BPL Global discusses trade risks in Vietnam having recently opened a new office in Singapore

News | 30 August 2012

Anthony Palmer photo

[updated  30 August 2012]

Berry Palmer & Lyle Ltd (BPL Global), the political risk insurance broker, has opened a subsidiary in Singapore, following on from the Hong Kong branch in early 2011. 

Anthony Palmer (pictured), one of the founding directors of the firm in 1983 heads up the operation with Harry McIndoe as his deputy. Both relocated from London to set up the new office in June. BPL has confirmed it is recruiting additional local team members. 

Commodities expertise

“Our immediate focus will be local financial institutions including the banks, where we see the biggest gap in the market for our services,” said Anthony Palmer, “although we will also be working with the Singapore subsidiaries of our multinational clients. These include commodity traders and exporters – a specialist area for BPL Global and a good fit with Singapore’s position as the regional hub for trade and finance.” He added: “As far as the commodity traders are concerned we have commodity trading clients here in Singapore across the full range of commodities – oil, softs and metals – which have so far been serviced from London. They will now get the benefit of improved speed of service and efficiency combined with the local expertise available in the underwriting market.”

Located in Raffles Place in the heart of Singapore’s central business district, BPLGlobal is committed to Singapore as its Asian head office alongside its Hong Kong branch which is headed by Peter Gilbert. The brokers are also able to do business for clients based in Labuan, which since its inception in 1990 as Malaysia’s offshore financial centre and free trade zone, has expanded to become a base for more than 6,500 offshore companies and 300 licensed financial institutions. – including global banks.

Examples of BPL Global’s product innovation include comprehensive non-payment policies consistent with the principles of Basel II/III for banks lending to emerging market borrowers, and the development of stand-alone political violence insurance cover that addresses the weaknesses of the “terrorism only” policies for land-based assets in emerging markets.

Vietnam and other hotspots

When TFR asked Anthony Palmer and Peter Gilbert what risks specific to the Asia region they were covering at the moment, they said: “ We are looking at a lot of projects in Vietnam at the moment; either on a comprehensive basis, in other words covering default for commercial or political reasons, or the banks want pure political risk insurance because they are comfortable with the commercial risk. When we look at comprehensive non-payment cover, the Vinashin problem[1] has heightened the underwriters’ perception of risk.” Palmer and Gilbert did concede that despite risk aversion in the region (some underwriters are ‘”off cover” in Vietnam), comprehensive cover is available for “the right names” for as long as ten years. Gilbert made the point that the cover that is available also has other demands on it, leaving not a lot left over for trade. This includes project finance, structured trade finance, and corporate lending. “The combination of Vinashin and a pretty active country means a lot of capacity is being used”, he explained.

Palmer added that the other “hot” areas of activity for the firm are the Philippines, Indonesia and Mongolia – the latter being a result of the extractive industries attracting a lot foreign direct investment.

Financial hub

Foreigners account for over one third of Singapore's 5.2 million people, and the region is a popular relocation destination for foreign bankers and other professionals because of its status as a financial hub of Asia. One of the top three export oil refining centres in the world, Singapore is the pricing centre and leading oil trading hub in Asia - oil accounts for around 5% of its GDP.

BPL Global won the recent TFR Excellence Award: Best Trade Credit Insurance Broker. 

The Vietnam Shipbuilding Industry Group (Vinashin) nearly collapsed in 2010 and, as the region’s biggest state-owned company failure at around US$4.5bn in debts, has catapulted Vietnam into the category of ‘high risk’. This Reuters story gives the full background. See also TFR's Vietnam's vicissitudes (November 2011) which has a useful analysis.




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