Saturday, 11 October 2014

Message from the Chairman

Paolo Provera, Chairman ITFA / General Manager, ABC International Bank Plc – Milan Branch

Dear Members and Friends,

As you will have read across the trade media, our annual conference in Barcelona was a great success and this is thanks to you. I wish to express my heartfelt thanks to each and every one of you for your trust and vote of confidence in the Board, and equally, for making our forum a dynamic business environment of reference. 

We are already working hard on the organization of the 2015 ITFA Conference, which will take place in Dubai in late October. We will once again be ready to offer to our members a valuable contribution on relevant market topics and to build again a stronger and more extended forum for networking. Mark your diaries!

We continue to strive to be a partner for you in business, deal generation and best practice, driving trade in the emerging markets and to this end I hope you will enjoy this, our second newsletter.

With my best wishes,

Paolo Provera

Barcelona: The Success and the Highlights

The 41st Annual Forfaiting Conference

It was at Barcelona that the new bigger and better The International Trade and Forfaiting Association was launched! As Paolo Provera, the Association’s Chairman said the organisation would now be even more of a facilitator for global trade. 

ITFA will seek to spread knowledge about global trade developments and global best practices (the ITFA’s” know how”), offer networking platforms networking to facilitate both deal-making and career development and offer dispute resolution through conciliation and arbitration. It would also work closely with organisations like the ICC Supply Chain Forum which were now emerging as critical to global trade.

The Barcelona conference was attended by 173 participants representing 35 countries reflecting the ITFA’s broad global reach and access to expertise. For the complete set of presentations click

For GTR News report on the Barcelona Conference and the revamp of the ITFA click

For TXF News report on the Barcelona Conference and the revamp of the ITFA click

For the report on the Russia and Iran sanctions from TFR with a quote from Grant Eldred’s presentation at Barcelona click 

Message from the New Board Member

Luiz Simione: MD, Global Head of Forfaiting & Risk Distribution, GTRF, HSBC Bank Plc 

I am delighted to be to be appointed to the ITFA Board with responsibility for institutional relations. 

My role is consistent with ITFA’s ambition to become a stronger representative of the Forfaiting and Risk Distribution industry. The aim of the “Institutional Relations” function is to actively cooperate with other subject matter experts and associations (such as the ICC, BAFT and Supranational Institutions such as the EBRD) and share best practices, participate in working groups and coordinate amongst regulators to ensure an outcome that is satisfactory to all industry stake holders (including regulators). 

I am writing to you directly from the USA where I attended Sibos conference in Boston. Most of the participants here articulated the demand for more training in Trade instruments, focusing on the secondary market, and the relevance that regulatory aspects have in their current business environment. Once I had the chance to talk about ITFA and our aspirations to represent even more the Trade Finance market, the reaction was very positive. Though most of participants demonstrated concerns about volumes, margins compression and the macro-economic environment, they still believe that international trade remains a solid proposition for financial institutions and ITFA can assist them developing that business. I am excited about the challenges ahead and will devote all the necessary energy to achieve our objectives. 

With my best wishes,

Luiz Simione

Message from the New Board Member

Damian Austin: Director, Head of Trade Finance Syndications, Corporate Banking Origination, Barclays

I was delighted to be voted onto the ITFA board last month and I am sorry I was unable to attend the conference. As most of you will know, I was otherwise engaged having become a father for the second time, so had a valid excuse for my non-attendance

I am very pleased to be given the responsibility of looking after the ITFA Regions, something I am hoping to bring energy and drive to. Having been an active participant in the market for nearly 20 years, I will look to bring the knowledge and industry contacts I have gained during that time to the table.

For me personally, the ITFA represents a voice across the industry and wider trade finance markets and is a platform not just for marketing and networking but also thought leadership, promotion of best practice and personal and professional development.

So what is on my agenda at this time? Like many of you, ongoing and ever-changing banking regulation is a key focus for me. These proposed regulatory changes may result in a number of unintended consequences for the trade finance industry, and it is therefore essential for us to have a voice as an industry around such matters.

ITFA has therefore taken the initiate to help lead discussions and provide support in lobbying on several regulatory topics including Dodd Frank and Capital Requirements Regulations (CRR) under CRD IV, both of which have specific reference to ITFA members. I would therefore encourage all members to reach out to ITFA, through their Regional Committees, when such issues arise.

With best wishes 

Damian Austin

Retirement from the Board of the ITFA

Sema Zeyneloglu, Global Head Financial Institutions EM at Rabobank

Sema Zeyneloglu retired from the ITFA Board after three terms of service. Her successful career has developed in new directions and has left her less time to devote to ITFA. She does not leave the association behind however. In her speech at ITFA’s AGM she expressed her continuing support for the association and her continued willingness to help with new projects in the future.

African Simbas are ready to roar: What makes Africa the ‘hot’ continent?

Dr Benedict O. Oramah, Executive Vice President, Business Development & Corporate Banking at AFREXIM Bank

Africa is Forfaiting’s New Frontier! This was the crux of the message delivered by Dr. Omrah who highlighted that forecasts indicated that African economies would grow by an average of 5.5% to reach US$10.4 trillion in 2050 with trade the major driver of growth, significantly with Asia. African trade was expected to rise by about 7% per annum to US S 2.1 trillion by the year 2020 with about 40% being with China and India. Intra-African trade, too, would exceed 16% of the total trade in 5 years, he said. Cross-border trade and investment flows that had been long suppressed by socio-political challenges and customs procedures have seen a rebound over the last decade, he pointed out. FDI inflows, which stagnated at around US$9 billion, have grown four-fold in a decade, consistent with the kind of FDI inflows that propelled Asia in the 1980s.

Dr. Omrah highlighted the changes across the industrial and agricultural spectrum across the continent pointing out that bankers would soon be required to finance cement, fertilizer and similar exports from West Africa and elsewhere.

The opportunities therefore were significant in areas like:

1. Large pre- export financing deals in the coming years as investments go into agriculture and heavy industries

2. Credit insurance, especially if the credit insurance market expands its risk appetite for non-traditional markets.

3. Forfaiting and factoring which was expected to grow from current volumes of US$23 billion in 5 countries to US$35 billion in 15 countries by 2017. 

He highlighted that, as with Asia, Africa is today a beneficiary of many initiatives to promote African trade, including AGOA, EU-ACP initiatives, etc. Further access to Asian markets is becoming an important factor. Not only does the Asia region have a large population, its effective market is growing — due to an expanding middle class — and the region’s success in addressing poverty. A striking feature of the recent growth performance is Africa’s relative resilience and robustness to external shocks. Relative to the contractions suffered during the early 1980s and 1990s on account of the Latin American debt crisis and the Asian debt crisis, Africa was one of the few developing regions that weathered the global financial and economic crises that broke in 2008/9, Dr. Omrah said. For the complete presentation please click

Cautionary Note on Russian Sanctions

Sean Edwards, ITFA Deputy Chairman, Head of Legal EMEA, Sumitomo Mitsui Banking Corporation Europe Limited

Guidance is needed on the recent extension of the EU sanctions on Russia which came into effect on 8th September (EU Council Regulation 960/2014) and which contains a number of unclear provisions:

· The new sanctions prohibit making, or taking part in the arrangement of, new loans or credit after 12th September 2014 with a term of more than 30 days. It is unclear whether this refers to new loan agreements entered into after that date or if drawings under pre-12th September committed loans will also be impacted by the sanctions regime. (OFAC sanctions permit drawings of any length under pre-sanctions agreements).

· The term “credit” is not defined and it is unclear whether letters of credit are impacted by the sanctions regime or if only certain roles under L/Cs would be impacted might be possible to advise an L/ C but not act as negotiating bank.

· Trade Finance appears on the face of it to enjoy an exemption from the prohibition on the granting of loans or credit mentioned above where they “have a specific and documented objective to provide financing for non-prohibited imports or exports …between the Union and Russia”. This exemption does not, however, include imports or exports from outside of the Union e.g. from China even where those goods are not prohibited. As a result EU based banks may not be able to finance such transactions and will be at a disadvantage compared to non-EU banks.

ITFA will issue a notice to members if the EU clarifies these questions. Until then caution must be exercised and legal advice sought as necessary by EU members of ITFA if they are involved in situations where these issues rise.

Important Survey on Dodd-Frank Title VII

Paul Coles, Director, Global Trade Risk Distribution. Global Treasury Services, EMEA, Bank of America Merrill Lynch

Whilst the market still appears to be generally awash with appetite for trade assets (and a relative shortage of suitable assets for sale to meet the demand), there are always some challenges brewing that can affect our industry.

One such matter is the confusion in past months around Dodd-Frank Title VII. This is highlighted by the fact that a number of players in the trade finance risk participation market are still trying to reach a definitive conclusion as to what the impact might be, whilst an even larger number are seemingly unaware of the issue at all. This isn’t too surprising, as it is buried in legislation that is not actually aimed at the world of trade finance and therefore wouldn’t naturally appear on the radar.

We will very shortly be posting a more detailed explanation on the website of what it’s all about and what steps are being taken, however in the meantime we would like to remind you that ITFA is conducting an important survey in order to help resolve this issue. The data will then be aggregated and will be passed to BAFT only, to assist in lobbying the US authorities.

Banks who have not yet responded to the survey are strongly encouraged to do so in the interest of the industry as a whole.

Please take a few moments to collect the following data and feed it back directly to ITFA via the following email address:

* How many sub-participation agreements does your institution have in place by number?

* What approximately is the value of the transactions completed by your organisation during the last financial year under such agreements?

* What proportion of these transactions were unfunded?

* What proportion were unfunded participations in underlying funded assets?

The information provided to ITFA for this survey will be treated as confidential. ITFA will collect the information and combine it with existing data which will be passed to BAFT only, to assist in lobbying the US authorities. No identifiable information for any organisation will be shared with any other party.

We hope that some positive progress will have been made by the time our next newsletter comes out!

The ITFA and the EBRD working together - Call for Membership

We are working to build stronger links into central and Eastern Europe, Southern and Eastern Mediterranean in collaboration with the EBRD. The ITFA was invited to attend the EBRD TFP Trade Finance Forum, which as you all know, is focusing on the development of Trade Finance and Forfaiting in the EBRD countries of operation covering FI's and SME's. The EBRD is working with over 800 banks in 77 countries. We hope many of you attending the Forum will join us as members and we look forward to working with you in building strengthened ties across the trade finance markets globally. We encourage you to go to our website for the ITFA membership form. 

Here is a link courtesy of TXF on the EBRD TFP conference.

Upcoming Events

The Association of Trade and Forfaiting in the Americas (ATFA) is holding its 4th Annual Canada Networking Seminar Reception in Toronto, Canada, on Tuesday October 21, 2014. To register click

 In Memoriam                                                  

Emilio Botin: The Legend

As we were about to kick off our annual conference in Barcelona earlier in September, we learnt with great sadness, of the passing away of Emilio Botin, Chairman of Banco Santander. He was 79.

Emilio Botin was responsible for the transformation of the Bank from a medium-sized Spanish lender to one of the world’s most successful banking entities. He is survived by his wife Paloma O’Shea and his children. 

His eldest daughter, Ana Patricia Botin, the former Chief Executive of Santander U.K. has succeeded her father as the group’s Chairman.

On behalf of all our members, friends and colleagues we express our sincere condolences to his family, friends and the whole of the Santander team of professionals worldwide.

ITFA Board