Supply chain growth prospects slow
The number of European banks that believe supply chain finance (SCF) growth prospects remain strong has dropped since 2010, according to a new report.
According to the report by SCF firm Demica, 75% of the 40 European banks polled think that growth for the SCF product will remain either strong or very strong.
This is down from 90% in 2010.
The drop in growth expectations corresponds to a more wary growth outlook while financial crises in the US and EU rage on.
Respondents to the questionnaire anticipate growth rates between 10% and 30% a year in mature markets, and up to 25% in emerging markets where SCF is a relatively new product.
Legal, jurisdictional and technology issues were those most cited as providing the biggest challenge for SCF growth in emerging markets.
“The corporate credit squeeze triggered by the financial crisis has made companies much more aware of the need to optimise working capital and to protect their smaller suppliers in order to avoid supply chain disruptions,” says Phillip Kerle, chief executive officer at Demica.
“Especially in light of the growing trends towards off-shoring and outsourcing, trade business is increasingly transcending the boundaries of mature and emerging markets nowadays.
“If suppliers in emerging economies are not able to cope with the pace of growth of their buyers in developed markets, SCF facilities can help them meet the requirements of their large customers by providing them with sufficient liquidity.”
Reader Comments