Supply chain finance is dominated by large global banks, yet developing regions are nurturing some challengers, and growing complexity is bringing nonbank investors into the picture.
Citi has more than 15 years of experience in SCF and hosts SCF programs for a number of leading corporate names in North America across the aerospace, pharmaceutical and retail sectors. With its focus on supplier acquisition and engagement, which is essential for the success of SCF programs, the bank has supplier-acquisition teams based in New York as well as elsewhere. Clients in North America also benefit from the bank’s global expertise in arranging programs and its ability to draw upon a network of investors to fund SCF assets.
The Spanish market is one of the most developed markets for SCF solutions. The terms “confirming” or “reverse factoring” are used to describe the solutions offered by Spain’s BBVA, which has more than 20 years’ experience of offering this product. The bank runs more than 2,400 SCF programs and has active client-buyers located in Austria, Belgium, Cyprus, Denmark, France, Germany, Greece, Ireland, Italy, Lichtenstein and Luxembourg. BBVA provides a dedicated website for suppliers, and there is no need to open an account with the bank in order to participate. BBVA focuses on serving not only large suppliers but also small and medium-sized companies that are most in need of financing.
CENTRAL AND EASTERN EUROPE
In Central and Eastern Europe, most of ING’s supply chain finance deals encompass markets such as Poland, Hungary, Turkey and Romania. SCF is part of the bank’s Working Capital Solutions Group, which was established in 2012. It has developed pan-European SCF programs and onboarded 500 suppliers, in countries such as Poland, for transportation company TNT. ING also seeks to differentiate itself in the marketplace by bringing in third-party funders (both banks and nonbanks). ING has developed a Cloud-based tool to expedite the supplier-onboarding process.
Danske Bank has a number of domestic SCF programs implemented in the Nordics, a portion of which also include multicountry/multicurrency programs. With supplier adoption being key to the success of any SCF program, Danske Bank focuses on lowering the barriers to entry for suppliers and minimizing the changes they need to make to their existing practices. There are very few technical requirements for suppliers to participate in the SCF program. The current invoice process remains unchanged. Quantitative analysis and scoring of individual suppliers is used to optimize the onboarding process. A supplier can view all of its approved invoices in the SCF module in Danske Bank’s Web-based Business Online. The supplier can either cherry-pick which invoices to discount or opt for automatic discounting.
The Spanish bank has offered confirming or SCF programs based on reverse factoring (approved payables) for more than 20 years in the Latin American region. It plays a key role in providing structured financing facilities for airlines in the region, to help finance their fleet acquisition programs.
Citi’s Caribbean customers benefit from a globally consistent supplier platform, which leverages the bank’s online technology, CitiDirect BE, providing access to a wide range of treasury and trade solutions. It also boasts an on-the-ground footprint in several countries throughout the region to support clients’ trade and supply chain finance needs.
DBS offers SCF across all of the core markets in which it operates in Asia (Singapore, India, Indonesia, China, Hong Kong and Taiwan). DBS leverages its Asian connectivity to help clients roll out SCF programs. The bank provides accounts receivable purchase and buyer finance as well as supplier finance based on payables. It also provides a dealer finance program, for reaching further into a company’s tier of suppliers. The bank boasts multiple live domestic programs, as well as cross-border deals implemented across the Asia-Pacific region.
Based on its newly launched “banking the ecosystem” approach, Standard Chartered maintains that it is able to better service the working capital needs of buyers and suppliers and their networks of vendors and distributors in 15 markets in Africa where the bank boasts a direct presence. The bank boasts a fully automated Vendor PrePay platform in East and West Africa, and many other parts of the continent, to support its clients. Vendor PrePay enables small and medium-sized suppliers to leverage a large company’s existing relationship with Standard Chartered Bank to access more-affordable financing, while ensuring prompt settlement of invoices. In 2016, the bank won new SCF mandates in Ghana, Nigeria, South Africa and Kenya.
Abu Dhabi Commercial Bank
In addition to its trade finance business, ADCB provides invoice-based financing. As part of its open-account trade portfolio, the bank provides invoice-discounting services that cover preshipment and postshipment on both purchase and sales for the bank’s corporate and commercial clients. ADCB says its invoice-discount- management portfolio has experienced consistent growth of 25% over the last two years.