Page 32 - Buy Russia - bne IntelliNews monthly magazine April 2017

32 I Special report bne April 2017
Best Trade Finance Bank in CEE Overall
Commerzbank
Our Overall Winner, Commerzbank, is Germany’s lead- ing trade finance bank, “the nation’s exporters’ partner of choice”, as the bank notes. With a global network of correspondent banks, Commerzbank is involved with settling €50bn worth of trade at any time and has a clear commitment to its international, commercial roots.
Through its local presence, which covers 70% of export markets, and one of the world’s largest correspondent networks, any letter of credit (LC) reaches its destina- tion within 24 hours. LC business is processed 18 hours per day, five working days a week, facilitated by three dedicated trade processing centres in Europe and Asia.
“One important trend is digitalisation,” says Holger Kautzky, head of financial institutions at Commerzbank
and responsible for the CEE and CIS region. “It’s impor- tant for us to stay ahead of the industry. It’s a global
trend and it will certainly also have an effect on our trade finance processes. At the same time, traditional letters of credit – hence paper-based documentary business – will continue to play an important role in the CEE & CIS region.” Like its peers in trade finance, the bank has had to adapt to new conditions in the last few years as geopolitical upheav- als as well as low commodity prices have upset economies.
“The region as a whole still suffers from the economic downturn in Russia, which affects neighbour countries and has led to a decline of all volumes of trade finance,” Kautzky adds.
kept pace with global GDP growth, and hit a post-crisis low of 2.7% in 2015.
Several factors appeared to be causing the poor volumes, according to the International Chamber of Commerce (ICC): low investment; rebalancing in China; a reversal in the development of global value chains; and changes
in the balance between trade in goods and services. Lack of progress on the opening of global markets
to trade – together with increased protectionist pressures – added to the unprecedented trade slowdown.
Against this glum backdrop, compliance requirements are snowballing – to cata- strophic levels, by some accounts. This
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remains the single greatest impediment to growth in trade finance, sanctions included, and was cited by almost all
of our winners, regardless of region.
“We had to get more people involved
in trade finance to do all the checks on all the parties involved, related to the protection against money laundering, financing of terrorism and sanctions and embargoes,” says Marketa Kryslova, Manager of Global Transaction Banking of Komercni Banka/Societe Generale, our 2017 Trade Finance Award winner in the Czech Republic. “Moreover there has been lots of work in educating people about the risks. Basically we now have to do much more to earn the same money, there is a lot of pressure
on the margin, and that’s the same in Russia, Serbia, Croatia or Romania. And this is not going to change.”
Complying can mean dying
Rudolf Putz, head of the trade facilita- tion programme (TFP) of the European Bank for Reconstruction and Devel- opment (EBRD), is blunt about the danger of banks being smothered by compliance. “Trade finance is silently dying, to some extent,” he tells bne IntelliNews. “Many banks just take the conscious decision that it’s not worth the risk and the cost of compliance, that it’s better to concentrate on a small number of large transactions, and they are not interested any more in cover- ing the cost of small transactions.”
Holger Kautzky, head of financial institutions
But in the current environment of sanctions and grow- ing compliance, Commerzbank is staying on top of the changing needs of trade finance. “We have implemented additional routines for analysing and verifying each transaction,” says Kautzky. “So of course, each transac- tion processing requires more time and effort, as we only process transactions that are absolutely accept- able from US & EU regulatory point of view and in line with the bank’s even more restrictive global policy.”
“We have opened trade finance lines for Russia and the CIS, though we see less demand. This is differ- ent in some countries like Ukraine, where our trade flows are picking up, and we are also seeing posi- tive development in Central Asian countries.”
However, the biggest trading partners for Germany and Europe remain the central European coun- tries, with a large volume of trade being performed with these countries on an open account basis.
“Digitisation is a global trend and it will certainly affect our trade finance processes”