Page 33 - Buy Russia - bne IntelliNews monthly magazine April 2017

bne April 2017 Special report I 33
Best Trade Finance Bank in Central Europe, Best Commodity Finance Bank
Societe Generale
"Societe Generale is investing in trade finance on a global scale with the creation in 2014 of a dedicated, global trade finance business line, more specifically in Central and Eastern Europe,” says Jean-Pierre Jentile, prod-
uct manager for trade services & correspondent bank- ing. “The goal is to become a key bank in trade finance using the ‘One Bank’ concept. This includes centralised monitoring, a unique organisation for all subsidiary banks, a large and unified array of trade finance prod- ucts, the use of e-banking tools and unified processes.
Our winner for the Central Europe category cites a year of major change across the board in 2016. International exchanges contracted because of the global economic downturn and lower prices of raw materials, mostly oil. Despite this contraction though, emerging countries have registered growth from 3 to 5% that supported international trade, the bank notes. Trade flows with China have reduced, while regional flows have got-
ten stronger, especially across the African continent.
“Trade flows in the CEE have been getting smaller because the region is stuck between the slower growth in the EU and international sanctions against Russia, which have also been affecting trade in the CIS,” says Jentile.
“As for the effects of the sanctions on trade finance, they had the effect of focusing the flows of interna- tional corporates towards global banks. This way Societe Generale was able to secure a growing share
Adds Putz: “This development is much worse than you imagine, because Western banks don’t like
to publish that they don’t do any international business any more, that their international business is only a fraction of what it was in the past, and that most international banks have re-allocated staff from international departments into domestic business, from trade finance into compliance.”
According to the 2016 Global Survey released by the ICC Banking Commis- sion, more than 90% of respondents indicated that the complexity and cost of compliance requirements – particu- larly relating to anti-money laundering (AML) and know your customer (KYC) –
are the main obstacles to providing trade finance. And 40% of respondents say they have terminated banking relation- ships due to compliance requirements.
heavily intensified our co-operation with our colleagues from the compli- ance department,” says Sabine Zucker, Raiffeisen’s head of Trade Finance &
Jean-Pierre Jentile, product manager for trade services & correspondent banking
of the trade flow and grew its market share in trade finance in Russia last year. This should keep going in 2017, as we have launched an ambitious develop- ment plan in 2015 and are in line with the budget.”
Overall in trade finance, among the deepening trends, the use of letters of credit to secure international trade keeps decreasing globally (-20% in 2015 and -9.5%
in 2016) and reached 15% of international trade (20% five years ago), according to Societe Generale. Open account trading is often preferred. A key area of evolu- tion of the bank’s products is the use of e-banking tools in trade finance, which is developing in OECD coun- tries but progressing slowly in emerging countries.
Compliance procedures require stronger compliance and back office departments, which in turn means that there is a need for a review of all the compliance pro- cess, in order to lower costs. Those requirements will only grow and reach regional banks, says Jentile.
“The goal is to become a key trade finance bank using the
'One Bank' concept”
“We now have to do much more to earn the same money”
“In trade finance we have adapted
to this new normal: we are investing much more resources in screening
our transactions against sanctions,
we are much more aware of the cost
of a RMA [Relationship Management Application] authenticator and we have
Transaction Banking. “Compared to 10 years ago, trade finance and other internal stakeholders such as compli- ance or relationship management overall are investing approximately 40% more time in a standard transac- tion due to compliance requirements.”
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