denotes premium content | Dec 5 2008 Trade & Forfaiting Review magazine archive
Volume 6 Issue 4
Editor's foreword
Having been back at the office for nearly a fortnight, I think most of us would agree that the Christmas festivities seem a world away. I’d like thank all of you who were kind enough to send Trade & Forfaiting Review cards and gifts. In particular, a big nod to the sender of a certain guide to London restaurants, as well as to an e-commerce solutions provider that couldn’t go wrong with chocolates.
As you would expect, many of the Christmas cards that I received sent warm wishes for a prosperous New Year; unfortunately I don’t think “wishes” will be enough to turn the current economic tide. There is no doubt that 2002 was a tough year for global financial markets – and trade finance and forfaiting were no exception. With traditionally large-volume markets – Argentina, Brazil and Turkey – sliding off the radar for most of the year, trade financiers and forfaiters had to rely on their skill and expertise to structure deals in these markets, while also trying to drum up much-needed business in new and re-emerging markets – China and Russia – and smaller economies. But this they have done, as proven by the “memorable” deals submitted by some of our editorial board members (p.52).
As well as deals, in this, our review of 2002 issue, we provide you with a round-up of the year’s events in the forfaiting (p.10), trade and commodity finance (p.14), export finance (p.17), trade services (p.21), legal (p.25) and credit insurance markets (p.28). Furthermore, we have an abundance of regular features, including our country focus, which this month looks at Indonesia, where the commodity-finance market has been far from dull, according to SMBC (p.34). Meanwhile, ITI Solutions looks at the country’s insurance options, particularly following the Bali bombing last year.
Finally, I would like to take this opportunity to welcome Courtney Fingar to Trade & Forfaiting Review. She joins us from across the Atlantic as Deputy Editor and we very much look forward to working with her. As always, we welcome news and views from our readers, so please feel free to contact me (llaypang@ark-group.com) or Courtney (cfingar@ark-group.com).
Features
The art of exporting into new markets
With the issue of the euro and the strength of the sterling continuing to affect exports, Murray Chisholm, managing director of Fortis Commercial Finance, highlights the issues to be aware of when exporting into new markets and the financial solutions available.
Originals sin
Presenting documents to a bank to get payment under a documentary credit is one thing. Presenting the correct documents is quite another. Alexia Ganotaki, lecturer in law,
PhD in international trade finance and banking law, University of Sheffield, examines legal definitions of an original document.
Moving finances online
Most companies are doing a better job these days of tracking physical goods through
supply-chain management, but now it’s time to focus on improving financial supply chains as well. Kurt Cavano writes that a fully automated financial supply chain is the backbone of B2B
e-commerce and well worth the cost of implementation.
Following the paper trail
Trade & Forfaiting Review speaks to CCEWeb CEO Jacob Katsman and CGE&Y managing consultant Urs Kern about the state of the trade-services market. Why has the change from paper to electronic documents not happened as soon as some people predicted and who will drive the change to paperless trade?
Not a bad deal
It wasn’t all gloom and doom. Despite significant market challenges, trade-finance
players found much to be proud of looking back on last year. Here, they recount their favourite deals of 2002 to Courtney Fingar.
Letters of credit - a whole range of fraudulent opportunity
“Well, as through this world I’ve rambled, I’ve seen lots of funny men. Some rob you with a six-gun, some with a fountain pen,” goes an old Woodie Guthrie tune. As Rowan Bosworth-Davies writes, they may also rob you with a letter of credit.
Financing Indonesia's hot commodities
The financial crisis in Asia forced many commodity traders and exporters in Indonesia to move away from the traditional balance-sheet relationships with their bankers into new trade-financing relationships. Freddie Lim explains how to make use of two of the more common facilities in the region – warehouse-receipt financing and pre-export financing – and how they are complimented by the standard letter-of-credit discounting facility.
Fast times in Indonesia
Indonesia’s commodity-finance market was hardly dull last year – the Bali bombing and economic slowdown made certain of that. However, as Kazu Yoshimura writes, for the brave of heart, the world’s fourth most populous country offers a host of possibilities.
Credit insurance review 2002: A happier new year?
As 2002 came to a close, the euro zone headed for trouble, Japan stayed in trouble, and the United States stayed afloat, while a crisis of confidence rocked Latin America.
In forecasting country-risk trends for this year, Sylvia Greisman says the future looks brighter, although recovery is by no means certain.
Legal review 2002: Law and orders
In any given year, English courts generate a number of decisions that will be relevant to the trade and forfaiting community. Sarah Charles, Sunil Gadhia and Richard Gwynne review the top three for 2002.
Trade services review 2002: Keeping up with the times
In a turbulent year, banks sought to keep up with the changing demands of importers and exporters. Moving forward, Paul Simpson writes that tomorrow’s top trade-finance institutions must provide two things: vision and capability.
Export finance review 2002: Sun rising from the east
Tough times required a creative approach to export finance in 2002, and the need for innovation will not disappear in 2003. However, despite last year’s gloom, Albena Vassileva sees bright spots in places like Russia, Thailand, Malaysia and Vietnam and bets on a revival in Latin America.
Trade & commodity finance review 2002: Priced to move
Last year, commodities markets performed remarkably well under the circumstances. Buoyed by strong showings in energy/chemicals, steel and agricultural goods, many commodity bankers faired better than their investment-banker colleagues. D. Paul Schuilwerve writes that the key to past and future success lies in China.
Forfaiting Review 2002: The waiting game
After a somewhat unremarkable 2001 in the forfaiting market – influenced by the global economic slowdown and country-specific events such as Argentina and Turkey – hopes were running high for a more promising 2002, writes Layisha Laypang. But with three of the most active forfaiting markets pretty much closed for business during a significant part of last year, optimism began to wane rapidly.
Regulars
Indicative forfaiting rates
The new year opens on a positive note overall as the constructive influences detailed in our last report remain in place.
Brazil drives LatAm contraction
Against a background of wide variations in asset returns in 2002 (the FTA World Equity Index fell by 20%, while JPMorgan’s EMBI+ index rose by 14%), the LTP Trade Finance Index™, which measures the total return on a representative basket of trade-finance assets, returned a solid 5.03% overall in 2002.
Personal profile: John Bugeja
When thinking about UK banks and international trade, there is a tendency to dismiss The Royal Bank of Scotland as secondary to more recognised names such as HSBC. But John Bugeja, director, head of global trade services, is ready to shatter the myth. He reveals that in terms of volume, RBS does more trade finance than any bank in the UK.
Company profile: Deutsche Bank
With a substantial number of structured transactions in 2002 and a hatful of awards,
Deutsche Bank is making the most of a challenging market. Global head of trade finance, Reinhard-E Uhl, reviews the past year, previews the next, and explains the bank’s philosophy and tactics.
