Monday 5 June 2017

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

Dear Members and Friends,

Before we get down to business, permit me an emotional moment or two. Since my last message the United Kingdom has been rocked by two dreadful terrorist incidents. The first targeted young children the age of many of our own; the second was too close to home for the many of our members who work in the City of London. Londoners and Mancunians are of course only the latest ones to have suffered. We are told that terrorism is a long-term problem; it is equally clear that each and every one of us must help to turn the tide. The harmony that is evident in the relationships between our members, a global community of different faiths, seems to me a better alternative than the messages of extremism.  

And when we work together what a world of (peaceful) opportunity this is. As we head into the last month of H1, the rally in emerging markets witnessed during the first five months of the year showed no signs of abating, with capital markets in the region remaining well in demand. Trading activity remained robust and this translated into a supportive global search for yield, within an asset class (region), which has so far remained versatile and offers minimal volatility.

As we announced at the beginning of the month, we have now opened registration for the 44th ITFA Trade and Forfaiting Conference. Click here for more information and to register. Attending the annual conference is essential to doing business in the trade finance market and a good chance for all markets to exchange views with each other. We do hope that you will participate and we look forward to having the chance to welcome you to Edinburgh. Early Bird discounts are available till 30 June so register at your earliest to benefit from the preferred rates.

In the June edition of the ITFA Newsletter you will find a thought-provoking article entitled ‘’SCF and Trade: Fitting into the Landscape’’ written by Katharine Morton of TFR. Our regular feature - Chart of the Month, contributed by Dr. Rebecca Harding of Equant Analytics looks at Article 50 - time to take a strategic look at trade. Finally, we update you on the SERC event which took place in Madrid on 28th April and the NERC Spring event that was held in Amsterdam on 11th May 2017, just the latest of our ever-increasing list of regional events.

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

SCF AND TRADE: FITTING INTO THE LANDSCAPE by Katharine Morton - Editor in Chief, TFR

Financing trade is increasingly seen as an element within corporates’ holistic working capital and liquidity management solutions. Katharine Morton (Editor in Chief, TFR) explores the changing SCF landscape from the perspective of corporate end users and banks and fintechs and the convergence that’s inevitable.

Corporates are increasingly seeing trade as less of a separate ‘thing’ to be financed and more of a part of an integrated global working capital picture. That’s been one of the big shifts in trade finance over the past decade. And for many companies, that means making sure trade finance fits into supply chain finance (SCF) solutions.

SCF is a rather clunky and unfortunate term – but it now benefits from having a master definition [1] as a series of processes and techniques (rather than simply supplier finance).

In this, SCF is defined as ‘the use of financing and risk mitigation practices and techniques to optimise the management of the working capital and liquidity invested in supply chain processes and transactions. The term is most often applied to open account trade and is triggered by supply chain events. Visibility of underlying trade flows by the finance provider(s) is a necessary component of such financing arrangements which can be enabled by a technology platform.’

This definition has evolved hand in hand with the evolution of technology (and particularly the visibility of e-invoices digitally). Successful SCF is viewed as a programme rather than a product, or series of products. Moreover, many corporate treasurers and providers are moving away from using the term SCF at all, and wholly focusing on working capital and/or liquidity management solutions.

A convergence of factors is driving change. First is the evolution in global trade patterns, embracing cross border e-commerce and open account trade and changing the expectations both of consumers and, in turn, corporates themselves. Second is the (albeit gradual) improved ability of banks to adopt new technologies, and their appetite to adapt to their clients’ changing needs.

Corporates traditionally bought trade products separately from treasury products. That’s changing and there is now a shift in the buying behaviour for trade as companies increasingly focus on the working capital cycle. ''The metrics for CFOs have changed, and they are increasingly being measured on improvements across the working capital cycle. That is filtering down, creating the need for end-to-end solutions. Trade is a critical component of that change,'' says Percy Batliwalla, global head of trade and supply chain finance, GTS at Bank of America Merrill Lynch.

It’s not only banks active in SCF, but they have dominated the more mature areas of the market where a single large company typically acts as an ‘anchor’ credit for its suppliers in the case of reverse-factoring/supplier financing solutions. Banks have also generally focused on the largest corporates.

''SCF dominance still largely resides within five or six banks with the platforms and financial muscle,'' says Prabhat Vira, president at Tungsten Network Finance. ''What’s happening, or is about to happen, is a convergence in terms of the efficiency play between the digital automation of suppliers and buyers and working capital between supplier and buyer trade flow relationships.''

For sure, in a post-Basel world where capital is tight, banks are not always finding SCF the product they thought it was. ''The number one thing for banks is return on capital,'' says Vira. ''The second and third together is that the amount of administrative work and effort required to integrate technology and onboard suppliers is a lot so not every deal is making sense as they are too finely priced and the work is too much. The product itself within banks is not growing by leaps and bounds.''

A convergence among platform providers and cooperation and partnership with banks makes sense as the marketplace in which they operate is complimentary – particularly in the emerging area that spans smaller suppliers. Technology has enabled visibility, bulk and scalability for the emerging generation of platform providers (Prime Revenue, Tungsten Network, GT Nexus (Infor), Misys, Demica, Taulia, Basware, Orbian, C2F0 to name just a handful). Many invoices can be on show at a time to be processed and all the providers offer slightly different solutions – some including dynamic discounting. The market is consolidating all the time.

Tungsten itself partnered in February with Orbian to expand the scope of its offering beyond simply e-invoicing through the latter’s bank agnostic platform. Vira points to the fact that larger companies are using SCF for efficiency purposes, and not just to extend payment terms. ''From 2000 until now SCF was a working capital solution extended by banks and it didn’t have digital optimisation – but imagine power of digital plus banks and strategic implication of one stop solution it means better efficiency plus the ability to fulfil strategic objectives.''

Some corporates don’t simply want to extend days payable outstanding (DPOs), which, to be frank, has traditionally been the primary objective of many SCF programmes for corporates (particularly those with supplier finance at the core). In fact, extending payment terms may not be a consideration at all. If that’s the case and the corporate wants to infuse liquidity into its supply chain, say to its SME suppliers to support them sustainably, improve market perceptions or for other strategic objectives, then the new generation of tech-enabled solutions can help.

Platform providers are onboarding larger quantities of smaller suppliers. Tungsten, for instance, boasts 235,000 on its platforms, not limited to the largest suppliers.

Banks too are teaming up with platform providers. In late March, HSBC announced that it was partnering with Tradeshift, a platform provider in which the bank took a minority shareholding in June last year. Tradeshift boasts that it connects more than 1.5m companies in 190 countries, processing transactions valued at more than US$0.5trn a year. The proposition is that, from July, buyers will be able to automate and digitise supply chain processes from all their suppliers and, by combining the benefits of electronic ordering and invoices, document matching and early payment capabilities, will be able to manage all this in one place. Clients will have greater visibility and ease of managing risk as they will be able to manage procurement, accounts payable, supply chain finance and settlement all on one platform on any device. HSBC plans to roll out further working capital solutions through the integrated platform next year.

The promise of technology

These are early days. Technology is constantly poised to digitise trade, but the jump hasn’t quite happened yet.  Trade needs to be part of working capital end-to-end solutions, and that involves digitisation. The perception of trade finance being the Cinderella part of supply chain solutions is still prevalent.

For sure, trade remains a paper based business and multiple touchpoints have to be digitised along the way. It’s going to take time. ''There are significant opportunities for financial institutions to change the way they transact within the banking system,'' says Peter Jameson, co-head of product management, GTS EMEA at Bank of America Merrill Lynch.  ''Banks historically used to look at how they could drive efficiencies within their own trade back-office environment. Now, it is critical for banks to take a view across the end-to-end transaction cycle and consider not just the improvements for their own business, but also what benefits and efficiencies it will deliver to their clients and their clients’ suppliers and customers.''

But when the move does happen, it could happen quickly, it could be driven in part by regulation and, many argue it’s already underway, particularly in Asia. 


Sunday 4 June 2017


Shinhan Bank is the leading Korean bank in South Korea and the Bank has a presence in 20 countries and over 150 offices outside of Korea. Shinhan Bank's main business activities are comprised of Retail, PB, CIB.

Shinhan Financial Holdings, its parent company, has various subsidiaries including Banking, Security Investment, Credit Card, Insurance, Asset Management, Private Equity etc.

Shinhan Bank, London branch, was established in 1991 and since then it acts on behalf of its Head Office and handles diplomatic and international roles in the London Market.

Mr Sung Nyoung Cho will be the main delegate for all ITFA related matters.

Australia and New Zealand Banking Group Limited (ANZ) has a proud banking heritage spanning over 175 years. It has grown to become a leading financial institution and the largest Australian bank operating in Asia Pacific.

Rated (AA-/AA-/Aa2) by the leading agencies, ANZ provides a range of banking and financial products and services to over 9 million customers, employing over 50,000 people in 33 markets around the world. ANZ aims to be the best bank for customers that have trade or capital flows in Australia, New Zealand, Asia Pacific and beyond.

ANZ will be represented by its Singapore branch. Kathy Tan will be the main delegate for all ITFA related matters.


May we take the opportunity to remind or readers about the BAFT Annual Conference on International Trade / Supply Chain Finance Bootcamp. Join BAFT in a gathering of key trade finance professionals during the 27th BAFT Annual Conference on International Trade on September 11 - 13, 2017 in Chicago, IL. The conference attracts 250+ senior bankers, corporate executives, consultants, other trade providers and management of government agencies, covering the key issues that enhance the growth and impact of trade finance on the economy.

As a pre-conference event, BAFT is offering its 2nd Supply Chain Finance Bootcamp. This is an all-day deeper dive training covering various types of supply chain finance techniques. Attend both events to receive discounted bundled pricing! 

Contact BAFT for additional details.


Last 28th of April the International Trade and Forfaiting Association held its Spanish regional meeting at Ciudad Grupo Santander.

The event was organised by the Trade Asset Mobilization team (part of ARCO, or Asset Rotation & Capital Optimization) within Santander Global Corporate Banking (SGCB), and together with ITFA ensured  a successful event. SGCB, represented by ARCO, is a member of the Southern European Regional Committee (SERC) of ITFA and is actively involved in the association's activities.

These regional events  are an innovative forum, where ITFA members meet to discuss industry trends. This event was attended by over 50 professionals from financial institutions, including banks, insurers and insurance brokers, from Spain, Portugal and other countries.

Andrés Ortiz, Global Head of Trade Asset Mobilization: "the event was a great opportunity to share regulatory trends and market practices with members of the regional players' distribution desks."

Sean Edwards, Chairman of ITFA, commented that “ITFA members benefit greatly from these events, specifically, but not only, for the educational content covering relevant current issues of the industry, which we are able to discuss at the highest level with front-line experts. Additionally, these events are a great platform to promote the dialogue between the main Southern European regional players as well as to find new business opportunities. We thank Santander for offering us the opportunity to host the event in their premises which ensured such a great turnout.”

Saturday 3 June 2017


On Thursday 11 May 2017 ITFA NERC in association with GarantiBank N.V. and Credit Europe Bank N.V. held its annual spring event in Amsterdam. This was the eighth annual spring conference and reception. Each year the event attracts greater number of attendees becoming one of the flagship events of ITFA.

Traditionally, a conference kicked off the day.  To start, Damian Austin of Bank ABC moderated a panel discussion on the theme of risk mitigation and distribution. The consensus was that risk distribution today is no longer about making profit so much as it is about the efficient use of capital. In addition, the reality of distribution is changing for more corporate risk being on offer as bank risk becomes either scarce to source or not part of overall strategy.  Discussing together with Damian Austin were panel members from ING Bank N.V. – Reinoud Le Coultre, Barclays Bank Plc – Karl Page, Swiss Re – Silja Calac, and Citibank – Anurag Chaudhary. 

The remaining part of the conference was about innovation in banking with specific focus on application and influence of fintech in trade finance. The keynote speaker Brian McNulty of R3 argued that in the era of digitalization financial institutions don’t just have to but need to adapt to the new realities to embrace technological solutions in order to deliver faster and better services to their customers. This is required by the conditions of the market, by remaining competitive or being ahead of the rest and last but not least, by the regulator who requires transparent and more standardized operations. Therefore, most banks and non-bank financial institutions are piloting some sort of innovative technological projects to tackle this need. Brian, however, suggested that the trend is towards collaboration in order to standardize terms and conditions for all participants.

Following his presentation on innovation in banking, Brian McNulty lead a second panel discussion on the day that gathered heavyweights from the fintech and innovation fields, such as Ivar Wiersma of ING Bank N.V., Ad Kroft of BC3, Aljosja Beije of BeSCOPE and Raphael Caruso of Euler Hermes Digital Agency, to talk about the role and application of blockchain and fintech solutions in trade finance. The panel members were diverse in their representation, coming from insurance, corporate sector, bank and regulator reflecting different views on the topic. However, all came to a final conclusion that the disruption has already been made and banking is moving towards digitalization with deeper use of technology.  The advice to the audience was to be prepared for this and instead of resisting in fear of protecting the jobs, get trained and add move value.  

After the conference, the evening continued with a guided tour around Artis – Royal Amsterdam Zoo. Ironically, the theme of the zoo tour was also collaboration and team work, similar to the innovation in banking that suggested partnership among banks was the best way forward. The reception and networking part of the event took place in the beautiful Two Cheetah’s restaurant situated in the waterside corner of the zoo overlooking the habitat of giraffes and zebras. Judging on the attendance, it was another successful event in Amsterdam.    

The ITFA Board would like to thank the event sponsors GarantiBank N.V. and Credit Europe Bank N.V. and also Ms Evelyn Wynne who took some fantastic photos at the event. Please click here to view the photos.

Thursday 1 June 2017


June 2017 - Article 50, time to take a strategic look at trade

Amid the chaos of the UK election aftermath, the Article 50 process to negotiate the UK’s exit from the EU will start. The UK so far has relied on a conciliatory Europe led by a Germany that was genuinely saddened by the loss of its like-minded Anglo-Saxon ally and therefore more likely to drive the bloc towards compromise. The G7 and NATO summits at the end of May, and the inauguration of President Macron have changed all that. Europe is finding a new assertiveness on the global stage. This was articulated by Chancellor Merkel in her Munich speech; she argued that the US and the UK could no longer be relied upon and that Europe must find its own voice to promote its own interests. And while much of the rhetorical anger in the speech may simply be attributed to electioneering, it serves as a wake-up call to the UK. Europe will have its own strategic interests when it starts the negotiations and the UK would do well to be aware of what these are.

Trade is political and this makes it strategic – that is, something that can be used as a tool to promote national or regional interests in economic or foreign policy terms. In this, EU negotiators will be keen to protect Europe’s economic and energy security as well as increasingly focused foreign policy interests.

The EU’s top ten export and import trade flows by sector with the UK are automotives, machinery (including computers), pharmaceuticals, electrical equipment and oil and gas (Figure 1). The top fifteen trade flows by sector add optical, photographic and medical equipment, plastics and aerospace. These are not just the top trade sectors for the EU as a whole; they are also among the top sectors for Germany, France, the Netherlands, Italy, Belgium and the UK.

Given that Europe exports to the UK some 85% more than it imports from the UK, it has been assumed that the cards are stacked in the UK’s favour. However, trade “wars” are reciprocal: one side imposes tougher arrangements and the other retaliates. As these are the top sectors for the UK as well, and as Europe is the UK’s largest export destination for each of these sectors, it will be important to bear in mind that the symbiotic relationship in these sectors are because of Europe-wide supply chains. Everyone will lose without some compromise.

Figure 1: Top 15 trade flows by sector between EU and UK (exports and imports, 2016, US$ bn)

Source:  Equant Analytics, 2017