Page 34 - Buy Russia - bne IntelliNews monthly magazine April 2017

34 I Special report bne April 2017
Best Trade Finance Bank in Eastern Europe
Raiffeisen Bank International
“We are seeing double digit growth rates with respect to supply chain finance products; particularly factor- ing is on the rise in many CEE and CIS countries,” says Sabine Zucker, head of trade finance & transaction banking at Raiffeisen, our Eastern Europe category win- ner. “Letters of credit have been declining both regard- ing number of transactions and volume in the last
three years, while we observe moderate growth rates
in guarantees. In the CEE/CIS region we are experienc- ing longer tenors of trade finance products than in other regions, even for similar types of goods. In my view, such relatively long tenors can be explained by the still very strong competition between local and regional banks – clients are taking what the market is offering them.”
Traditionally L/C post-financings were quite high in pre- sanction times in CIS countries, the bank notes. However, due to sanctions and the consequent excess liquidity in the market stemming from a decrease in investments, these types of financings have reduced considerably during the last 1.5 years.
“Although many Western banks have been reducing their risk appetite towards CEE/CIS over the last years, market prices still remain competitive due to lower trade finance volumes concentrating on a declining number of banks,” says Zucker. “Overall in CEE I do not expect a substantial pick-up in trade finance volumes for 2017/18, hence RBI is therefore concentrating on keeping its trade finance market share in its home countries (including CIS).”
Like many of its peers, Raiffeisen is significantly expand- ing its resources to cater to relationship manage-
ment needs, and also growing compliance demands
as trade finance and other internal stakeholders are now investing approximately 40% more time in a stan- dard transaction due to compliance requirements.
Sabine Zucker, head of trade finance and transaction banking
Raiffeisen expects internal compliance efforts to increase even further as the bank prepares to implement the changes required by the 4th EU Anti-Money Laundering Directive that entered into force in Austria on 1 Janu-
ary 2017. “One area that is affected by the new legisla- tion is, for example, customer due diligence (CDD), a topic that has become increasingly important for the daily banking business,” says Zucker. “As the directive redefines many existing notions like, 'correspondent banks', 'risk-based approach' or 'politically exposed persons (PEPs)', banks have to deploy a great amount of effort to meet and implement the new requirements.
Such redefinitions may affect for example the risk-rating model of the bank and can therefore lead to an increase in customers rated as 'high risk'. This of course is a challenge for the compliance department of the bank but also for the bank as a whole. With the implementa- tion of the 4th EU Anti-Money Laundering Directive the legal framework is evolving and banks have to adapt.”
Besides building up resources and adjusting pro- cesses in this area, RBI has met this challenge
by implementing for example so-called compli- ance ambassadors in each department. One goal is among others to strengthen the knowledge of the first line of defence (i.e. employees dealing directly with customers) regarding AML and FiSa topics.
“One area affected by the new legislation is customer due diligence (CDD). It is increasingly important for daily banking business”
SOS of the SMEs
According to the ICC, it is also clear that a majority of small businesses have experienced significant problems accessing trade credit – with almost 60% of applications for trade finance in 2015 being rejected by banks.
This creates an urgent situation that must be addressed by policymakers, but also by banks themselves as they try to cater to SMEs. These are the backbone of the global economy, since
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globally 95% of enterprises are SMEs, representing around 60% of private sector jobs. In Europe, official estimates suggest that SMEs play an even greater role in promoting employment and social cohesion, providing two out of every three jobs in the private sector.
And consequently, “the enormous potential of small businesses to create jobs and growth is being held back by increasingly limited access to trade finance”, warns the ICC.
In 2015, SMEs submitted 44% of all trade finance proposals yet faced 58% of total proposal rejections. This compares unfavourably with large corporates and multinationals, which submitted 40% and 16% of proposals yet only experi- enced 33% and 9% of rejections, respec- tively. Geographically, the greatest unmet demand was reported in Russia.
Changing toolbox
Still, while down from 63.3% in 2014, a majority of 52% of survey respondents –