ICC Banking Commission Global Survey Highlights Impact of Trade Finance Gap on SMEs

Cover Page ICC Global Survey on Trade Finance 2015_sourceThe International Chamber of Commerce (ICC) Banking Commission has released the results from its 2015 Global Survey on trade finance – highlighting the impact of the trade finance gap on SMEs, the impact of regulation on correspondent banking, as well as positive trade finance trends, particularly with regards to export finance.

Small and Medium-sized Enterprises (SMEs) are among the hardest-hit by the trade finance gap, reports the Global Survey on trade finance, released on September 29 by the International Chamber of Commerce (ICC) Banking Commission. The Survey received 482 responses from 112 countries around the world and showed that SMEs account for nearly 53 percent of all rejected trade finance transactions. By contrast, 79 percent of the trade finance transactions for larger businesses are accepted.

The trade finance gap is highlighted throughout the Survey, citing compliance as a chief barrier to trade finance. Nearly 46 percent of the banks surveyed terminated correspondent relationships due to the cost or complexity of compliance, while 70 percent of respondents reported declining transactions due to AML/KYC requirements. Furthermore, the percentage of respondents citing anti-financial crimes compliance requirements as a significant impediment to trade finance has increased from 69 percent last year, to 80 percent in this year’s Survey. This trend is expected to continue, as nearly all (93%) of respondents expect compliance requirements to increase during 2015.

“The Global Survey works as a snapshot of market trends, allowing us to compare progress from previous years and gauge global expectations,” said Vincent O’Brien, chair of the ICC Banking Commission Market Intelligence. “This year that snapshot has highlighted the severity of the trade finance gap – which continues to be impacted by regulation, despite the low-risk nature of trade finance – and particularly its impact on SMEs. This is crucial given SMEs constitute over 95 percent of all firms and account for approximately 60 percent of employment worldwide.”

That said, the results from the Survey also show some positive trends in trade finance. Around 63 percent of respondents reported an increase in overall trade finance activity, with 61 percent of banks stating they have increased their capacity to meet trade finance. What’s more, 25 percent of respondents to the Global Survey on trade finance consider trade instruments supporting trade as involving more than 75 percent less inherent risk than conventional lending.

The results from the Global Survey also reflected positively on export finance, with 79 percent of respondents in the industry claiming it remains a profitable business. The industry also observed a significant decrease in pricing, and even more so, fees in 2014.

“While the trade finance industry is certainly facing challenges, and the trade finance gap is a clear issue, the results from the Global Survey on trade finance show that it is not all doom and gloom,” added O’Brien. “The financial landscape is recognizing the importance of trade and, in addition to banks stating they have increased capacity to meet trade finance, we have an array of alternative lenders – such as specialist financiers, export credit agencies, and multilateral development banks – stepping up to fill the trade finance gap.”

Daniel Schmand, chair of the ICC Banking Commission, said: “New players can prove their worth by addressing the shortfall of trade finance; new or alternative financiers may support trade in areas where banks are restricted by risk appetites, regulatory burdens or stakeholder concerns.”

Download the 2015 ICC Global Trade and Finance Survey.

ICC Launches Global Export Finance Committee

The launch of the ICC Global Finance Committee took place on September 7 in Barcelona, Spain.
The launch of the ICC Global Finance Committee took place on September 7 in Barcelona, Spain.

The International Chamber of Commerce (ICC) launched the “ICC Global Export Finance Committee,” an export finance working group supported by many leading banks across the export finance industry.

Operating under the umbrella of the ICC Banking Commission, the committee is the first step towards building a real global export finance community – representing medium- and long-term (MLT) export finance banks.

The Global Export Finance Committee has three key objectives:
  1. To create a credible standing global discussion forum of banking experts in MLT export financing,
  2. To create a representative body to discuss industry matters with various stakeholders,
  3. To advocate for and help develop improvements and efficiencies through the standardization and harmonization of processes and regulations.

“The Global Export Finance Committee fills a much needed role in the export finance industry,” said Eric de Jonge, head of structured export finance at ING Bank, who chairs the working group. “It aims to not only act as a discussion forum and a body to exchange information and views on export finance but also to enable improvements and increase the efficiency of the processes and regulations governing the export financing industry as a whole.”

Although the export financing industry as a whole is relatively small, it serves an important purpose for OECD governments as well as governments in emerging markets, enabling and facilitating international trade and economic activity. Indeed, governments in many countries are exploring how they can more efficiently support exports, investments and trade.

Not only has the industry observed changes in regulatory requirements such as Capital Requirements Regulation (CRR) and Basel III, it also faces changes in the value chain concerning Export Credit Agencies (ECAs). These developments, together with the involvement of the capital markets, mean it is necessary for banks active across the industry to reach a common approach.

ICC has already made a first step towards reaching a common approach through the inclusion of MLT trade and export finance products in the influential ICC Trade Register Report. The dedicated Trade Register working group has successfully evolved into a platform of active banks that are responsible for ECAs, and that supports transaction data gathering.

While the Trade Register working group focuses primarily on data gathering, there are many more topics relevant to the export finance industry. Cooperation with ECAs, advocacy before governmental and regulatory bodies, standardization, and harmonization, as well as the exchange of views and data to the extent allowed under anti-competition laws, are just a few of the areas that can be explored further by the ICC Global Export Finance Committee.

Download ICC Global Export Finance PDF Document here

Kim Kit Ow Named to Lead ICC Academy

Kim Kit Ow
Kim Kit Ow

The International Chamber of Commerce (ICC) has named former ICC Regional Director for Asia, Kim Kit Ow, as Managing Director of its recently launched ICC Academy.

With extensive experience both as a practicing lawyer and in-house counsel, Ow will be responsible for overseeing day-to-day operations of the new Academy, established by ICC to deliver market-leading professional education.

“I am thrilled to take up the challenge of leading this pioneering initiative from ICC,” Ow said. “My overarching priority is to ensure effective implementation of the Academy’s strategy so that our important work of bridging the global skills gap and making quality professional education accessible worldwide can begin and be sustained for many years to come.”

Ow holds a law degree from the National University of Singapore and was called to the Singapore Bar. She began her career in a leading Singapore law firm, practicing as a disputes resolution lawyer. Subsequently she moved into the banking and finance sector, working for both private and public bodies including Credit Suisse and the Monetary Authority of Singapore.

In 2009, Ow became regional director, Asia for the ICC International Court of Arbitration and ICC Dispute Resolution Services where she was responsible for promoting ICC’s dispute resolution services.

“Providing quality education on a global scale begins with quality management,” said John Danilovich, ICC Secretary General and ICC Academy Chairman. “With her extensive professional experience and in-depth knowledge of ICC’s unique value proposition, I have no doubt that Ow is the right person to lead this exciting venture and help drive the ICC Academy into the next phase of its development.”

The ICC Academy is headquartered in Singapore where Ow will lead a team of Academy staff liaising closely with ICC headquarters in Paris to develop and distribute ICC Academy products and services worldwide.

Follow the ICC Academy on Twitter @TheICCAcademy

Visit the ICC Academy official website

Staff contact: Eva Hampl 

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Trade Finance Made Easy: ICC Revises Dispute Resolution Rules

globe_money_lo-resThe International Chamber of Commerce (ICC) has revised its DOCDEX rules, a dispute resolution mechanism specifically designed to address trade finance concerns. In addition to widening its scope to address any trade finance dispute, the new rules will also increase transparency and enhance time efficiency.

DOCDEX is a rapid, cost-effective, document-based procedure offering international bankers and traders a means to settle documentary instruments disputes – not only helping parties minimize the disruption caused by a dispute but also eliminating the need to settle the claim in court.

Decisions are reached by a panel of three independent and impartial experts, and later scrutinized by an ICC Banking Commission technical advisor. Crucially, decisions are non-binding unless both parties agree otherwise – freeing the independent experts from due process, and adding flexibility.

Daniel Schmand, head of trade finance and cash management corporates EMEA, Deutsche Bank and incoming Banking Commission Chair said: “Documentary disputes can severely impact, and often entirely halt, trade finance proceedings. And resolving them is not only a costly and lengthy process, it can also – if taken to court – irreparably damage relationships with trading partners.”

By quickly and inexpensively managing claims, DOCDEX helps minimize the disruption caused by a dispute – not only eliminating the need for protracted litigation, but also safe-guarding the partnerships that are so crucial to the banking and trade finance sectors.”

The recently revised rules – which come into force on 1 May 2015 – will significantly enhance the already advanced dispute resolution mechanism.

The revised rules will also enhance transparency – requiring ICC to publish redacted decisions in every DOCDEX case. Doing so will not only set a precedent for future cases, it will also allow ICC to analyze the panel of experts charged with forming a decision – ensuring they are both impartial and practitioners.

Finally, the 2015 revision provides that filings be made in electronic form – using standard templates available on the ICC website. While speed has always been a hallmark of the DOCDEX process – decisions are typically reached within 30 days of a claim – the change in format will help to streamline case administration and, therefore, further accelerate proceedings.

The ICC DOCDEX Rules and more information on how to use the service can be found at www.iccdocdex.org.

Launch of ICC Academy, a Premier Source for Professional Education

The International Chamber of Commerce (ICC), the world business organization for which USCIB serves as the American national committee, today launched the ICC Academy – setting a new standard for professional education. Based in Singapore and delivered via a digital platform, the Academy will provide rigorous, relevant and applicable business education – encouraging individuals to reach their highest potential with respect to professional competency and ethical conduct.

The Academy has been launched in partnership with International Enterprise (IE) Singapore, the government agency that promotes international trade and assists Singapore companies to internationalize. Singapore Minister for Trade and Industry Lim Hng Kiang joined ICC board members at the launch of the ICC Academy, which aims to enhance the expertise of practitioners across a wide range of business sectors.

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“As the world’s business organization, ICC has long provided training and certification programs to help build business skills for the jobs of today and tomorrow,” said Terry McGraw, chairman of ICC (as well as USCIB) and chairman of McGraw Hill Financial [now S&P Global]. “We are taking this commitment to growing a skilled workforce and jobs globally to a new level with the launch of this Academy, which will be internationally recognized and accessible to all – in developed and developing countries.”

IE Singapore and ICC share a common vision to promote global trade. The former’s role is to establish Singapore as a global trading hub while the latter promotes open trade and investment and helps businesses worldwide meet the challenges and opportunities of an increasingly integrated world economy. The ICC Academy is a successful partnership milestone for both parties in nurturing global business leaders and experts. It will serve as a center of excellence and thought leadership for the global business community.

Taking full advantage of ICC’s extensive global network, the ICC Academy promotes the highest standards of excellence in global professional education – providing a wide range of specialized programs that are recognized worldwide. Courses are designed and taught by ICC’s unrivalled roster of experts and practitioners, incorporating insights from external senior business leaders and policymakers.

ICC Academy courses are delivered via a dynamic digital platform, using innovative tools to give the Academy global reach. The ICC Academy can therefore offer those in developing and remote regions the same access to world-class professional education as those in advanced economies – developing skills even in the most challenging locations.

“E-learning initiatives are being adopted as a means of maximizing educational budgets as well as expanding the potential breadth of audience – without compromising on the quality or depth of learning,” said ICC Secretary General John Danilovich. “Provided users have access to the Internet, distance learning means there will be no inequalities with respect to educational potential via the ICC Academy – no matter where an individual is situated.”

The use of a digital platform also allows ICC to centralize the Academy in one location: Singapore – an established international trade hub, underpinned by its strategic location and presence of a strong trading community. It is chosen as the location of the ICC Academy because of the country’s well-established ecosystem of business infrastructure, strong network of companies and large pool of skilled talent. The ICC Academy will further enhance this trade ecosystem.

Teo Eng Cheong, chief executive officer of IE Singapore, said: “The establishment of the ICC Academy global headquarters in Singapore is a testament to our role as an international trading hub. With a common mandate to promote international trade, IE Singapore and ICC can jointly contribute to growth of expertise and talent for the sector globally.”

The ICC Academy will draw on ICC expertise in specialist fields – starting with a faculty in banking and trade finance shaped by over 600 banking experts from 110 countries. The faculty features around 70 online courses and two global certificates in trade finance. Following this initial trade finance focus, the ICC Academy will broaden its scope – introducing new curricula, spanning all ICC competences from international law to anti-corruption.

ICC Academy website

Banking

Trends and Challenges Facing the Banking Sector:

  • The banking sector requires standardization of international banking and commercial practice procedures to obtain increased efficiency and to ensure that parties to transactions are operating under the same assumptions to increase the likelihood of payment.
  • The banking sector needs decreased costs to international trade transactions.
  • Business needs a global set of forfeiting rules for both primary and secondary markets.

USCIB’s Response:

  • Promote standardization of international banking and commercial practices, which helps policymakers and standard-setters put programs and regulations in place that enhance business practices around the world.
  • USCIB, through the ICC Banking Commission, aims to overhaul the rules in different fields, such as international standard banking practice and forfeiting, as well as in traditional trade services, open account and supply chain financing, global regulation, legal and compliance issues and risk and asset management.
  • Ensure members have greater clarity and understanding of current practices by promoting the adoption and integration of the ICC’s Uniform Rules for Demand Guarantees (URDG), as well as the Uniform Customs and Practice for Documentary Credits (UCP 600).
  • Facilitates the rapid settlement of disputes arising in banking by working through ICC to administer the ICC Rules for Documentary Instruments Dispute Resolution Expertise.
  • Responds to member inquiries regarding suspected cases of attempted financial fraud using falsified or illegitimate financial instruments or banking practices.

Magnifying Your Voice with USCIB:

  • USCIB is the only U.S. business association formally affiliated with the world’s three largest business organizations where we work with business leaders across the globe to extend our reach to influence policymakers in key international markets to American business
  • Build consensus with like-minded industry peers and participate in off-the-record briefings with policymakers both home and abroad.

Positions and Statements

USCIB Gives Feedback on OECD New Approach to Economic Challenges Project (1/22/2015) - Authors of the Organization for Economic Cooperation and Development’s “New Approach to Economic Challenges” report met with USCIB and member
Global Trade Set to Benefit From ICC Trade Register Report (6/19/2014) - It has long been anecdotally known that trade finance is a low risk for lenders. That claim now has a

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News Stories

USCIB Weighs in With Administration on Trade Deficits (5/15/2017) - A USCIB statement addresses the issue of bilateral trade deficits, viewed by many as a marker of the health of
New Compliance Guide for Trade Transactions Published (1/30/2017) - The International Chamber of Commerce (ICC) Banking Commission, along with partners, the Wolfsberg Group and the Bankers Association for Finance

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Press Releases

Now Available in USCIB International Bookstore: Uniform Rules for Bank Payment Obligations (6/13/2013) - New York, N.Y., June 13, 2013 – Uniform Rules for Bank Payment Obligations (BPOs), a 21st-century standard in supply-chain finance
New Report Proves Trade Finance Is Low-Risk, Asks Regulators and G20 to Unlock Trade (10/26/2011) - Beijing and New York, N.Y., October 26, 2011 –The rules set by bank regulators impose unwarranted capital requirements that choke

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Op-Eds and Speeches

SMEs Face Significant Financing Gap (7/22/2013) - Speaking at the World Trade Organization’s annual “aid-for-trade” review earlier this month, a representative of the International Chamber of Commerce (ICC)
The Future of Trade Finance: Outlook 2011 (5/23/2011) - As 2009 ended, we viewed the global economy – and its lifeblood, trade – through the prism of cautious optimism.

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Chair

Michael Quinn
Managing Director
JP Morgan Global Trade Services

Staff

Eva Hampl
Director, Investment, Trade, and Financial Services
202-682-0051 or ehampl@uscib.org

Staff

Christopher Olsen
Policy & Program Associate, Washington
202-617-3156 or colsen@uscib.org

 

USCIB Gives Feedback on OECD New Approach to Economic Challenges Project

L-R: Rick Johnston (Citi), David Mallet (Wells Fargo), Tom Molitor (Wells Fargo), Mathilde Mesnard (OECD), Peter Robinson (USCIB) and William Hynes (OECD).
L-R: Rick Johnston (Citi), David Mallet (Wells Fargo), Tom Molitor (Wells Fargo), Mathilde Mesnard (OECD), Peter Robinson (USCIB) and William Hynes (OECD).

USCIB and member representatives met with officials from the Organization of Economic Cooperation and Development (OECD) on January 22 at USCIB’s New York office to give feedback on the OECD’s New Approach to Economic Challenges (NAEC), aimed at updating the organization’s instruments and policy analyses.

USCIB President and CEO Peter Robinson met with the main authors of the NAEC report, Mathilde Mesnard and William Hynes, along with member representatives from Citigroup, Wells Fargo and JPMorgan Chase.

The informal meeting gave USCIB an opportunity to provide member feedback and concerns at this stage of the NAEC project.

USCIB is the American affiliate of the Business and Industry Advisory Committee to the OECD (BIAC), which acts as the voice of business in the OECD and has provided structured input to the NAEC project.

The OECD’s final synthesis report on its NAEC work will be delivered to OECD ministers in June 2015.

 

Register for ICC’s Banking Supply Chain Summit

4825_image002Given the volatile economic climate in the wake of the financial crisis, innovations in working capital flows are more vital than ever before. That is why USCIB and its global network are focusing on the establishment of new financial solutions that will enable companies to maintain a resilient supply chain.

USCIB invites you to join a gathering of the world’s leading supply chain finance experts for timely and thoughtful discussions about the forces driving change in trade finance.

ICC’s 3rd Annual Supply Chain Financing Summit
October 22-23, 2014
Maison des Arts et Métiers
Paris, France

 
This summit will provide an opportunity for large and small companies to learn from experienced global professionals about their visions and strategies in the new area of supply chain finance. Topics of discussion include streamlining of trade finance operations, the changing landscape from the BPO (bank payment obligations) perspective, the impact of the regulatory environment, dealing with logistical hurdles, and more. The chair of USCIB’s Banking Committee, Michael Quinn (JP Morgan), will speak at a panel titled “BPO: From Conception to Adoption.”

In addition, prior to the summit on October 21, participants will have the chance to take part in a web-based simulation game where they’ll learn to balance the constraints and manage the interdependencies of the physical and financial supply chain.

USCIB members may register online for the event at a discount by entering the code USA-9262.

Staff contact: Eva Hampl

More on USCIB’s Banking Committee

Register for ICC’s Banking Supply Chain Summit

4825_image002Given the volatile economic climate in the wake of the financial crisis, innovations in working capital flows are more vital than ever before. That is why USCIB and its global network are focusing on the establishment of new financial solutions that will enable companies to maintain a resilient supply chain.

USCIB invites you to join a gathering of the world’s leading supply chain finance experts for timely and thoughtful discussions about the forces driving change in trade finance.

ICC’s 3rd Annual Supply Chain Financing Summit
October 22-23, 2014
Maison des Arts et Métiers
Paris, France

 
This summit will provide an opportunity for large and small companies to learn from experienced global professionals about their visions and strategies in the new area of supply chain finance. Topics of discussion include streamlining of trade finance operations, the changing landscape from the BPO (bank payment obligations) perspective, the impact of the regulatory environment, dealing with logistical hurdles, and more. The chair of USCIB’s Banking Committee, Michael Quinn (JP Morgan), will speak at a panel titled “BPO: From Conception to Adoption.”

In addition, prior to the summit on October 21, participants will have the chance to take part in a web-based simulation game where they’ll learn to balance the constraints and manage the interdependencies of the physical and financial supply chain.

USCIB members may register online for the event at a discount by entering the code USA-9262.

Staff contact: Eva Hampl

More on USCIB’s Banking Committee

Global Trade Set to Benefit From ICC Trade Register Report

4762_image002It has long been anecdotally known that trade finance is a low risk for lenders. That claim now has a wealth of data to back it up. Today the International Chamber of Commerce (ICC) released its 2014 Trade Register Report, providing overwhelming evidence that trade and export finance – in all its forms – is a low risk bank financing technique.

The report supports ICC’s and USCIB’s advocacy of trade finance as a strong contribution to economic recovery and growth. Its findings hold the potential to alter attitudes towards trade finance, and therefore contribute to the growth of both global trade and the global economy.

The Trade Register also highlights a concern about the effect overly-stringent money laundering regulations have on trade finance flows. Strict regulations have damaged access of some firms to trade and export finance services.

“The intention of the Register was to progress the understanding of trade finance, its importance to global trade and its highly-effective risk mitigation capabilities,” explained Kah Chye Tan, Chair of ICC Banking Commission. “The impact of the Register, however, is much greater. As the latest results show, the Register provides concrete fact-based evidence that trade finance is low risk which, if fully reflected in capital requirements, would help banks to give companies the financing support they need for their exports, and to contribute even further to the global economy as it recovers from the global financial crisis.”

The report’s findings may help policymakers understand the negative consequences such laws have on export finance, which is crucial for economic growth in the developing world.

First launched in 2009 by ICC’s Banking Commission, the report is widely recognized as one of the world’s leading analytical reports on global risks for the trade finance industry—identifying risks across a range of trade finance products and markets.

Read more on the ICC website.

ICC Flags up Concerns Over Effect of Money-Laundering Laws (Financial Times)

Staff contact: Eva Hampl

More on USCIB’s Banking Committee