Trade key challenge for global financial services industry
With trade finance a key opportunity, the industry is keeping its eye on lingering concerns, as heard in multiple conversations at Sibos 2011. October 27, 2011 | Peter HoflichWhile the trade volumes that fell in 2009 rebounded in 2010, they have been flat in 2011 so far, according to banks that attended this year’s Sibos in Toronto. With dollar liquidity drying up there has been a squeeze on available capital, just as new Basel III rules on credit conversion of trade assets will be making the business a more expensive one to be in. This means that a global slowdown in trade that will trickle down into the real economy seems to be imminent to observers at the conference, which included the key transaction banking heads of all the largest global banks from all parts of the world. JP Morgan, which claims to be the world’s largest exim bank financier, has been educating regulators on trade assets through meetings with the International Chamber of Commerce (ICC) and the Basel Committee, stressing that trade assets are low-risk, self-liquidating long-term transactions. To cope with these stresses, many of the banks interviewed at Sibos stressed that they are seeing more partnership concepts emerging, due to a tightness of liquidity globally. Banks are also working with their SME clients, who will be the most-affected by a Basel III-related slowdown in trade, to warn them of troubles a head. Work with the ICC for a trade default registry has been able to demonstrate this, but it may have come too late to be effective—as one executive noted, the disgraced financial services industry has done a bad job in making a case for less harsh terms in businesses like trade finance and needs to broaden its speech from regulators to voters and the man on the street, now key stakeholders in banks. “Regulators aren’t interested in banks complaining that regulators are hurting them,” said Howard Bascom, board member of BAFT-IFSA and BNY Mellon’s head of trade finance, in a session on trade, noting that banks may soon see new entrants from outside financial services if new costs passed on to clients increase the need for gr... Please login to read the complete article. If you already have an account, you can login now or subscribe/register.
Categories: Payments, Trade Finance, Transaction BankingPayments,Trade Finance,Transaction Banking, Payments,Trade Finance,Transaction Banking, Keywords:Sibos 2011, SWIFT, JP Morgan, BAFT IFSA, BNY Mellon, Barclays, Letters Of Credit Sibos 2011, SWIFT, JP Morgan, BAFT IFSA, BNY Mellon, Barclays, Letters of Credit
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