Monday 16 November 2015

CHAIRMAN'S MESSAGE - Sean Edwards, ITFA Chairman / Head of Legal at SMBC

Dear Members and Friends,

As we put this newsletter to bed, the tragic news of the Paris attacks began to appear on, and then dominate, our television screens. We are not aware of any fatalities or injuries amongst our Paris-based members, a blessing to our close-knit market. ITFA condemns terrorism and the use of violence in all circumstances.  One of the often cited reasons for alienation amongst those perpetrating terrorism is poverty. I have always believed that responsible business is the greatest antidote to poverty  and that, in the less developed and emerging world, this is best encouraged through the development of international trade. Enabling this business is our business as trade financiers and is, in particular, the vocation of our own market which provides fast, liquid and simple solutions to enabling trade. This was the clear conclusion I took away from the Afreximbank Advanced Structured Trade Finance Seminar held last week in Nairobi (more on this in the next newsletter) where an ITFA team was invited to speak.

Looking at the markets, we are into the final stretch of 2015, a year which has clearly had its challenges not only for the adverse market conditions within which we have had to contend with for pretty much the greater part of the year, but also for the less benign outlook which is seemingly hampering economic growth within the emerging market (EM) economies.

Emerging Markets (EM) have been pretty much in the limelight for the best part of H2 2015. The year-long depreciation of EM currencies from mid-2014 up to the beginning of September was highly volatile at times. However, many of the major EM economies managed to withstand the negative spill-over effects in the past year. EM are more robust and better equipped to deal with crisis, however, there remains lingering structural risk from the massive build-up in foreign currency liabilities and weakness in capital inflows. Furthermore, banking systems are more robust whilst financial regulatory has improved markedly. This has enabled EM currencies (and subsequently their respective underlying economies) to be less susceptible to crisis.

During the month of October, EM benefited from large inflows in credit markets and a relief rally ensued. Asset classes which had sold off in August and September, particularly the energy sector (oil & gas), as well as the mining and metals sector were amongst the best performers in October. Apart from investors wanting to take advantage of beaten down valuations, this positive performance came on the back of supportive and accommodative central banks in China and the Eurozone, and a seemingly clearer path of interest rates as dictated by the US Federal Reserve. Since October, the picture has been mixed, however, with the Paris attacks adding to volatility.  

My appointment as Chairman to the ITFA board has coincided with this period of uncertainty.. I think that volatility and weakness is to remain the new normal for some time, but I can assure you all, that as far as ITFA is concerned, both the Board and the team behind the scenes will strive to achieve the best position for all members of our growing Association. The trade receivables market contains much untapped supply, as we saw in Nairobi, and bringing our members closer to those markets is, and will continue to be, one of our major goals.     

May I remind you all that with the Christmas season just around the corner, the ITFA Board is pleased to invite all ITFA members to attend the yearly informal gathering; the ITFA Christmas Cocktail Party. As previously communicated, we would greatly appreciate if you could RSVP on by latest 25 November 2015. The event is being held at The Roof Garden, Kensington, London on Monday 7th December 2015 at 19:00 hrs. To view the invite please click here. As always, we encourage you all to attend this valuable networking opportunity, so please…save the date! As a reminder, this event is open to members only.

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,  

Best wishes,
Sean Edwards

Sunday 15 November 2015


Clarissa Dann reports from the 42nd annual ITFA conference in Dubai that forfaiting is alive and well and it's all change on the board.

When Paolo Provera addressed a packed auditorium at the Jumeirah Beach hotel in Dubai for the last time as ITFA chair, he confessed that his earlier misgivings about venturing outside Europe to Dubai were unfounded.
Some 230 participants representing around 30 countries set an all-time record for the professional body's main annual gathering, and the choice of location has widened ITFA's Middle East reach.
"While we have tried to cover the full spectrum of trade finance, we should never forget that forfaiting is the heart of our association," said Provera.
The 42nd annual conference had themes of endings, beginnings and continuations, not least of which because there were ITFA board changes. In Clarissa's preview, "All aboard!", she recalled how one delegate said that attending these conferences was like being at a wedding and was made to feel part of the family. Having had four "weddings" under her TFR belt, this year Clarissa's thoughts had been propelled to the other end of the life spectrum.
"Our personal thoughts go to a friend of ours. You remember Kendrick, the man with the pink camera, he passed away a few days ago and I would like you to raise a glass to him tonight", added Provera. Kendrick Struthers Watson was my partner, who had joined me in Dubrovnik and Barcelona, and had helped out as photographer at many events. It was a testament to the inclusiveness and sense of family at these gatherings that I felt able to attend, knowing I would return to his funeral. And we did raise our glasses that evening - in our flip-flops on Jumeirah Beach. The stars were particularly bright that night.
New committee
Provera closed his remarks by officially standing down as chair while remaining honorary chairman, and it was at the annual general meeting that vice chair Sean Edwards (head of legal at SMBC Europe) was confirmed as his successor. ITFA treasurer Daniel Schär also said goodbye. The line-up with new board joiners (marked*) comprises:
  • Sean Edwards, SMBC: chairman.
  • Damian Austin, (resigned from Barclays): deputy chairman and head of regions.
  • Lorna Pillow, London Forfaiting Company: head of communications and membership.
  • Silja Calac, Swiss Re Corporate Solutions: head of insurance and treasurer.
  • Paul Coles, Bank of America Merrill Lynch: head of market practice.
  • *Chris Hall, Lloyds Bank: head of young professionals.
  • *Zeyno de Vries-Davutoglu, Credit Europe Bank: head of education.
  • Jing (Jane) Li, Bank of China: head of Asia.
  • *Anurag Chaudhary, Citi, head of institutional relations.
Board papers indicated that the ITFA was in good shape and profits are being invested into market practice, regional committees and more marketing and communications.
Economic winds of change
First on the conference podium was Lloyds Bank Commercial Banking's chief economist Professor Trevor Williams. He said the "gale blowing through the global financial markets and relationships" was the result of "huge demographic changes underway in the world, adoption of the market economy and best practices, and the spread of information technology." 

Three factors dominated the outlook for the second half of 2015:
  • the imminent start to the normalisation of US - and eventually UK - interest rates;
  • the greater-than-expected weakness of the Chinese economy, with possible policy reversals; and
  • the continued fall in commodity prices (the last two are inter-connected).
Just over one month after the conference, we now hear that Federal Reserve may have an increase in short-term interest rates on the table by December (it has not lifted rates since 2006). This long period of low rates, said Williams, is "telling us that the crisis is not yet over". He made repeated references to the likelihood that US rates are likely to rise before those of other advanced economies - an indicator of its more balanced economy and its head start in 'normalising' rates - but this could have repercussions for the global economy.
"The fact that the shock in China has transmitted itself to the rest of the world shows how much relationships have changed," he pointed out before moving onto the commodities prices' continued fall. This, he said, exposed the frailty of those economies dependent on commodities exports. "The decline in oil prices is positive for advanced economies and some emergers but there are significant losers as well among the oil exporters."
"The slow growth in world trade is leading to another year of below trend GDP growth," he observed. But Williams remained optimistic about global growth and trade in medium term, driven, he says, by improving trade links, the adoption of best practices and demographics.
Insurance and supply chain
In recognition of the fact that insurance has become an increasingly important part of international trade finance, ITFA set up its new insurance committee on 18 August 2015, chaired by ITFA board member Silja Calac with Willis's David Neckar as secretary.
It was formally announced at the Dubai conference. Calac said, "There are many different insurance products which support banks in their task to forfait receivables, finance trade or issue guarantees and letters of credit. But bankers as well as brokers and insurers are often complaining that this cooperation is not as smooth as it should be: lack of information, misconceptions, regulations, internal barriers often hinder insurance companies from providing efficient protection to transaction banking."
Key objectives of the committee is to promote a deeper understanding of the role insurance plays in trade finance, and of the support which ITFA members need in order to make cooperation between banks and insurance smoother. Also, education is considered a top priority of the committee.
In a presentation that focused on the banks' use of credit insurance as a risk mitigant and a means of obtaining regulatory capital relief (the insurer's policy takes the place of the borrower's credit exposure), David Neckar set the scene for why insurance is such an important tool.
"We have seen a huge pressure on liquidity, accompanied at the same time by a very difficult shrinkage in the economy, which has meant there are more banks looking to develop opportunities with plenty of capital in a field that has shrunk, but where regulation has grown exponentially." Lack of understanding of what credit risk insurance can do for banks and businesses was, he said, one of the main reasons why its use was not more widely developed. The ITFA is determined to put this right.
Less dramatic but no less illustrative of the role of ITFA in the increasingly broad and cross-pollinating world of trade receivables finance were presentations on the ICC’s Supply Chain Finance Definitions project from Abhijit Prasad of HSBC and, to round off the conference from Edwards, on the Basel III opinion commissioned by ITFA from Sullivan &Worcester on the credit risk mitigation status of the BAFT master sub-participation agreement. The Supply Chain Finance Definitions will be shaping TFR's coverage of SCF as they evolve, but for the moment it is sufficient to say that forfaiting is acknowledged as one of the leading techniques in this field. The Basel opinion is, as Edwards said, a “present” to ITFA’s members: a cost-effective way of dealing with one of the myriad impacts of Basel on trade finance.
Forfaiting to the rescue
One of the highlights of the conference programme was the panel session chaired by the ICC Banking Commission's charismatic Vincent O'Brien on originating, financing and distributing trade receivables. Panellists included Damian Austin (ITFA Deputy Chairman), FIMBank's Simon Lay, HSBC's Abhijit Prasad, and Emirates NBD's Faisal Lalani.
When asked for an example of a "war story", one panellist shared how his bank had "put a classical forfaiting structure around what was traditionally a receivables financing facility", and had "moved an invoice discounting facility into a syndicated bills of exchange structure to eradicate performance risk on the seller". He continued, "The bill of exchange gave certainty of payment and removed some of that performance risk. The seller got into financial difficulties, but the structure we put around that protected not just us but the other banks in the eight-bank syndicate and nobody lost a penny because of the structure we put in".

Whoever said forfaiting was dead?

Saturday 14 November 2015


Chris Hall is Head of Trade Asset Management (TAM) for Lloyds Bank’s Global Transaction Banking, responsible for the development of the secondary market trade finance offering. Chris is based in London and has been in this role since early 2015 when he joined Lloyds to set up and establish TAM. Before this, he spent 9 years at the Royal Bank of Scotland.
Chris has 10 years of transaction banking experience, through sales of trade finance and international cash management solutions to corporates in London and the South East, followed by working in Trade Distribution, dealing mainly with Financial Institutions. He has also worked on the project delivery and strategy side of Transaction Banking, having been Business Manager to a senior Change Management executive.
Chris holds a LLB in Law from the University of Bristol and has attained Associate Membership of the Corporation of Treasurers (AMCT).
''Having been elected onto the ITFA Board at the recent conference, I am delighted to have been asked to build on the great work already done on the Young Professionals side of our business.

As Sean alluded to in his introduction to October’s newsletter, I think that the whole industry, let alone this organisation, is at a crossroads. I am keen to harness the wealth of experience we have in the trade finance and forfaiting world and use this to develop the next generation of colleagues and by extension the future growth of our markets. For me, this requires us to look across the whole spectrum from the back office through to the front office and to this end, I would ask all members of the Association to nominate those who you think would benefit from this development.

I will be working closely with both Paul Coles and Zeyno de Vries-Davutoglu on the Market Practice and Education briefs as they are inextricably linked. We would like to run some round-table sessions and panel discussions, quite possibly on a virtual basis to allow greater participation and would like to tie in with some of the mentoring work that Duarte Pedreira has been running. For new entrants to the industry, much of our world, whether it be our products or MRPAs can be a mystery that we would like to help clarify! I would ask all members of the Association to nominate those who you think would benefit from this tailored development and mentoring and similarly, should any of you like to be mentors, then please reach out to Duarte or myself.

Many of you will have attended the “Alternative” or the ITFA Conference and I am delighted to see so many colleagues joining for the first time. We will work to create more, similar, opportunities for networking and development and will co-ordinate with the regional committees and where possible make sure that our Young Professionals can build strong cross-border networks which will allow them to function effectively in the business.

You will also have seen that ITFA will be starting to use Twitter, Linkedin and other forms of social media more often, giving greater exposure to both the Association’s and YP’s latest news. If you haven’t already, please connect with, or follow, ITFA and watch out for our updates and retweets!

Amongst others, Johanna Wissing, Philipp Moulas and Duarte Pedreira have been heavily involved with these initiatives so far - my thanks to them all - if there are any other volunteers who would like to work with us on developing this further, please let me know by sending an email on''

Friday 13 November 2015


The ITFA Board is pleased to announce the following new member.

Tawreeq Holdings is a group of related corporate entities, based in the UAE and Luxembourg, offering comprehensive Sharia-complaint Supply Chain Finance (SCF) solutions targeting SMEs and their corporate clients in the public and private sectors across the MENA region.

Tawreeq Holdings Group offers its range of services across four separate subsidiaries, utilising the flexibility to serve its clients. The Group includes Dar Al Tawreeq Forfaiting and Factoring Services, ISCF Limited, Tawreeq Investments and HMR Consulting. The range of services include Sharia-Complaint factoring, forfaiting, reverse factoring and tailored SCF solutions offered through the world-first Sharia-Complaint SCF platform.

The Group offers multiple trade secularization programs and other innovative short-term asset-backed alternative investments.

Harish Parameswaran will be the main delegate for all ITFA related matters.

Tuesday 10 November 2015


With Christmas fast approaching, the ITFA Board is pleased to invite ITFA members to attend its yearly informal gathering; the ITFA Christmas Cocktail Party. To view the invite please click here. The event is being held at The Roof Garden, Kensington, London on Monday 7th December 2015 at 19:00 hrs. 

Invites to the Christmas event have already been sent to the main delegate of each member association and to non-member individuals who attended the Dubai Conference. Please keep in mind that the invite is for MEMBERS ONLY and access to the event is restricted to 5 confirmed guests per member institution. Names of attendees are to be kindly sent through the main delegate. We truly appreciate should you RSVP on by latest 25 November 2015.

May we also take the opportunity to remind all our members of the ITFA Insurance Committee Presentation which is being held at Liberty Specialty Markets, 20 Fenchurch Street, London on 7th December,  just before the ITFA Xmas Party. Admission to the event is at 15:30 hrs and will end at 18:30 hrs. This event is open to two delegates per member institution, therefore we would appreciate if you could RSVP on by latest 25 November 2015. 

As always, we encourage you all to attend these invaluable networking opportunities. We look forward to seeing most of you there. So the date!