Most Innovative Trade Bank: Natixis

Runner-up: JPMorgan
Commended: HSBC
2007 Winner: BNP Paribas

Snatching this title from its rival BNP Paribas will no doubt go down very well at Natixis’ headquarters in Paris, but it is thoroughly deserved given the hard work that has been put into developing the commodity finance franchise, in particular, over the past few years.

Natixis is, today, a regular on the ‘Russian front’ and considered one of the top banks in energy and, especially, metals. “We are now consistently awarded the mandated lead arranger (MLA) role, not only due to our ability to innovate, but also because of our strong syndication team,” says Dominique Fraisse, Global Deputy Head, Commodity Finance, Natixis.

“In terms of innovation, four areas have been developed within Natixis in 2007: borrowing-base lending, reserve-base lending, the oil and gas sector and the mining sector,” he adds.

With the borrowing-base lending scheme, Natixis offers traders, fabricators and processors a greater level of flexibility compared to traditional transactional lending. As it did, for example, in deals involving Duferco and Cormin (in Peru). “Such transactions are based not only on inventories, but also on trade receivables and sometimes include advances to suppliers.”

It is also one of only a handful of banks to finance reserve development in oil and gas at pre-field development stage, says Fraisse, not only in developed countries (such as Ithaca Energy financing in the North Sea), but in emerging markets too. “We are pioneers in applying early reserve-field development financing in the emerging markets – recently financing the development work in the Salamander and the Serica fields both in Indonesia, for instance.

“We have now gone one step further by proposing hybrid facilities, which combine both valuing reserves, not yet bankable under regular RBL facilities, with a minimum guaranteed availability driven by corporate facility covenants.

“Furthermore, in the past two years in the oil and gas sector we have developed a comprehensive approach with strong and promising activity in the oil services and mid-downstream infrastructure sectors,” says Fraisse. “With the goal of being able to offer global coverage along the entire value chain in energy.

Due to the complexities and scale of the energy businesses, financiers with deep and global industry knowledge have an edge in sourcing, evaluating and managing energy-related debt finance opportunities.

“In the oil services space, we have developed an intimate relationship with key energy private-equity funds, providing excellent opportunities in landmark acquisition financings,” he says. In the first half of the year, these included Natixis acting as joint MLA in a $1.55bn deal with Abbot Group and a $1.25bn deal with CHC Helicopter Corporation.

Mining finance has also been stepped up, with a dedicated team in Paris and the establishment of a desk in Sydney – to capture the booming mining industry in Australia and Asia – and one is planned for North America, too. Natixis has been involved in several interesting mining deals, including one with Canadian company Semafo involving two mines in Burkina Faso and Guinea.

For Fraisse, like so many trade finance professionals, the credit crunch has helped business to return to normal. “It was the environment before the credit crunch that was abnormal,” he says. “While we now have a more sensible risk/return ratio. Clients are rediscovering banking relationships with deep industry knowledge, strong structuring capacity and decent rewards for the risk-taking players. In the meantime, Basel II has now been implemented and this gives structured deals a competitive edge compared to straight corporate deals,” he says. Maintaining those relationships, however, will require plenty of innovation.

“Clients are rediscovering banking relationships with deep industry knowledge, strong structuring capacity and with decent rewards for risk-taking players. In the meantime, Basel II has now been implemented and this gives structured deals a competitive edge compared to straight corporate deals.”

Dominique Fraisse, Natixis