Best Trade Bank in Asia: HSBC

Runner-up: Standard Chartered
Commended: Deutsche Bank
2007 Winner: ANZ

In the past year, HSBC in Asia has been instrumental in a string of complex and innovative trade deals. They may not have had the biggest figures attached to them, like the major Russian oil and metals deals, but they provided a valuable service to clients and stretched the talents of the bank’s trade and supply chain professionals to the limit.

For example, the award-winning West Coast Power deal in Sri Lanka not only provided the country with much-needed power infrastructure, but did so with an innovative structure that involved no fewer than seven export credit agencies (ECAs) and five tranches of debt: one commercial facility and four ECA tranches of debt.

HSBC has also been involved in some of the first carbon-emission-related financing arrangements. “One of the deals we are most proud of is the solution provided to Noble Group/Gujarat Fluorochemicals Limited (GFL) on certified emission reduction (CER) pre-payments,” says Lawrence Webb, global head of trade and supply chain at HSBC.

“The Noble/GFL deal was the first CER transaction to be registered under the Kyoto Protocol’s Clean Development Mechanism. Not only that, it was the first time the trading of carbon credits, an intangible asset, were financed in the same manner as a physical commodity, which marks a significant step in the development of a mature market for CERs,” he adds.

While some commentators have suggested that globalisation could be reversed as a result of high oil prices, Webb believes that we are entering into a new era of globalisation, with exceptional levels of emerging-market trading. “For the past 20 years, trade has been dominated by the three big trading blocs of Asia, Western Europe and the United States. This picture is gradually changing. For instance, South and Central America and the CIS are showing strong trade growth; their real merchandise imports increased by 20%, more than three times the global average, in 2007. These two groups are expected to record even faster growth in 2008.”

“Advances in transportation and technology have provided buyers and suppliers with powerful tools to help increase their familiarity with trading partners in new markets. These tools help to reduce some trading risks, which is leading to the opening of new markets and new trading partners around the world,” says Webb.

Another trend is the way in which buyers and suppliers are working more closely together, demanding financial services that can facilitate this and help both ‘sides’ manage their working-capital requirements better. “More and more importing corporations are exploring ways of improving working capital management, not only for themselves, but for suppliers, too. However, this transformation is causing some suppliers to struggle with financing their operations to fill orders. There will be some interesting developments in supply-chain financing over the next 12 months,” says Webb.

Trade and supply chain business is also moving on from paper to electronic transactions. “A number of importers are issuing electronic purchase orders to their suppliers and, in turn, a number of suppliers are responding with electronic invoices. We are increasingly seeing electronic bills of lading, freight forwarding receipts and a clear trend towards electronic trade. This opens the door for greater development in the electronic trade space to lower barriers of adoption and further drive straight-through-processing,” says Webb.

To date, Asia has been less affected from the credit crunch than the US and Europe and intra-regional trade has grown significantly in the past 18 months or so, despite some major global banks’ difficulties. HSBC has continued to open new offices in China and Vietnam to take advantage of the opportunities in these emerging markets. In Asia, as well as globally, HSBC is one of the few banks able to offer wide-ranging trade and supply chain solutions, covering a comprehensive suite of trade financing from traditional documentary credits to open account and sophisticated upstream supply-chain financing.

“This transformation is causing some suppliers to struggle with financing their operations to fill orders. There will be some interesting developments in supply chain financing over the next 12 months.”

Lawrence Webb, HSBC