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From Global Trade Review (GTR) | By Finbarr BerminghamFrench bank BNP Paribas has made a series of senior appointments to its transaction banking team in Asia Pacific. Mahesh Kini (pictured) joins as head of cash management for the region. He moves from Deutsche Bank, where he was most recently head of global transaction banking for China. During his time with the German bank he also held the roles of head of corporate cash management for Greater China and head of cash management for corporates, Asia. Kini joined Deutsche Bank from HSBC in 2007 and has also worked for ABN Amro, Bank of America and HDFC Bank in India. He is based in Singapore and reports to Chye Kin Wee, head of transaction banking for Asia Pacific. Zoran Lozevski is now BNP Paribas’ head of global trade solutions, Asia Pacific, also based in Singapore. He was most recently head of transaction banking for Australia and New Zealand for the bank. He joined BNP Paribas in 2007 from George Weston Foods Group. He is replaced in Australia by Michael Reid, who joins the bank from Citi and is based in Sydney. Louise Zhang has been named head of transaction banking for China, based in Shanghai. She joins from Deutsche Bank, where she spent 11 years, most recently as deputy general manager for the Shanghai branch, and head of cash products for the Greater China region. Zhang previously worked for HSBC in Hong Kong and Shanghai. She reports to Timothy Lee, who is the new head of transaction banking for Greater China. This role is based in Hong Kong. Lee will be responsible for connecting the bank’s China business with the rest of the Asia Pacific region. He has worked for BNP Paribas for five years, and joined from JP Morgan. Lee has also worked for HSBC, Citi and Deutsche Bank. “We are pleased to welcome so many senior hires to our existing, deep pool of talent. Their extensive experience will strengthen our position as a leading transaction banking business in the Asia Pacific region,” says Chye Kin Wee. The post BNP Paribas reshuffles Asia transaction banking team appeared first on Global Trade Review (GTR).
From Global Trade Review (GTR) | By Finbarr BerminghamDanish export credit agency (ECA) EKF has frozen all new guarantees to Turkey, as concerns about the country’s economic health continue to mount. The Turkish lira has lost more than 45% of its value this year and continued its plunge this week amid a growing geopolitical storm between Turkey and the US. There are widespread fears that other emerging markets will get dragged into the crisis, including South and Southeast Asian nations and parts of Latin America. Commercial lenders across Europe are watching the situation closely, especially those with high levels of exposure to the Turkish economy. “There are some European banks that are exposed to Turkey – BBVA, UniCredit, BNP Paribas – but these are strong, very large banks that may see a negative impact on their profits from their Turkish operating areas, but won’t face fundamental problems,” IHS Markit’s principal economist Andrew Birch tells GTR. Despite this, BBVA shares plunged 5.7% last Friday, BNP Paribas fell 4.4%, with UniCredit stock losing 6.4%. Turkey accounted for 14% of BBVA’s total profit in the first half of the year, Reuters reports. Development banks such as the European Bank for Reconstruction and Development (EBRD) and the European Investment Bank (EIB) are also lenders who have large exposure to Turkey, and both of these could face problems with their outstanding loans in the country, Birch says. Turkey is one of EKF’s largest markets and the ECA regularly funds projects there that use Danish exports. It has financed more than 15 wind projects in Turkey over the past 10 years, including the US$100mn Balabanli windfarm last year, co-funded with UniCredit. Lynge Gørtz Smestad, senior analyst at EKF, tells GTR that the agency is “not that concerned” about that existing debt because “we mainly have bank risk on our books”. “Our assessment is that in the long run, the Turkish financial sector is pretty healthy. It’s well-capitalised and regulated. So I think our counterparties in Turkey are among the best, but of course we’re aware of the situation because it is a big market for EKF,” he says. Should there be a rate hike or other government intervention to stabilise the lira, EKF may reassess the freeze, but Smestad says that EKF and “all the banks around the world” will be watching the situation carefully. There are huge concerns about Turkey’s domestic banking sector too. The likely loss of foreign investment inflows is likely to undermine its banks’ trade, project and export finance businesses. “In the first quarter of 2018, Turkish banks had outstanding foreign liabilities equivalent to 23% of total funding, or 230% of official foreign exchange reserves,” Birch says. Turkish banks regularly tap international debt markets as a means of funding their trade lending. Indeed, annual refinancings of Turkish bank debt are viewed as calendar events and attract lenders from around the world. In March, for instance, Akbank refinanced US$1.2bn-worth of debt with 39 banks from around the world. “Despite the domestic volatility, the facilities achieved a strong global response with the participation of 38 international banks across North America, Western Europe, Asia and the Middle East which is a testament to Akbank’s strong fundamentals and successes through volatile markets, as well as the resilience of the Turkish financial sector,” reads a bank statement accompanying the refinancing announcement. In May, meanwhile, Yapi Kredi refinanced US$1.5bn-worth of debt, with 48 banks from 19 countries joining the syndicate, and eight new lenders this year. It’s been reported that some domestic banks are selling their project finance loans to lenders from the US and China in a bid to free up their balance sheet for domestic lending, on the request of the Turkish government. For now, the unrest in the Turkish economy shows no sign of abating. Today (August 15) the Turkish government announced that it was raising tariffs on US imports including cars (120%), alcohol (140%) and tobacco (60%). Turkish President Recep Tayyip Erdogan has encouraged Turkish people to boycott US electrical goods, including iPhones, and to replace them with Turkish-made products. He has accused US President Donald Trump of “economic warfare” over the US’ punitive tariffs on Turkish metals. Trump doubled tariffs on Turkish aluminium and steel last week after Turkey refused to release US citizen Andrew Brunson, a pastor who has been held in Turkey since 2016. The US has also sanctioned Turkish government officials in a bid to force the release of Brunson, who was arrested on charges of high espionage. The post Danish government freezes new guarantees to Turkey over lira crisis appeared first on Global Trade Review (GTR).
From Global Trade Review (GTR) | By Finbarr BerminghamWells Fargo has completed financing packages for two solar power generation facilities in the US. The first is a US$85mn project financing deal for a large solar project near Fresno in California. The borrower is Sempra Renewables and the funds will help build a 200MW facility in the north of the state, comprising four solar farms, with four separate offtake agreements. The Sempra Great Valley solar project, as the facility is known, will begin operating commercially in May 2019 and will produce enough electricity to power 90,000 homes. The four offtake agreements in place are with Marin Clean Energy (100MW), Sacramento Municipal Utility District (60MW), Pacific Gas & Electric (20MW) and Southern California Edison (20MW). In Florida, meanwhile, the bank has committed US$35mn to the FL Solar 5 project in Orange County. The borrower in this case is Origis Energy, a Miami-based solar energy company. The project will complete by December 2018 and will transmit electricity to Reedy Creek Improvement District of Orange, the offtaker. Both projects are in line with Wells Fargo’s commitment to invest US$200bn in sustainability by 2030, announced in April this year. The plan states that 50% will go into renewable energy, clean technologies, sustainable transport and green bonds. This follows on from a previous goal, set in 2012, of investing US$30bn in clean technologies by 2020. A host of commercial banks have made similar commitments in the wake of the Paris Agreement on Climate Change, which was signed in 2015 and which aims to keep the global temperature to below 2 degrees Celsius. Speaking upon signing the Florida deal, Wells Fargo’s head of independent power and infrastructure, Alok Garg, says Origis Energy is at “the forefront of creating a greener energy future. He adds: “Wells Fargo is proud to be a part of impactful projects like FL Solar 5 that help our communities accelerate the transition to a lower carbon economy.” The post Wells Fargo funds two US solar projects appeared first on Global Trade Review (GTR).
From Global Trade Review (GTR) | By Finbarr BerminghamAgricultural commodity giant Wilmar has renegotiated an existing revolving credit facility (RCF) with lender DBS, so that the terms may be reduced if it hits sustainability targets. Wilmar will now pay less interest on its two-year US$100mn facility if it reaches performance indicators on a range of issues, from biodiversity to greenhouse gas reduction and renewable energy. This is the latest sustainability-linked loan in Asia, following similar agreements reached this year. The market is nascent, but DBS says it has fielded enquiries on such facilities from both Asian and global commodity players. “We welcome clients to discuss the possibility with us, and we also reach out to clients committed to the sustainability agenda to consider different green financial products, such as green loans, green bonds and ESG (environmental, social, governance)-linked loans,” Yulanda Chung, DBS’ head of sustainability, tells GTR. She refused to say how much of a pipeline there is for this type of funding, but said that “it should not be used as a greenwashing attempt”. The bank will only consider working with companies that have “ambitious yet achievable targets” pertaining to ESG. Further details on the loan’s terms have not been disclosed, but the pre-set performance indicators have been established by Sustainalytics, a Dutch company which has been involved in a series of sustainability-linked loans over the past year. In November 2017, ING restructured a portion of a US$150mn loan to Wilmar. Again, this will see the company benefit from more favourable terms should it hit ESG targets. Wilmar was involved with DBS’ Singaporean rival OCBC in June this year on a US$200mn sustainability-linked RCF, also assessed annually by Sustainalytics. Asia’s first sustainability-linked club loan was closed in March, which DBS was also involved in. Olam was the borrower on this occasion, with 15 lenders contributing equal parts to a US$500mn facility. Further deals are expected before the end of 2018, although most involved in the sector are keen to impress the very early stages at which the market is currently stood. The post DBS rejigs Wilmar loan in Asia’s latest sustainability-linked loan appeared first on Global Trade Review (GTR).
From Global Trade Review (GTR) | By Finbarr BerminghamHans-Dieter Holtzmann has been named chief country officer and head of global transaction banking for Deutsche Bank, Vietnam. Holtzmann has been with Deutsche Bank for more than 20 years, most recently as head of public sector for Germany. In this role he covered federal, state and municipal-level clients. Before this, he was an economic advisor to former German chancellor Helmut Kohl. He now reports to Werner Steinemueller, Asia Pacific head of Deutsche and Kaushik Shaparia, head of global subsidiary coverage for foreign exchange and corporate cash management in Asia. The bank has been in Vietnam since 1992 and employs 70 staff. Holtzmann will be responsible for leading and growing Deutsche Bank’s business there, including “cash management, trade finance and securities services, servicing both global and local clients”, Shaparia says. Steinemueller adds that Vietnam is “one of our key markets in Southeast Asia” and that “last year we significantly increased our capital base in this market”. “Our Vietnam franchise has shown profitable growth and we are excited about the country’s outlook,” he says. The last few years have been a period of relative flux for Deutsche Bank’s Asia transaction banking business. In November 2017, the bank lost Lisa Robins as head of global transaction banking for Asia Pacific. Robins joined Standard Chartered in a similar role two months later. In July of that year, Shivkumar Seerapu left his role as regional head of transaction banking fro the region, to join Lloyds Bank. He was replaced by Atul Jain in a newly-created role, head of trade finance and trade flow, Asia Pacific, reporting to global head of trade finance, Daniel Schmand. The post Deutsche Bank appoints new Vietnam country head appeared first on Global Trade Review (GTR).
From Global Trade Review (GTR) | By Finbarr BerminghamThe insurance arm of the World Bank Group has issued guarantees for commercial loans to projects in Myanmar and Pakistan. In Myanmar, the Multilateral Investment Guarantee Agency (Miga) is to cover US$114.76mn-worth of loans from the Industrial and Commercial Bank of China (ICBC) to Myanmar Fibre Optic Communication Network. The funds will cover the installation and maintenance of 4,000km of fibre optic cable through six states and eight cities in the country. It supports a government aim of connecting 90% of Myanmar to a telecommunications network by 2020. Miga’s guarantee provides protection for 5.5 years against the risks of transfer restriction, expropriation, war and civil disturbances. The organisation previously issued a guarantee for a 4,500km cable network in January 2017. In Pakistan the agency is covering a US$66mn loan from Sojitz Corporation, a Japanese trading company, to Hyundai Nishat Motor, a joint venture between the Korean carmaker Hyundai and the Nishat Group, one of the largest conglomerates in Pakistan. The guarantee will support the construction, design and operation of a vehicle assembly plant in Lahore, which will produce three Hyundai-branded vehicles from 2020. With an annual production capacity of 30,000 vehicles, the plant will source supplies such as tyres, rubber parts and batteries from local vendors. Again, the risks covered by Miga are transfer restriction, expropriation, war and civil disturbances – this time for 15 years. The package will help diversify Pakistan’s automotive industry, which is at this point dominated by Japanese companies. Sojitz, the lender, will operate a number of dealerships in Pakistan. The flagship dealership will be in Lahore, with a number of franchises to be opened around the country. The company has committed to investing US$136.5mn in Pakistan’s automotive sector. “This project will help strengthen Pakistan’s automotive industry, reducing vehicle shortages, improving safety standards, and increasing the choices consumers will have available to them,” says Keiko Honda, CEO and executive vice-president of Miga. The post World Bank covers loans to Myanmar and Pakistan appeared first on Global Trade Review (GTR).
From Global Trade Review (GTR) | By Finbarr BerminghamFintech company TradeIX has opened a Singapore office, making two senior appointments in the city state. Leon Scott (pictured) joins as head of Asia Pacific operations, while Eugene Buckley has been named business development executive for the region. Buckley joins from Standard Chartered, where he was head of trade finance innovation and alliances. He has previously worked as an independent consultant and for PrimeRevenue, and is responsible for growing the client base. Scott joins directly from PrimeRevenue, where he was a director for global capital markets. He has also worked for HSBC and DHL. Scott will oversee the delivery of all the company’s solutions and projects and is charged with growing its trade finance relationship base. TradeIX is an open blockchain platform focusing on trade finance. It’s Singapore office is part of a global development plan, the company says in a statement. It is among the most high profile of fintech disruptors in the trade finance sector. “Asia Pacific is one of the fastest growing regions in trade finance and our presence in Singapore is crucial for our current and future bank clients. The strategy of TradeIX is to continue our focus on expanding our client relationships in Asia Pacific,” Buckley says. Scott adds: “We anticipate strong growth of our team over the coming year, allowing us to serve more clients while covering a larger part of the trade finance market.” The post TradeIX opens Singapore office appeared first on Global Trade Review (GTR).
From Global Trade Review (GTR) | By Finbarr BerminghamThe majority of Asia’s top 1,000 companies are unconvinced that digital technologies such as blockchain will improve their trade finance experience. 54% of those polled in exclusive research conducted on behalf of GTR said they were either unsure whether it would translate into a better user experience, or that it would definitely not do so. This compares with 46% of respondents who think that such technology will improve the trade finance products they use. The feedback comes as many banks in the region aggressively pursue blockchain projects. HSBC and ING recently completed their maiden trade finance deal on the ledger, out of Hong Kong. Last week, Commonwealth Bank of Australia also completed a trade deal with the help of blockchain technology. The research, which was undertaken by East & Partners, polled 1,000 companies in 10 countries across Asia, namely: China, Hong Kong, India, Indonesia, Malaysia, the Philippines, Singapore, South Korea, Taiwan and Thailand. Support of digital products is strongest in China, Hong Kong and Singapore. This is unsurprising given that these are among the hotbeds of fintech innovation in the region. In countries such as Indonesia, the Philippines and Thailand, appetite for such products is lower. There are many examples of innovative banks and companies in these countries. In Thailand, 14 banks are developing a trade finance platform using blockchain technology. In the Philippines, meanwhile, invoice financing platform Acudeen is working with fintech company Stellar to build a blockchain layer that will connect its marketplaces across multiple geographies. However, in general, it is perceived that the technology is being pursued more vigorously in more mature financial markets, where regulators are seen to be driving many of the initiatives. “Engagement with digitised solutions tends to be driven by multinational companies in Singapore, Hong Kong and China. It’s almost a measure of maturity and sophistication,” says Paul Dowling, principal analyst at East & Partners. Furthermore, those companies that are interested in digitising their trade finance experience are expecting to be led by their banks. “That’s the go-to place for these corporates. They’re not necessarily building their own stuff, piloting their own digitised solutions, they’re looking for their banks to deliver,” Dowling says. A director at a Singapore-based commodity producer tells GTR that the company is extremely interested in – and well-versed on – developments with blockchain technology. However it is not a strategy they are pursuing independently. “We don’t pursue digitisation on our own. We pursue it with our banking partners as well as some of our key customers, and some of the other participants within our supply chain,” says the source, who prefers to remain unnamed. Other commodity players have independently staked out blockchain. Trafigura, for example, enlisted French bank Natixis last year to test the technology for use in the oil market. Steve Ehrlich, chief operating officer at the Wall Street Blockchain Alliance, says that the needle of sentiment will move towards blockchain and other forms of disruptive technology as education as to its benefits also grows. Ehrlich claims that many corporates “cannot define a blockchain, let alone articulate how it could impact their everyday financing activities”. He says that the association with bitcoin does not do the technology any favours, given the tumultuous year the cryptocurrency has had. “With all of this in mind, it is perfectly reasonable that a significant percentage of respondents are waiting to be convinced of the technology’s utility and efficacy,” he tells GTR. He adds: “From my point of view, one that appreciates and is supportive of blockchain-based trade finance and supply chain initiatives, this is not unreasonable. Looking at the 46% who are confident about the benefits of blockchain, it is good to see this level of optimism, though I’d imagine that they are looking for some of the same progress indicators as the pessimists.” The post Most Asian companies unconvinced by blockchain’s use in trade finance appeared first on Global Trade Review (GTR).
From Global Trade Review (GTR) | By Finbarr BerminghamHSBC’s chief executive John Flint says the trade war between the US and China is yet to affect the bank’s trade business in Asia. Speaking on an earnings call after the bank announced a 4.6% rise in net profit for the first half of 2018, Flint said that the forceful rhetoric could do more harm that the trade spat itself. China and the US have been engaged in a tit-for-tat tariff battle for months. In the latest escalation on Tuesday, the US announced that it will collect tariffs on a further US$16bn of Chinese goods from August 23. This follows existing tariffs on US$34bn, introduced in July, taking the cumulative total to US$50bn-worth of Chinese goods. While US President Donald Trump says the “tariffs are working big time”, Flint shrugged off their material impact to date. “We haven’t yet seen any meaningful impact on our customer base either through activity or risk profile. It’s too early to know if that will make an impact. When we think about the trade wars, I think from my perspective I am more concerned with the trade rhetoric damaging investor sentiment, investor confidence and sending markets lower. I think that could have more impact on our wealth business,” he said. Trade finance revenues were up for the first half of the year, while the vast majority of the bank’s profitability is coming in Asia. Of the US$10.7bn total profit before tax, US$9.4bn came from Asia. Despite that, higher than expected costs meant that the profit missed consensus predictions. Chief among the expenditure hikes were technological investments, with the bank singling out its recent blockchain experiments in Hong Kong as one area of progress. Other banks in the region have voiced their concerns about the potential of the trade war to eat into profitability. Speaking this week as OCBC announced a 16% hike in net profitability for the second quarter, chief executive Samuel Tsien said that “the concern is not only trade itself, it is actually a shrinkage of the economies that we would see in the event that it is carried out to the extent of the rhetoric”. DBS CEO, Piyush Gupta, upon announcing 20% rise in profits, described the trade war as a “psychological challenge”. He told CNBC: “The fact that people are more uncertain about where this is going creates a degree of lower confidence and that results, whether it’s the credit spreads or the stock market, in animal spirits in the region coming off.” Meanwhile, China’s export data for the month of July beat analysts’ forecasts, posting 12.2% growth. “Shipments to the US did weaken slightly, which hints at some impact from the tariffs. Equally though, this may reflect a broader softening in economic momentum among developed economies given that exports to the EU edged down too,” says Julian Evans-Pritchard, China economist at Capital Economics, in a note. The post HSBC chief shrugs off trade war headwinds as half-year profits rise appeared first on Global Trade Review (GTR).
From Global Trade Review (GTR) | By Finbarr BerminghamA Singapore-based company has gone live with a solution that allows trade documents to be registered and exchanged securely on blockchain. Focusing initially on Asia, the founders are positioning the platform to play a role in China’s Belt and Road Initiative (BRI). The Open Trade Blockchain (OTB), launched by Global eTrade Services (GeTS), allows any entity in the trade cycle – be it the buyer, seller, shipper or freight forwarder – to register their documentation on the platform. Other parties involved in the trade can subsequently verify that the documentation is legitimate through an automated matching process. Powered by blockchain technology, the system is designed to deal with real-world events, such as an exporter’s email account being hacked or commercial invoices within an email being fraudulently changed. Documents being on the platform include certificates of origin, commercial invoices, shipping and freight-forwarding documents. Users can drag and drop the documents onto the OTB, where other permissioned players in the trade cycle can access them. For parties with large volumes of documentation, APIs are available so that they can automatically extract documents stored on internal systems onto the OTB. Already, around 100,000 documents have been processed on the platform, mostly using GeTS’ existing user base. The firm has also partnered with a number of organisations and agencies, whose clients are now using the platform as well. As well as referring their own clients to use the system, these organisations can also make use of the OTB’s web service APIs to develop their own interoperable blockchain solutions. GeTS’ partners host nodes on the platform, which was developed by GeTS using Multichain, a permissioned blockchain framework that the company’s CEO, Chong Kok Keong, says was chosen because of its security and “ability to manage the extraction of data points in huge volume”. The “digital silk road” The geography of partners was chosen with an eye on China’s BRI. “With OTB linking China to the rest of the region, it will provide a strategic edge to businesses wanting to participate in China’s BRI initiatives as it offers greater connectivity with the country’s digital Silk Road,” a GeTS statement reads. The platform’s current user base of more than 4,000, which includes customers of GeTS’ existing solutions (such as export and import management, trade processing, regulatory and compliance software), as well as users of its partners’ services, can use the OTB for free. The company will begin to charge for services bolted onto the top of this “early building block” further down the line. No banks have signed up as yet, but Chong says discussions are ongoing. There are ambitions to host transactional documents on the OTB in the future. GeTS launched one year ago and is a subsidiary of the more established fintech company CrimsonLogic. Singapore has been a hive of blockchain related activity in recent months, as the Monetary Authority of Singapore (MAS) continues to work towards the launch of the Global Trade Connectivity Network (GTCN – a trade finance solution built on blockchain with the Hong Kong Monetary Authority) early next year. In May, the Singapore International Chamber of Commerce announced plans to move electronic certificates of origin (eCOs) onto a blockchain-based platform in a bid to improve transparency and security. In the same month, Arkratos, a Singapore company linked to trading house Rhodium Resources, launched a commodity trading platform built with blockchain technology. Earlier in the year, Pacific International Lines (PIL), PSA International (formerly the Singapore port authority) and IBM Singapore successfully tested a blockchain platform on a supply chain network between Singapore and China. This latest effort by GeTS can be viewed in line with MAS’ top-down strategy of connecting other parts of Asia to the blockchain activity in the city state. “Partnering with GeTS from Singapore on its OTB makes good business sense,” says Xu Xucheng, general manager at Suzhou Cross e-Commerce. “We are already seeing an increase in cross-border trade volumes, and with GeTS’ blockchain solution enhancing the security of the trade documents, it will definitely help to strengthen Suzhou’s position as an e-Commerce hub for China.” The post Singapore tech firm launches blockchain service for Belt and Road appeared first on Global Trade Review (GTR).
From Global Trade Review (GTR) | By Finbarr BerminghamThe first fully-integrated petrochemical complex in Vietnam has moved one step closer to fruition after a syndicate of lenders agreed to provide US$3.2bn in funding. The borrower is Siam Cement Group (SCG), the largest building material company in Thailand and in Southeast Asia. It is also Thailand’s second-largest company. Six lenders are involved in the package: Bangkok Bank, Export-Import Bank of Thailand (Thailand Exim), Krungthai Bank, Mizuho Bank, Siam Commercial Bank and SMBC. The loan has a tenor of 14 years, with SMBC acting as the financial advisor. Long Son Petrochemicals plant will be built in Vietnam’s Vunt Tau province, about 100km from Ho Chi Minh City. Construction is due to start in the third quarter of 2018, with the plant expected to produce 2.3 million tonnes of olefin – an unsaturated hydrocarbon used in wallpaper, carpeting, ropes and vehicle interiors – each year. The project requires total investment of US$5.4bn and is described by SCG’s president, Roongrote Rangsiyopash, as the company’s “flagship investment”. He adds: “This venture will increase competitive advantages of SCG’s chemicals business in Southeast Asia. Furthermore, the project is equipped with world-class advanced technologies which allow for high flexibility to utilise raw materials resulting in increased competitive advantage. The project also leverages digital technologies to create innovations for better products, services and solutions for customers.” The project has been in the works for years and SCG became the sole owner in May when it acquired Vietnam National Oil and Gas Group (PetroVietnam)’s stake in Long Son Petrochemical. Initially it was licensed in 2008 with an estimated required investment of US$3.7bn, which has grown significantly over the past decade. Given the importance of SCG and its vast array of subsidiaries to the Thai economy, the involvement of Thailand Exim is no surprise. It comes two months after the agency announced plans to open a representative office in Vietnam, with a view to expanding Thai exports to its Asean counterpart. “Vietnam is certainly one of the promising markets in the Cambodia, Laos, Myanmar and Vietnam (CLMV) region for Thai entrepreneurs,” said Thai Exim president Pisit Serewiwattana on a recent visit to Hanoi. The post Syndicate funds landmark Vietnamese petrochemical complex appeared first on Global Trade Review (GTR).
From Global Trade Review (GTR) | By Finbarr BerminghamGerman finance and shipbuilders are to deliver a new cruise ship to the world’s largest leisure travel company, Carnival Corporation. The Miami, Florida-based company has borrowed €786mn, with KfW-Ipex Bank, a German development finance institution, structuring and financing the entire package. However, KfW-Ipex plans to syndicate up to 80% of the total to the commercial banking sector, it says in a statement. The 12-year loan (from date of delivery) is backed by export credit insurance (also known as “Hermes cover”) by the German government. The ship will be built by Meyer Werft, a leading cruise ship manufacturer, in Papenburg, Germany. It will have a low-emission dual-fuel engine, using LNG and marine diesel, however it will be primarily fueled by LNG. Delivery date is May 2022 and the ship will be able to accommodate 5,200 guests. This is the latest in a long line of financings KfW-Ipex has arranged for the cruise ship sector, following a huge €3.2bn package it organised last year for another Florida-based liner, Royal Caribbean Cruises. This previous deal saw two reduced-emission cruise ships delivered, in the development bank’s largest ever structuring. It contributed €686mn from its own book, with the rest syndicated to Bayern LB, BBVA, BNP Paribas, Commerzbank, DZ Bank, HSBC, JP Morgan and SMBC. The latest deal will support a large SME manufacturing base in Germany, which has long provided parts in the shipbuilding supply chain. “We are enabling our long-standing customer Carnival Corporation, which placed the order with Meyer Werft Papenburg, one of the world’s leading cruise ship builders, to build a new flagship,” says KfW-Ipex board member, Andreas Ufer. The post German bank provides loan for new US cruise ship appeared first on Global Trade Review (GTR).
From Global Trade Review (GTR) | By Finbarr BerminghamOnDeck Australia, an SME lender, has closed a A$75mn asset-backed revolving credit facility (RCF) with the US branch of Credit Suisse. The capital will refinance its current loan book in Australia and fund future originations. It will mature in June 2020. A subsidiary of OnDeck Australia will be issued loans from the RCF. In turn, it will then purchase small business loans from OnDeck Australia. This revolving pool of SME loans will act as collateral for the RCF. OnDeck Australia is a subsidiary of the US company OnDeck Capital. The parent company has also borrowed from Credit Suisse in the past: in December 2016, it closed a similarly structured US$200mn RCF with the bank. Meanwhile, OnDeck Canada has recently opened a C$50mn RCF with Crédit Agricole, half committed and half available at the discretion of the lender. According to Cameron Poolman, OnDeck Australia CEO, the online SME lending market in Australia is growing faster than its US equivalent did at a similar stage of development. “We believe there will be a flight to trusted and quality providers. We expect to see fewer, stronger players as the Australian market consolidates over time. OnDeck Australia aims to be part of that market,” he says. The market has long been dominated by the big four banks – ANZ, Commonwealth Bank of Australia, National Australia Bank and Westpac. However, successive scandals have plagued the established players, including CBA’s damaging money laundering impropriety, which saw it hit with a record fine this year. Challenger banks and non-banks have been appearing, hoping to take advantage of a dissatisfied small business base. Judo Capital, a new bank with an ambition of servicing Australia’s underbanked SME sector, launched in March. In a statement, co-founder Joseph Healy said it was avoiding “increasingly centralised functions and cookie-cutter lending policies”. Other banks are also making inroads to the big four’s slice of the pie. Recent research shows that HSBC recorded a 3.5% growth in market share last year, while Bank of Queensland recorded an 11.1% growth in market share, albeit from a low base. The study from East & Partners showed that the average wallet share allocated to primary trade finance providers fell last year by 4% per year to 67.2% due to customer dissatisfaction with product and service lines, namely trade loans, e-trade solutions, value for money, pricing competitiveness and global representation. The post SME lender OnDeck Australia secures credit facility from Credit Suisse appeared first on Global Trade Review (GTR).
From Global Trade Review (GTR) | By Finbarr BerminghamMore than half of Asian corporates are considering switching to non-bank providers for part of their payments services. Furthermore, 19% are considering shifting their payment services to the non-bank sector, as the appeal of fast, digital settlements continues to grow among companies in the region. Research from East & Partners, revealed at a briefing in Hong Kong today, shows that in other areas, though, companies in Asia are way behind the technological curve. In the case of cybersecurity, for instance, more than one-fifth have experienced breaches to their systems over the past 12 months. But 40% were unaware if they have even been breached, a figure described by principal analyst Paul Dowling as “astounding”. The overall picture painted was a dichotomous one. Asia is often presented as a society in which technology has great penetration, where customers are comfortable with digital products and where much of the innovation takes place. The research suggests that big business is not averse to using technology to improve their finances. The vast majority say their banking has not been negatively affected by digitisation. One-third expect to start using biometrics imminently as a means of making payments more secure. At the same time, large corporations continue to drag their heels – almost 100% of the big companies surveyed by East & Partners still settle payments by cheque. Less than 20%, on the other hand, use mobile payments. Telegraphic transfers are used across the board. All of this makes the noise around a “blockchain revolution” appear fanciful. Banks may well be pursuing the technology’s advancement with vigour, but companies are seemingly less enthused. Belt and Road Another hot topic in Asian trade finance is China’s giant Belt and Road Initiative (BRI), which will attempt to implement swathes of trade infrastructure along the old Silk Road land and maritime routes. For many outside of China, the much-hyped programme has been a damp squib to date: most of the projects has been funded by Chinese banks with Chinese contractors and workers building most of the infrastructure under the BRI umbrella to date. However, Asian corporates view BRI “as an enormous opportunity and potential for business”. Unsurprisingly, given that the cumulative trade volume across 71 designated BRI countries amounted to US$9.3tn last year (28% of global trade), many view it as an opportunity to grow their commerce. Naturally, they want their banks to help them fund this growth. Almost 80% of large companies surveyed by East & Partners are demanding trade finance solutions from their banks to help them capitalise on BRI. Cash management and forex solutions, which go hand in hand with trade finance, are also high on their list of priorities. However, within that, there’s a large subset of companies with knowledge gaps around what BRI actually is and what the opportunities might be (perhaps because the Chinese government is continually revamping and reviewing the scheme, to the extent that one trade finance banker quipped this week: “Everything is now BRI”). Knowledge is particularly low in markets such as Thailand, Indonesia, Malaysia, UAE and Vietnam – all key BRI target markets, where Chinese banks have been dispensing officials in a way to attain corporate buy-in to their projects. For Dowling, this presents an opportunity for trade finance banks to “take ownership of BRI” and to fill in some of the gaps their clients may have. This is particularly true for banks based in Hong Kong: companies who want to benefit from the trade growth spurred by BRI expect their banks to be based locally, with Hong Kong’s transparent regulatory system providing, for those surveyed, a mitigating factor to the perceived risk of doing business on a Chinese-government led initiative. The post Half of Asia’s companies want to switch to non-banks for payments appeared first on Global Trade Review (GTR).
From Global Trade Review (GTR) | By Finbarr BerminghamA shipment of almonds has been exported from Australia to Germany using a blockchain-based trade platform. Documentation for the trade of 17 tonnes of nuts was stored on an Ethereum-based private ledger built by the in-house blockchain lab at Commonwealth Bank of Australia (CBA), which funded the trade. The bank onboarded Olam Orchards, an agricultural exporter, Pacific National, a rail haulage, the port landlord of Melbourne, stevedore Patrick Terminals and shipping carrier OOCL Limited. The pilot, the bank says, is another step towards proving that blockchain can be successfully used to execute trade, provided the ecosystem is collaborating. The trade finance function was not conducted on blockchain. It was conducted in parallel, with the documentation subsequently digitised and moved onto the platform, Alex Toone, managing director for global commodities and trade at CBA, tells GTR. CBA was among the first movers towards blockchain in the trade finance space. In 2016, it worked with Wells Fargo to execute a cotton trade from Texas to China using Skuchain’s Brackets technology. The new shipment is viewed by the bank as a follow-up pilot to that Brighann Cotton deal, despite the shift to Ethereum and the fact that the trade finance process was done off-ledger. The bank also trialled the technology for use in an aluminium warehousing transaction in 2017. Nevertheless, Toone says that the industry is a long way from broader adoption of blockchain. “The industry is not able to have a quantum leap to blockchain, because we have industry standard documentation and processes we can’t just move away from. It’s going to be a path of learning for parties. We’ve got to engage with regulators and other participants in the broader supply chain if we’re to do transactions solely on the blockchain,” he says. Smart contracts and the internet of things (IoT) were also deployed on the almond export, which saw the nuts delivered to Hamburg from Sunraysia, in Victoria. The parties involved were able to view and track the shipment and its storage conditions such as temperature throughout, using IoT devices. “Trade inefficiency can be extremely detrimental to our business. It is vital that as an industry we look at emerging technology for ways to enhance the supply chain to develop a more transparent and efficient platform. This project has shown that through collaboration from all parts of the supply chain this can be achieved,” says Emma Roberts, supply chain manager at Olam Orchards Australia. Bill of lading, certificates of origin and other customs documents were uploaded and stored on the blockchain during the almond export, which helped improve “transparency and efficiency”. Indeed, in this instance the technology’s potential as a “track and trace” tool have been deployed, rather than its transactional capabilities. There is increased demand for higher provenance and greater traceability among commodity players in Australia. “Through the work over the last 12 to 18 months there’s more focus on provenance. In the future, the purchaser of the almonds will be able to see what the farm was, when they were harvested, how long it took to get to port, how long they spent on various ships, what route it took and so on. Whether that’s in the agricultural space or even the metals space, where people are focusing on whether aluminium was produced through clean power, be it hydroelectric or geothermal, we’re finding more use cases for blockchain to solve,” Toone says. Gerhard Ziems, chief financial officer at Pacific National, adds: “Since the expansion of globalisation, global supply chains have continued to become more complex. This project is unique as it looks to re-imagine how the supply chain communicates and shares information. Simple access to this information provides us with an ability to better utilise our assets and provide customers with better, more efficient services.” The post Australian agri exports go nuts for blockchain appeared first on Global Trade Review (GTR).
From Global Trade Review (GTR) | By Finbarr BerminghamClifford Capital, a Singapore government-backed infrastructure financier, has launched Asia’s first securitisation of project finance loans, sourced from five commercial banks. The portfolio, worth US$458mn, comprises 37 infrastructure loans, covering 30 projects spread across 16 Asian and Middle Eastern countries. They have been bundled into three notes and are to be listed on the Singapore Exchange. The notes were issued by Bayfront Infrastructure Capital, a company sponsored by Clifford Capital. The banks providing the loans are DBS, HSBC, MUFG, SMBC and Standard Chartered. The model was conceived by the Monetary Authority of Singapore (MAS) between 2015 and 2016, with Clifford Capital subsequently chosen to execute the transaction. Work on the deal began in 2017, with Moody’s required to rate each loan individually due to the fact that the project finance markets in these regions are unrated. This is essentially a new asset class. Clifford Capital CEO Clive Kerner tells GTR that the company has earmarked some assets which, for various reasons – such as concentration and stage of construction– were not suitable for the first transaction, but could be suitable in future issuances. In terms of pipeline, he adds that the size of the project finance markets in Asia and the Middle East, estimated to be up to US$40bn by Dealogic, give an indication as to the size of the asset pool the company can tap into. The projects are at a range of stages, with 75.6% being operational with “stable and predictable cash flows” and the remaining 24.4% at the advanced construction stage. More than one-third are covered by export credit agencies, insurers or multilateral financial institutions. They cover a range of sectors, with 33% coming in the conventional power and water industry, 2% in integrated LNG, 13% in renewables and 12% in metals and mining. The investors involved include insurance companies, asset managers, pension funds, endowment funds and bank treasuries, Kerner says. The majority of investors (65%) are Asian, but the 23% that comes from Europe is indicative of a growing trend across the trade and project finance space of western investors looking to pump capital into Asian markets. “These are investors that are currently not actively engaged in the project and infrastructure finance space. Each of the classes of notes were comfortably oversubscribed prior to pricing. We feel the deal marked a major milestone in helping to create a new asset class for these institutional investors,” he adds. Much is made of the trade finance gap in Asia Pacific, estimated to be around US$600bn by the Asian Development Bank (ADB). However, the same agency estimates the infrastructure finance deficit to be much more significant: the ADB estimates that by 2030, US$26tn needs to be invested in Asia’s infrastructure to keep pace with demand spurred by economic growth. This equates to US$1.7tn a year, a figure which could swell as the effects of climate change become more manifest. Clifford Capital’s strong financial backing is surely a draw for investors. The company’s shareholders include DBS, Standard Chartered, SMBC and Temasek – the sovereign wealth arm of the Singaporean government, which manages some S$308bn in assets. Indeed, the Singapore ministry of finance guarantees all of the company’s debt issuances. It has also been a significant lender in its own right. Last year, for example, it was part of a syndicate that lent US$409mn to Singapore utility company Sembcorp for a power plant in Bangladesh. However, the size of the Asian infrastructure market has also been attracting smaller players too. Boutique trade finance provider Bachmann & Welser announced plans to launch a US$2bn project finance fund targeting Asia, Africa and parts of the Middle East. At the time of the announcement, company director Jeremy Brown told GTR that they are looking at energy projects in Thailand and Vietnam. Commenting on the Clifford Capital securitisation, Alan Yeo, head of financial markets development at the MAS, says: “This transaction is a good example of how infrastructure can be developed as a mainstream, investible asset class to help crowd in institutional capital. It also showcases the role that Singapore can play as a full-service Asian infrastructure financing hub, by bringing together the right mix of industry expertise and networks.” The post Clifford Capital launches Asia’s first project finance securitisation appeared first on Global Trade Review (GTR).
From Global Trade Review (GTR) | By Finbarr BerminghamThe Hong Kong Monetary Authority (HKMA), the de facto central bank, has launched an open API framework for banks, and made its own open API available. The move brings open banking to the city, an initiative which was implemented into law in the UK earlier this year and is now gathering momentum around the word, enabling new players to challenge incumbents. Through the HKMA’s API, approved third parties will be able to access 130 sets of financial data. The regulator has also set commercial banks deadlines ranging from six to 15 months to make their own data available. The essence of open banking is that it gives customers the power to share their own banking data with other companies – be they payment firms, fintechs or alternative lenders – which for years has laid unused in banks’ ether. This information is stored in a virtual socket, into which third parties can plug, with the customer’s approval. The data can be extracted and used to provide services to rival or augment those of the banks. Some are suggesting that it may make less innovative banks completely redundant, particularly in a sector as old-fashioned as trade finance, where most processes are still paper-based and where the most incremental improvements are hailed as groundbreaking. “People are worrying about tiny innovations that make things slightly better, when actually the likes of Paypal, Google or Facebook are going to remove the problem entirely. It will boil down to a question: is trade finance a necessary service, or is it a fix, on a fix, on a fix that could be swept away entirely?” asks Louise Beaumont, the co-chair of open banking and payments at techUK, a lobby group for the technology industry in the UK. Speaking to GTR, Beaumont suggests that the HKMA’s initiative may open the door for tech titans to move into the trade finance space, providing services such as direct lending and invoice financing. It may also allow behemoths in sectors such as telecoms and energy to offer integrated services, creating an existential worry for banks which lack innovation and efficiency. “My sense of it is that if you’ve lost the ability to innovate so completely that you haven’t had an R&D budget for decades, you’ve lost those genetics – you’ve atrophied. If you are genetically engineered without imagination, and the skills you need to survive now and in the future are imagination, creativity and courage, you tell me which banks have that at a board or executive level,” she adds. It’s understood that tech giants around the world are already working on applications that can plug into the banks’ APIs. In Hong Kong, giants such as Alibaba and Tencent, which have made successful forays into financial services, in particular e-commerce-based trade finance, will surely be eyeing the sector hungrily. Hong Kong is the latest in a series of jurisdictions to introduce such an open banking programme. The Monetary Authority of Singapore has plans to make its own data available through an open API initiative, while the UK’s open banking standards entered force in January of this year. For fintech companies that have been working to innovate the trade finance process, this could potentially act as a leveller, removing some of the competitive, data-led advantages large banks have had for years. Andrew Coles, head of banking solutions for Asia Pacific at Finastra, one of the world’s largest fintech companies, says that the benefits of open banking are becoming evident in trade and supply chain finance, having initially been focused on retail products. “Full digitisation of the trade finance value chain has been a goal for many years. However, the advent of new technologies, such as artificial intelligence, robotic process automation and distributed ledger technology, combined with the increasing market adoption of open APIs, means we are closer today to reaching that goal than ever before,” he tells GTR. Coles, who confirms Finastra’s plans to plug into HKMA’s open API, adds: “Never before has there been such a spotlight on the area of trade finance, with such a wealth of companies looking to innovate at all levels of the physical and financial supply chain. This level of investment can only be a good thing, and will surely lead to the breakthroughs the industry requires to modernise.” The HKMA claims that the move will make Hong Kong’s banking sector more competitive. The special administrative region of China is one of the world’s largest banking hubs but has arguably lost its edge in recent years. At a recent press conference in the city, head of macroeconomic research for Euler Hermes, Ludovic Subran, said that Hong Kong was no longer the hub of financial innovation it once was. “I remember years ago, when I started in trade finance, bankers were sent to Hong Kong to learn how to structure. That is no longer the case,” he told reporters, bemoaning the inertia of the city’s dominant banks. Arguably more than any other large Asian city, Hong Kong is dominated by big banks. The fintech scene may be buzzing, but it is still nascent. In the invoice financing space, a number of startups have caught the eye in recent months, but there is nowhere near the volume of platforms that you have in Southeast Asian cities such as Singapore, Manila and Jakarta. Whether the HKMA open API will change this remains to be seen, but for supporters of the movement, it is being viewed as a step in the right direction. The post Could Hong Kong’s open API revolutionise trade finance in the city? appeared first on Global Trade Review (GTR).
From Global Trade Review (GTR) | By Finbarr BerminghamRising geopolitical tensions in Iran, as well as the US-China trade war, are making banks more conservative when it comes to lending decisions. The sanctioning of Chinese telecoms giant ZTE Corporation, which almost brought the firm to its knees, has sent a chill through compliance officers in international banks, while the Trump administration’s abandonment of the Iran nuclear deal has added another layer of confusion around who banks can lend to. At a press conference in Hong Kong, Baker McKenzie compliance and investigations partner Mini vandePol said that borrowers are confused by the muddied waters. Often, “a lot of corporate clients only find out they have breached sanctions when their banks inform them”, she told gathered media. vandePol said that companies in certain sectors and geographies are “struggling to find lines of credit from their banks” due to the uncertainty – which is having more of an impact on bank lending than the trade tensions themselves, the effects of which are yet to be materially felt. Banks, meanwhile, are becoming more restricted in where they can lend money, for fear of being sanctioned by the Office of Foreign Assets Control (OFAC), the US government body which has doled out billions of dollars in fines to banks in recent years. This uncertainty adds to already existent anxiety over anti-money laundering (AML) legislation and know your customer (KYC) requirements, which have seen many international banks abandon business in countries and industries that are perceived as being risky. An example of this has been the widespread severance of correspondent banking relationships. Between 2009 and 2016, there was a 25% decline in such collaboration, with only China bucking the trend (Chinese banks, conversely, grew their correspondent banking relationships by 3,355% over the same period). Lishi Fong, of counsel at Norton Rose Fulbright in Singapore and a commodity lawyer by trade, tells GTR that the trade war may serve to extend this conservative attitude. “Banks have been relatively conservative the last couple of years and the trade tensions may result in this conservative attitude being prolonged. But I don’t think it will exacerbate the situation significantly given that the banks and traders we work with are doing deals with the big commodity players with a strong credit risk,” she says. For smaller players in the market, it may mean longer credit approvals, with some deals already falling away due to banks’ conservatism. Despite the swirling headwinds, however, demand for trade finance in Asia remains high. Anecdotally, bankers are seeing an uptick in their lending books this year, but remain wary of the impact any sudden escalation may have. Also speaking at the event was Rob Koepp, director for the Economist Corporate Network in Beijing, who was at pains to impress the fact that this is not yet a trade war – despite the pace of the escalation. Only US$34bn of US tariffs on China have yet been activated, with China reciprocating in kind. However, should Donald Trump follow through with his various threats of imposing tariffs on US$200bn, US$400bn, US$500bn or all of China’s exports to the US, people should begin to worry, Koepp said. “We’ve seen a very quick escalation. China doesn’t really have any more to take from the US, in tariff terms. China is in a spot, but we may see more qualitative actions as opposed to quantitative measures,” he added. Part of this would be China making life more difficult for US companies working within its borders. Customs measures could be tightened, deliveries and orders delayed and production disrupted. In the middle of this salvo lies Hong Kong. More than 50% of its exports go to Mainland China, with the US in second place in terms of export destinations. Should there be a full-scale escalation, trade hubs such as Hong Kong and Singapore could stand to lose most, given that the mammoth economies of China and the US have the robustness to absorb all but the most extreme measures. The post Trade tensions making banks in Asia “more conservative” appeared first on Global Trade Review (GTR).
From Global Trade Review (GTR) | By Finbarr BerminghamCommodity trader Trafigura has launched a US$1.5bn package of revolving credit and term loan facilities in Singapore. The funds will refinance the metals and energy giant’s existing facilities, as well as being used for general corporate purposes. With responses due on August 24, the package will comprise a 365-day revolving credit facility (RCF) and a one-year Chinese offshore spot (CNH) syndicated fund. ANZ, Bank of China, DBS, Industrial and Commercial Bank of China (ICBC), OCBC and SMBC have been named as original mandated lead arrangers (MLAs) and bookrunners on the RCF and term loans. CTBC and ICBC, meanwhile, have been named MLAs and active bookrunners on the CNH syndication. Trafigura is among the sector’s most frequent visitors to Asia’s debt finance markets. It first closed a US$300mn RCF in 2006 and a recent facility, which will now be refinanced, was a US$1.9bn package in September 2017. In a recent interview with GTR, the company’s head of corporate finance, Laurent Christophe, said that the company will continue to tap Asian markets as the banks there continue to mature. “We believe that banks in Asia – particularly in Singapore and Japan – are very sophisticated in the products they offer. Trade finance has been a product offering for a long time, but they’ve now developed expertise in capital markets, and areas beyond that,” he said. The trading house made headlines in November with an innovative inventory securitisation programme, which was funded mainly by Asian banks. The programme combined receivables finance, structured commodity finance, asset finance, supply chain finance and securitisation and was worth US$470mn. It saw Trafigura Commodities Funding, as the programme is known, issue notes which were placed on a private basis with the banks involved. The proceeds of these notes were used to buy crude oil and refined metals. It was seen as a way of maximising access to finance, at a time when some of Trafigura’s erstwhile competitors have become overleveraged. The post Trafigura launches US$1.5bn debt facilities in Asia appeared first on Global Trade Review (GTR).
From Global Trade Review (GTR) | By Finbarr Bermingham
Trade finance marketplace LiquidX has opened a Singapore office, as well as expanded its presence in New York.
Rohit Goyal has been named managing director in Singapore, after joining from trade finance fund EFA Group in April. Goyal was the deputy head of the SME finance fund at EFA Group, which is among Asia’s most prominent players in that space.
He has previously worked across the fintech, private equity and asset management sectors in Singapore.
LiquidX is one of a clutter of relatively new platforms making waves in the invoice financing and account receivables space. The company is now operational in 25 jurisdictions and has expanded beyond US dollar transactions, having denominated its first trade in pound sterling earlier this year.
It handled US$1.8bn in transactions in the second-quarter of this year, a 64% increase on the previous year. Since its inception in January 2016, it has processed US$13bn in trade volume.
In New York, the company has also established a new desk focusing exclusively on Latin American transactions, catering for demand there.
“We’re rapidly ramping up to better serve our clients, no matter where they are located. It is a tremendous opportunity for us but we are also excited to be able to provide the global infrastructure our clients demand,” says global head of sales, Glenn Kocher.
Goyal adds: “We’re seeing strong interest in our marketplace in Asia, and we’re very pleased to be open for business here in Singapore.”