Best Bank in Structured Trade Finance: JPMorgan

Runner-up: Deutsche Bank
Commended: ABN Amro
2007 Winner: Deutsche Bank

Once again, TFR’s Best Bank in Structured Trade Finance award was a ‘clash of the titans’, but with the venerable JPMorgan just coming out on top.

JP Morgan may not be as prominent in such fashionable areas for trade finance as the Russian oil, gas and metals industries as, say, Deutsche Bank, ING or ABN Amro. Furthermore, it is rarely listed as a participant in the swashbuckling multi-billion dollar syndicated loan or pre-export finance deals that boast long lists of mandated lead arrangers, lead arrangers and so on.

The reason, quite simply, is that JPMorgan follows a different strategy. “We generally go to markets where our top clients are very active and strategically deal with our existing clients’ customers/counterparts around the world. We don’t go to a market merely because margins are high or because all the other banks are doing business there,” says Astar Saleh, Executive Director and Head of Global Structured Trade Finance at JPMorgan.

This approach enables JPMorgan to focus on the most viable local corporates and financial institutions around the world.

“We have been able to come up with a very wide range of solutions for clients including supplier-driven financing structures, risk mitigation and financing solutions for short-term and medium-term accounts receivables, and not just limited to agency-backed financing. We have also become an active structured trade finance solution provider in all regions – Asia, Latin America, Europe, the Middle East and Africa,” says Saleh.

Saleh points to two key deals concluded in the last year as key landmarks of the Bank’s success, demonstrating its expertise and flexibility. The first is the Banco De Oro bridge financing structure in the Philippines for DMCI-MPIC, a joint venture between Metro Pacific Investment Corporation (MPIC) and DMCI Consunji Holdings.

“Using an alternative bridge financing solution, via a stand-by letter of credit, instead of traditional bridge financing facilities, the solution resulted in significant cost savings for our client. The corporate takeover was expected to help revive the state-owned Metropolitan Waterworks and Sewerage System’s (MWSS) water supply programme,” says Saleh.

The second key deal is a $132m PrivatBank deal, with Export Development Canada, that helped finance the export of high-tech telecoms equipment from Canada to Ukraine. This won a TFR Deal of the Year award – described by the judges as “ballsy” – in which PrivatBank doubled as the borrower and the on-lender. The deal took four months to craft from start to finish and supported a $300m telecoms upgrade in Ukraine.

This export credit agency (ECA) backed deal demonstrates one way forward during the credit crunch for Saleh. “ECA-supported financing is back in fashion,” he says.

“In the pre-credit-crunch period, the capital markets were seen as the easiest venue in which to raise funding – even for capital-goods imports – as opposed to the more difficult ECA route. But now we are seeing a substantial increase in demand for agency-backed financing, as customers see the benefit of cost savings.”

While it is not JPMorgan’s style to apply its name to the big syndications, Saleh nevertheless foresees many opportunities in oil and gas, mining and commodities. “Solutions combining traditional agency-backed financing and structured commodity finance will be more prominent in these sectors,” he says.

JPMorgan is also one of only a handful of big banks that has emerged relatively lightly from the sub-prime credit crisis that has scarred the financial services sector of America and Europe. It is therefore well positioned to capitalise on the continuing disarray among some of its traditional competitors.

“In the pre-credit crunch period, the capital markets were seen as the easiest venue in which to raise funding – even for capital-goods imports – as opposed to the more difficult ECA route.”

Astar Saleh, JPMorgan