- Focus Areas
From Global Trade Review (GTR) | By Sanne WassBarclays has launched a new trade centre in Birmingham, which will be dedicated to helping UK businesses export more. Staffed by 30 export and trade product specialists, the centre will provide export support to more than 1,000 firms across the Midlands. Its goal is to “make it easier for UK businesses to find their way in overseas markets, by providing the right finance and all-important advice and guidance”, according to Jes Staley, Barclays’ group CEO. Supporting firms in all sectors, the centre will focus particularly on export activity into India, Pakistan, Bangladesh, across Europe, the Middle East, Africa, as well as Far Eastern markets such as China, South Korea, Thailand and Vietnam. The announcement follows the launch of the UK government’s new export strategy, which sets out its ambition to raise exports as a proportion of GDP from 30 to 35%. It aims to reach this goal through a range of initiatives, such as promoting more peer-to-peer learning and creating an online tool for UK businesses to easily connect to overseas buyers, markets and other exporters. Many of the projects will be business-led, with the government intending to work closely with private sector players to drive exports. In a statement, Barclays says the launch of its new trade centre is “a great example of the private sector support that the department of international trade (DIT) is promoting as part of its new export strategy”. Staley adds that Barclays “is determined to play its part” in helping firms to become “superstar exporters”. “New research we have commissioned on this important subject, published with the Policy Institute at King’s College London, shows that one important way to boost UK exports is to create more ‘superstar exporters’, or UK firms who export 10 or more products to 10 or more overseas markets. Helping these businesses to export more in turn helps smaller firms in their supply chain to grow, and to create jobs,” he says. The post Barclays opens major UK trade centre appeared first on Global Trade Review (GTR).
From Global Trade Review (GTR) | By Shannon MandersUK Export Finance (UKEF), the country’s export credit agency, is providing a guarantee for a US$125mn loan from Citi to El Al Israel Airlines to finance their purchase of one Rolls-Royce-powered Boeing 787 aircraft. The deal is part of Rolls-Royce’s contract to supply engines for 16 such aircraft for the Israeli airline. According to UK international trade secretary Liam Fox, this contract is “the largest single export deal the UK has had with Israel, and a marker of the strength of the trade relationship between the two countries”. “British goods remain in global demand – this is the first time that UKEF has supported an aircraft delivery to El Al and clearly shows the value of support from the UK’s export credit agency to the UK’s aerospace engineering sector,” says Fox. This is the sixth aircraft to be delivered as part of the contract. UKEF is considering extending its support to cover future deliveries of Rolls-Royce-powered Boeing aircraft to El Al. The announcement comes days after the UK government launched its new export strategy, which lays the foundation for how the government plans to support exporters in the years ahead. The strategy sets out the government’s ambition to increase exports as a proportion of GDP and to produce “more tailored support” to UK companies. Key elements of this support will be peer-to-peer learning to encourage more businesses to export; the development of the department for international trade (DIT)’s website into a “single digital platform” for practical advice and assistance on exporting; and the creation of an online tool to enable UK businesses to easily connect to overseas buyers, markets and other UK exporters. The response from the UK trade community has been mixed, with one source telling GTR that the new strategy is a sign that the government has acknowledged that its lack of communication forms part of its shortcomings and is simply “passing the buck” on to UK companies themselves to engage in peer-to-peer learning. The plan comes into play immediately and with no fixed deadline. “We are considering next steps in terms of an implementation plan and its governance, including monitoring and tracking progress against each of the measures,” a spokesperson from the DIT told GTR this week. The post UKEF backs country’s largest export deal with Israel appeared first on Global Trade Review (GTR).
From Global Trade Review (GTR) | By Shannon MandersThe UK government’s new and much-anticipated export strategy sets out its ambition to increase exports as a proportion of GDP and to produce “more tailored support” to UK companies. Key elements of this support will be peer-to-peer learning to encourage more businesses to export; the development of the department for international trade (DIT)’s website into a “single digital platform” for practical advice and assistance on exporting; and the creation of an online tool to enable UK businesses to easily connect to overseas buyers, markets and other UK exporters. Response to the new strategy – which was launched today by international trade secretary Liam Fox – has been mixed. The British Exporters Association (BExA) says it is “extremely encouraged” by the new plan and welcomes the “challenging growth targets” that have been set. BExA co-chair Marcus Dolman calls the government’s export target of 35% of GDP “ambitious but achievable”. In 2017, this number was 30%, amounting to £620bn-worth of goods and services exported by British companies. It’s the first time the government has used this measure to quantify its exports. “It’s preferable to a nominal value target as it more accurately reflects changes in the UK’s underlying export performance,” a DIT spokesperson tells GTR. No time frame on the target was provided. According to DIT estimates, as many as 400,000 businesses believe they could export but don’t – and these form the focus of the new strategy. Demand for British expertise and goods overseas, meanwhile, is growing. The strategy’s business-led approach –in which the government intends to work closely with the private sector to drive exports – has been hailed by some market players as crucial. Speaking at the launch, Adam Marshall, director general of the British Chambers of Commerce, said that the right day-to-day support for exporters is “as important as efforts to negotiate new trade deals”. “Trusted, face-to-face support is key to export success. When firms get the information and connections they need to develop new markets and find new customers – that is when we see confidence, investment and results,” he explained. Others are less encouraged by this approach. One source tells GTR that the new strategy is a sign that the government has acknowledged that its lack of communication forms part of its shortcomings and is simply “passing the buck” on to UK companies themselves to engage in peer-to-peer learning. The new strategy stipulates that there will be an “increased focus on amplifying the voice of existing exporters to inspire other businesses and facilitating peer-to-peer learning”. It does not outline how the government will incentivise companies to support their peers in this regard. “It’s not going to work,” says GTR’s source, a former UK banker with close ties to the government, who prefers to remain unnamed. “Most UK companies are lethargic. Those that are proactive and have this knowledge know exactly how much energy, cost and time it’s taken to get hold of that information and keep it up to date. Often this knowledge is gleaned from having in-country capability. They’re not going to give that away for nothing.” The DIT tells GTR that it will be creating a “community of new UK Export Champions” as one way of overcoming this hurdle. “Our consultations with businesses have concluded peer-to-peer is a more sensible way of engaging with business rather than dictation from government,” the spokesperson says. The new strategy – which comes into play immediately and with no fixed deadline – lays the foundation for how the government plans to support businesses in the years ahead. The next phase will see the DIT work across government to review what further measures could help improve its export performance and meet the 35% goal. “We are considering next steps in terms of an implementation plan and its governance, including monitoring and tracking progress against each of the measures,” the spokesperson explains. “It’s a long-term aspiration.” The post UK’s new export strategy draws mixed response from trade community 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 Shannon MandersThe UK government will have the power to impose sanctions independently of the international community after Brexit. That’s as a result of a new law, the Sanctions and Anti-Money Laundering Act 2018, which received royal assent in May, and will come into force when the UK officially leaves the EU next year. In the short term there may be little substantive divergence from the existing regime – under which the UK has to follow the EU. But the act “sets the stage for possible variance once the UK starts to establish a clearer political path in the world as it sets out on its own”, says Charles Enderby Smith, associate at law firm Carter-Ruck. The UK government could decide to replicate sanctions coming out of the EU or it could choose to mirror the US’ approach towards sanctions, which would not be an unsurprising move, he tells GTR. This may result in a widening of the application of sanctions to include whole geographical areas, groups of people and may even bring about the implementation of so-called secondary (extraterritorial) sanctions – the likes of which the US has just reimposed on Iran. Regardless of the direction the government takes when moulding its newly-autonomous sanctions programme, institutions “must be alive to a new layer of compliance”, Enderby Smith says. In an interview with GTR, he explains the most important features behind the new legislation, and what that tells us about the powers that the UK seeks as it prepares for its new independence. GTR: Why is the Sanctions and Anti-Money Laundering Act required? Enderby Smith: With Brexit set for March 2019, the UK is preparing the framework for its future independent sanctions programme, which may in time evolve in a direction at variance from the European Union’s existing sanctions regime. The act will come into force on March 29, 2019, the day the UK formally leaves the EU. The UK currently implements sanctions in accordance with its international obligations. These include:
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 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 Sanne WassBarclays is to expand its invoice finance offering for SME clients, having partnered with MarketInvoice, a fintech firm and Europe’s largest online invoice financing platform. In doing so, Barclays has committed to acquiring a “significant minority stake” in the firm, the bank says in a statement. The bank also plans to fund invoices via the platform, growing its asset base in the small business segment. The aim, Barclays adds, is to give SME clients “seamless access to innovative forms of finance”. As a result of the partnership, customers will get access to MarketInvoice’s single invoice finance product as well as broader digital invoice finance facilities. MarketInvoice’s platform allows SMEs to upload their invoices and sell them to investors, thus unlocking cash during the invoice’s payment period, which can often be up to 120 days. Since it was founded in 2011, MarketInvoice has funded more than 90,000 invoices worth over £2.7bn. The new product will be introduced to Barclays customers “over the coming months” in East Midlands, West Midlands, Herts and North West London, with a full roll-out across the UK set to commence in 2019. MarketInvoice is among a sea of fintech firms seeking to tap into a booming invoice financing market. As reported by GTR in its recent fintech feature, these firms differentiate themselves through technology, utilising emerging tech to shore up security and speed up transaction times. Most recently, MatchPlace, a platform that has been offering foreign exchange and payment services for SMEs since 2016, launched a peer-to-peer invoice financing service in the UK. Seeing a “huge potential” for invoice finance across Europe, the firm expects to soon expand its service to Portugal, France and Spain, and aims to build a book of £30mn within the next three years. There seems to be plenty of space for growth within this market, as more companies (SMEs in particular) move away from traditional banking products to more innovative ways of optimising their working capital. MarketInvoice recently announced that in one year it almost doubled the average amount advanced to UK businesses – from £606,000 in 2016 to £1.14mn in 2017. The partnership with MarketInvoice is undoubtedly an effort by Barclays to capitalise on this trend and stop the flight of SME customers toward alternative financiers. “Invoice financing gives small businesses the power to obtain funding in a fast and innovative way. It is a product that has come of age in the digital era, it’s efficient, effective and controllable for small businesses,” says Ian Rand, CEO of Barclays Business Bank, commenting on the new partnership. Barclays is the first UK high street bank that MarketInvoice has partnered with. Anil Stocker, MarketInvoice’s CEO, says: “It’s exciting to be combining the knowledge and footprint of a 325-year old British banking institution with MarketInvoice’s tech-led online finance solutions. Bringing this together in a strategic partnership can only mean good news for UK businesses, with the segment we’re targeting responsible for upwards of 60% of UK employment.” The post Barclays to offer digital invoice finance after taking “significant” stake in fintech firm appeared first on Global Trade Review (GTR).
From Global Trade Review (GTR) | By Shannon MandersMetinvest has secured a €43.2mn buyer credit facility for its subsidiary Ilyich Steel which is being guaranteed by Austrian export credit agency Oesterreichische Kontrollbank Aktiengesellschaft (OeKB). It is the first loan covered by an export guarantee to be provided to the Ukrainian steelmaker since 2012, and the company’s first-ever from OeKB. Raiffeisen Bank is the sole lender on the facility, which matures in September 2025. The interest rate has been set at 6-month Euribor plus margin. The funds will be used to finance the construction of a continuous casting machine (CCM) for Ilyich Steel, a steelmaking plant in Mariupol, Ukraine. The CCM is being supplied by metallurgical plant solutions company Primetals Technologies Austria. “It is yet further proof that European financial institutions believe in Ukraine in general and the Metinvest story in particular,” says Metinvest CEO Yuriy Ryzhenkov. “This project is one of the key investments in the group’s steel business envisaged by the ‘Technological Strategy 2030’, which aims to increase overall steel production capacity. It is also difficult to overstate the positive effect of this project in reducing our environmental footprint in Mariupol.” Following the commissioning of the new CCM, expected by the end of 2018, the existing ingot casting line will be taken out of operation and the blooming mill will be shut down. The launch of the CCM will enable Ilyich Steel to cut costs by reducing metal losses and energy consumption, while boosting output of crude steel and finished products. When implemented, the CCM will also help to improve the environmental situation in the city of Mariupol by reducing the dust content in flue gases following gas cleaning, the company says. The news follows Metinvest’s announcement in April that is had refinanced US$2.3mn of its existing debt through two new bond issuances and a US$765mn pre-export finance (PXF) facility. The transaction was the largest-ever refinancing by a Ukrainian corporate. Deutsche Bank and ING served as global co-ordinators and, together with Natixis and UniCredit, acted as joint bookrunners of the bond refinancing and co-ordinating mandated lead arrangers (MLAs) of the PXF deal. On the legal side, Allen & Overy and Avellum advised Metinvest, Linklaters and Sayenko Kharenko supported the bookrunners, and Clifford Chance and Redcliffe Partners advised the co-ordinating MLAs. The transaction also generated an additional US$205mn in liquidity, which the group used to settle the first PXF repayment before it was due. It then announced last week that amid “decent cashflow” it had voluntarily paid another part of the PXF facility. The remainder due is now US$528mn. Metinvest secured its first ever ECA-backed facility in 2012. The €25mn 10-year buyer credit facility was backed by Euler Hermes and paid an interest of 1.95% a year, with Deutsche Bank taking on the role of sole arranger and sole lender. The post Ukraine’s Metinvest returns to ECA market appeared first on Global Trade Review (GTR).