CHAIRMAN'S MESSAGE - Paolo Provera, Chairman ITFA / General Manager ABC International Bank Plc.- Milan Branch

Dear Members and Friends,

It is with great pleasure that I am writing this third newsletter of 2015 as, by the time you get to read this, we will be well into the second quarter of the year. With Q1-2015 behind us, I am sure that you will all agree that it was a rather challenging one to say the least, as trading conditions around the globe made sure that we were kept on our toes for pretty much most of the time.

As we all know, Emerging Markets have had a rough start to 2015, with the continuing appreciation of the dollar (negatively affecting those countries that have got a portion of their debt denominated in US dollars), declining price of oil and overall declining demand in global growth, most notably from China and Russia. However, recent dovish comments from the US Federal Reserve’s Chairwoman Janet Yellen may herald a deceleration in dollar gains, particularly against Emerging Market Currencies.

Global concerns about weak inflation continue to make headlines, with more than 20 central banks having eased policy so far this year, many in surprise moves. Lower inflation due to commodity-price weakness is having differential effects on oil importers and exporters. A number of countries and regions have posted stronger-than-expected growth (the Eurozone, for example), but there have been more disappointments (US, China, Brazil) than positive surprises. It is imperative therefore to appreciate that, all-in-all, monetary policy is loose (or easing) in most countries with the ultimate aim of stimulating global growth and propping up inflation and inflationary expectations. 

As we have communicated in our previous newsletters, the ITFA Board is working hard to continue to grow the depth and knowledge of expertise within the Association, by attracting new members from a wide array of regions and lines of business. To this effect, we can comfortably and proudly say that each month we are welcoming 3-4 new institutions, on average; quite a feat as more international players are appreciating the benefits of forming part of an Association such as ours.

On a different note, our Association has once again been invited to take part in a survey carried out as a joint initiative between ITFA and the Asian Development Bank (ADB). The survey can be accessed by clicking here. Whilst we thank you in advance for taking the time to reply to this survey, please do not hesitate to contact your Regional Committee's chair person or directly to Sean Edwards (sean_edwards@gb.smbcgroup.com) or Lorna Pillow (info@itfa.org) via email.

As highlighted above, the challenging market conditions for Emerging Market economies in 2015 are taking its toll on Emerging Markets, with this topic expected to be one of the main points of discussion at the ITFA 42nd Annual Conference which will be held in Dubai at the Jumeirah Beach Hotel, between the 28th and the 30th of September. Rest assured that the ITFA team will leave no stone unturned in ensuring that this much awaited event will turn out to be a great success…we thank you for your constant support! So please…save the date!

As always, we look forward to hearing from you with any feedback you may want to share with us by sending an email to myself, any of the Board Members or to our general email, info@itfa.org.  

Best wishes

Paolo Provera

RUSSIA UNDER SANCTIONS: A VIEW FROM THE INSIDE by Dmitry Kuryshev, First Vice President/Global Trade Finance, Chief Representative - ABC International Bank Plc

After Ukrainian situation burst out in November 2013, nobody thought that might have such serious consequences for Ukraine, Russia and the EU. Economic sanctions introduced by a number of countries including the USA, the EU, Canada, Switzerland, Japan, Australia etc in summer 2014 limited international capital and debt raising opportunities for Russian banks and corporates, slightly affecting trade finance and even bank-to-bank transfers, especially those denominated in USD. Compliance is now the key word for each and every bank globally when it comes to anything related to Russia in their day-to-day business. In addition to restrictions on new Russian debt and equity, S&P and Fitch downgraded Russian sovereign ratings to below investment grade levels. On top of those factors, crude prices went down, decreasing inflows of hard currencies to the country.

The above weighed hard on Russian economy – 2014 GDP growth of 0.6% only, -2.5% in investments, inflation (CPI) went up to 11.4%, RUB depreciated almost 1.7 times to USD and EUR. Local interest rates hiked to 11-17% p.a., and those still capable of either borrowing abroad or doing trade finance noted increased rates and fees charged by their overseas counter-parties. Secondary market appetite for Russian risks dried out, and foreign lenders selectively stick to their customers’ business only most of times.

But was that really all gloom-and-doom, and what happens to Russia now?

Russian borrowers are still fully and timely repaying their international debts, including any trade related obligations. New business is limited but is offered at more lucrative terms, and new structures are in place to adapt the business to be compliant to sanctions regimes (e.g., financing Russian corporates against bank guarantees instead of funding those banks directly). The government and the Central Bank have developed a crisis plan to support key local companies and financial institutions in case they face difficulties in repaying their international borrowings.

I believe all those troubles on Russian horizon are a headwind, but not yet a tornado. If someone still remembers 1998, the situation was almost the same then, with the exception of political tensions with the West, and afterwards the country pushed for development. It was widely argued that Russia missed a chance to diversify the economy from being heavily dependent on oil and gas exports – probably this time is another chance to do something about that. Depreciation of RUB makes Russian non-oil exports even more competitive and the lack of hard currency coming into the country as investments and debt makes the Russian government to promote non-oil exports even harder these days. Drop in imports may further ease up the pressure on Russian FX reserves and we saw almost 40% decline in imports to Russia during 2014. It should be also mentioned that EU sanctions do not restrict financing of exports of non-sanctioned goods from EU countries to Russia – therefore there are still a good number of opportunities for trade and export finance.

NEW ITFA MEMBERS

The ITFA Board is pleased to announce the following three new members.

Operating primarily within Africa and the Middle East the focus of African Forfaiting Limited (AFL) is to provide long term financing and forfaiting solutions for large infrastructure projects in the telecom, mining, construction, transport and power sectors.

Their boutique approach to forfaiting means that AFL is nimble enough to move quickly whilst drawing on a wealth of expertise and experience. Matching clients with the most appropriate bank for each individual project is AFL’s acknowledged speciality. Syndication of debt is a complex transaction made simple by the in depth working knowledge of a number of regional and international banks and financial institutions.

AFL has built partnerships with banks across Africa and the Middle East by being fully conversant with their mandates and objectives. Their success is based on the ability to match their clients requirements with those of the relevant financial institutions. AFL offer long term support to clients for transactions that are often quite challenging, resulting in strong relationships which are mutually rewarding for their clients and the banks.

Urvesh Rajani will be the main contact in relation to ITFA.

Mashreqbank  is one of the leading banks in UAE with a growing presence in the GCC region including Egypt, Qatar, Kuwait and Bahrain. The bank also has four branches and three representative offices in seven other countries.

In the Middle East, Mashreq is a full service retail and corporate bank, and in London, New York, Hong Kong and Mumbai the branches form part of the bank’s financial institutions division.

In all locations trade finance is a key business area. From the simplest of trade related transactions, like advising, confirming, negotiation and discount, to originating and structuring more complex transactions. We provide our expertise in multiple countries and currencies to importers and exporters at highly competitive rates.

Robert Dollery will be the main delegate with respect to ITFA matters.

Africa Trade Finance Limited (ATF) focuses on the origination and distribution of African trade finance transactions, with a target to accompany new and non-traditional financiers such as banks, funds and alternative lenders in investing in African trade assets.

ATF has a solid network within leading African trade finance institutions, underpinned by a deep understanding of the risks associated with regional and pan African credit markets.

ATF's strong technical expertise in trade finance structures and instruments, together with enhanced due diligence and governance, makes it a leader in African Trade market.

Christian Karam will be the main contact in relation to ITFA.

UPCOMING EVENTS - SAVE THE DATE

The ITFA board is excited to announce that all the preparations for the 42nd Annual Trade and Forfaiting Conference which is to be held in Dubai between 28th - 30th September are well on track, both for the conference and for launching new initiatives which we will tell you all about at the conference. To view the conference flyer, please click here, however, for any further details regarding the conference, please click on the following link.

The ITFA Annual Conference continues its tradition to deliver on its strengths of quality planning, leading industry speakers and panellists, and networking opportunities all in one successful conference. With the experience and expertise of ITFA's past conferences, together with the high profile industry experts and hot topics to be discussed, this conference is sure to be another great success.

So please do not forget to save the date!


Also, we would like to inform our members that BAFT is holding its Annual Global Meeting - The Americas and Regulatory Compliance Forum. This will be held between 3rd and 6th May in Miami, Florida. In order to register for the conference please click here. 

TUTORIAL - BECOMING FAMILIAR WITH VARIOUS FUNCTIONS ON THE ITFA WEBSITE

From feedback we have been receiving, the inclusion of the tutorial page has been quite a hit. This success brings us to the next tutorial where we will be tackling something new and exciting. While in previous tutorials we took a step-by-step approach on how to create and update posts in the ITFA website, and also how to style the text included in a post , this month we will be explaining how to upload images into a post and how to add and use the ''Read More Tag’’ function.

How would you go about uploading an image in a post?

To add an image to a post you first need to select where you want to include the image in the text area and then click on the ''Add Media’’ button.

The following screen is displayed. One then has 2 options; you can either choose an image from the ''Media Library’’ (already uploaded images) or you can select an image ''From Computer’’ to upload new images.

To select an image from the media library just click once on the ''Media Library’’ tab, then select the image you want and click on ''Insert into Post’’ and finally click on ''Submit for Review’’ in order to update the post.

Alternatively, to upload a new image select the ''Upload Files’’ tab on top left of the page and then click on ''Select Files’’. Choose the image you wish to upload, then click on ''Insert into Post’’. Once you have uploaded the image, simply click on ''Submit for Review’’.

How would you use the ''Read More’’ tag?

When a post is rather long, one may use the ''Read More’’ tag to shorten the post in the front page of the website. The users will still be able to view the full post, however at first glance one can only see the first few lines. Then, once you click ''Read More’’ from the actual page, the whole post appears.

Simply select where you want to insert the ''Read More’’ tag and click on the following button as shown below.

Once you click on the button, the read more tag is entered automatically in the text area. You can now save the post by clicking on the ''Submit for Review’’ button on the right hand side of the page.

It is as simple as that. Together, we have now learnt how to use two very useful functions in the ITFA website; uploading an image into a post and using the ''Read More’’ tag. We truly hope you will soon be using what you have learnt by becoming active in the ITFA website.