
BEST TRADE FINANCE PROGRAM: IFC’s Global Trade Finance Program
The International Finance Corporation works in partnership with private-sector banks to deliver trade finance in 94 frontier and emerging markets through its Global Trade Finance Program (GTFP). For the past decade, the program has guaranteed the trade-related payment obligations of approved issuing banks to support private-sector trade deals in some of the world’s poorest countries. In the 12 months through September 2014, the program issued 3,100 guarantees, and its transaction volume exceeded $7 billion for the first time.
Tighter credit and rising compliance costs for confirming banks pose serious challenges to the availability of emerging-markets trade finance, the IFC says. In frontier and fragile markets, the IFC program focuses on building trade capacity at the larger banks. In bigger emerging markets, the GTFP works with second- and third-tier banks to strengthen their correspondent relationships with global trade banks.
The IFC’s network of 559 banks comprises 293 GTFP issuing banks and 266 confirming banks. Since the program began, nearly 35,000 transactions have been financed without a single claim. In 2014, network banks were added in the West African countries of Chad, Côte d’Ivoire, Senegal and Togo. Issuing banks were added in Iraq, Myanmar (Burma), and Thailand.
BEST TRADE FINANCE MULTILATERAL INSTITUTION OR EXPORT CREDIT AGENCY: Export Development Canada
Canada’s economy relies on trade, with one-third of the country’s jobs related to exports. Export Development Canada, a self-sufficient Crown corporation, supports international trade deals through insurance, advice and financial services. One of Canada’s fastest-growing trade sectors is clean technology. In 2014, EDC issued its first green bond, a $300 million global offering to support financing for environmentally friendly businesses. EDC collaborates with Sustainable Development Technology Canada to further develop the country’s international capacity in the clean technology sector. In October 2014, EDC sponsored the International Finance Corporation’s second annual Climate Business Forum in Hong Kong.
EDC is a partner with Canadian Manufacturers and Exporters, Canada’s largest industry association, on a website that connects Canadian corporations to international buyers seeking matching products and services. To help small Canadian companies to successfully enter new markets overseas, the EDC publishes a new quarterly report with country risk profiles and market intelligence.
Citi’s trade finance network comprises 86 countries, making it one of the truly global trade banks. Its Trade MAPS program, established in December 2013, issues asset-backed securities of trade finance assets, allowing other trade banks to increase their portfolios in a capital- and balance-sheet-efficient manner. Citi’s scale enables it to have one of the largest investment budgets in the trade finance business.
In North America, Citi originates and implements major deals, particularly large export and agency finance transactions. The bank has partnerships with 65 export credit agencies, and correspondent relationships with more than 5,000 financial institutions.
In Latin America, where it offers trade services in 23 countries, Citi offers supplier finance programs and a full range of trade products. The bank has significant market shares in Brazil, Argentina, Peru, Colombia and Mexico, as well as in the Caribbean and Central America. Plus, the Asia-Pacific is one of Citi’s more important regions for trade product offerings.
WESTERN EUROPE: Deutsche Bank
Deutsche Bank has a trade network with 79 locations in 40 countries. The bank is a market leader in structured finance solutions and risk management capabilities. In its home market of Germany, Deutsche Bank has a trade finance market share of more than 25%. At the end of September 2014, it had documentary credits, collections and guarantees worth more than $90 billion on its books.
Deutsche Bank has invested in a robust and flexible trade finance platform. In addition to classic trade solutions, the bank offers a wide range of supply chain financing products. It also provides trade finance solutions to other banks, enabling them to offer import refinancing and discounting solutions to their own corporate customers.
In December 2014, Deutsche Bank completed China’s largest-ever structured commodity trade finance facility in collaboration with Switzerland-based international trading firm Duferco for Tangshan Iron and Steel, or Tangsteel. Deutsche Bank was coordinating lead arranger and bookrunner for the $1.5 billion, two-year syndicated facility, with participation by 22 banks globally. Deutsche Bank’s Hong Kong branch acted as facility agent and account bank for the prepayment export financing, which was oversubscribed.
NORDIC REGION: Nordea
Nordea is the largest financial services group in the Nordic region in terms of market capitalization and assets. It also has the largest distribution network, with some 800 branches. The bank has a 37% market share for letters of credit and documentary collections in the Nordic countries—Denmark, Finland, Norway and Sweden.
The bank handles more than 6,000 trade transactions a month with a trade finance staff of 250 people. It offers both traditional trade finance products and supply chain finance. Nordea has invested significantly in trade-processing systems, which are integrated into the internal workflow systems of its corporate clients to improve mutual productivity.
Nordea employs a global operating model to deliver a consistently high level of service across its trade finance network. In addition to the Nordic countries, it has trade operations in the Baltic countries and Central and Eastern Europe, as well as trade offices in New York, Shanghai and Singapore.
Nordea’s return on equity of 12.8% and core Tier 1 capital ratio of 15.6%, as of September 30, 2014, are among the best in Europe. The bank’s high credit rating has helped to make it the top choice for guarantee facilities in the Nordic region.
CENTRAL & EASTERN EUROPE: UniCredit
UniCredit is the largest international banking group in the CEE region, with a network of 3,600 branches. The bank combines a strong local presence with access to global markets. Based in Italy, UniCredit has operations in 50 markets worldwide. The CEE represents a significant growth area for the bank.
UniCredit focuses on electronic banking solutions to meet the specific trade finance needs of large corporations as well as small and medium enterprises. Its trade finance portal enables corporations to handle guarantees and letters of credit with all of their global banking partners through a single platform.
UniCredit Bank Austria is the single entry point for UniCredit’s correspondent banks around the world using the existing SWIFT message structure. The bank is a leader in the adoption of the bank payment obligation, a supply chain settlement solution of SWIFT and the International Chamber of Commerce that seeks to become a global standard for trade.
In addition to its processing efficiency, which has helped to make it the leading trade finance bank in the CEE, UniCredit is adept at advising, structuring and financing transactions. The bank also has a strong position in the discounting and purchase of receivables in the region.
HSBC is the market leader in renminbi services. Its position as the largest foreign bank in China gives HSBC unique insight into the dynamics of this market. HSBC says the renminbi could become fully convertible as early as 2017. Meanwhile, HSBC is able to settle renminbi trade transactions onshore via Shanghai, or offshore via Hong Kong.
HSBC hosted 30 large Indian corporations at its Global Connections conference in the UK in September 2014. This was part of the bank’s UK-India trade corridor, an initiative introduced earlier last year.
In Asia, HSBC’s supply chain finance service is delivered by a specialist team in the bank’s Hong Kong office, which prepares documentary credits for issuance by its local offices in Vietnam, South Korea, China and elsewhere. HSBC handles transactions across a broad range of industries and deal types.
In its latest trade forecast, HSBC says global merchandise trade is projected to more than triple by 2030, as companies capitalize on the increasing productivity and growing consumer wealth in emerging markets. China is expected to increase its overseas shipments five-fold as it strengthens its commercial ties to emerging Asia, the Middle East and North Africa.
MIDDLE EAST: Arab Bank
With its extensive network in the Middle East and North Africa and teams of experts around the globe, Arab Bank provides added value in meeting its customers’ trade finance needs. Altogether, the Jordan-based bank is present in 30 countries and has a network of 600 branches, including such niche markets as Yemen and Palestine.
Arab Bank’s online trade finance and cash management corporate banking solutions enable clients to conduct their international trade transactions efficiently. The bank also has the local expertise that derives from its historical presence of 85 years in the MENA region and that offers an added level of security.
The bank maintains close relationships with its customers, offering key strategic products and services, as well as customized solutions. Egypt is one of Arab Bank’s core markets, where it has been operating since 1947 and has an expanding network of 30 branches. In its home market of Jordan, Arab Bank’s 76 branches blanket the country. In Lebanon, where it has been present since 1944, the bank has 11 branches, and in Palestine it has 26 branches.
Arab Bank prices its services competitively, taking into account the country risk of each country where it operates, as well as its clients’ overall transaction business, including cash management.
Ecobank is the leading pan-African banking group, with a presence in 36 countries on the continent. Last May, Ecobank and the African Development Bank signed a $200 million trade finance accord. The agreement includes $100 million for a risk-sharing facility to increase Ecobank’s capacity to confirm trade instruments issued by banks in Africa. The other $100 million is a loan to Ecobank to provide trade finance to corporations and small and medium enterprises in Africa.
Ecobank offers unique intra-African trade solutions with efficient transaction processing, settlement, financing and risk mitigation. It also provides credit enhancement from export credit agencies and multilaterals, such as the International Finance Corporation. And
EBI, Ecobank’s wholesale bank in Paris, confirms letters of credit to beneficiaries, enabling an end-to-end solution for the group. EBI has correspondent banking relationships with financial institutions worldwide. It offers structured trade finance and supply chain finance. EBI has representative offices in Dubai, London and Beijing.
Qatar National Bank became Ecobank’s largest shareholder in September 2014, after increasing its stake to 23.5%. Previously, the largest shareholder in Ecobank was South Africa’s Public Investment Corporation, with a 20% holding.