Leading trade services specialists gathered recently in Singapore to talk about food and fuel trade flows in Asia, financing structures, and the efficacy of Swift’s TSU.


Roundtable participants

  • Digby Bennett, regional sales director, China Systems Corporation (chair)
  • Parvaiz Dalal, structured trade & asset distribution head, global transaction services, Asia Pacific, Citi
  • Andy Dyer, managing director, transaction banking, APEA, ANZ
  • Khuresh Faizullabhoy, head of trade & supply chain, Singapore, HSBC
  • John Hills, managing director, BNY Mellon Treasury Services
  • Michael Hogan, head of trade finance, Asia, National Australia Bank
  • Ashutosh Kumar, managing director – transaction banking, global head of trade product management, Standard Chartered Bank
  • Lee, Yung Sheng, executive director, trade sales head, North Asia, JP Morgan
  • Roger Packham, regional trade finance head, Deutsche Bank
  • Pang, Tit Khuen, vice-president, senior product manager, transaction banking, UOB
  • Geoff Parry, head of trade finance, Southeast Asia, National Australia Bank

NAB kindly hosted this roundtable at its Singapore office


Bennett: What product flows are increasing, and where?

Faizullabhoy: We have seen fairly broad-based increases in trade flows across softs, oils, energy, metals and ore, as well as capital equipment. These flows are Asia led − no surprise given the growth across China, India and other Asian economies.

In fact, our recent Trade Confidence Index results showed Greater China leading the way in Asia for trade volume outlook. We are also experiencing the emergence of new trade corridors, for example, Africa-LatAm flows supplying raw material to feed the manufacturing engines of Asia.

Dyer: We largely mirror that. Australian flows seem to be pushing into Japan and China. Also increasingly into India, where we are getting very interested in. It’s also interesting to see that shift in trade because when most of us started our careers we spent a lot of time looking at Asian exports to the OECD and the big flows into Europe. While these flows are decreasing, we are seeing more intra-Asia flows between China and Japan, Taiwan and China and between Northeast and Southeast Asia. Those flows are becoming larger and a great basis to build a trade business on.

Packham: At Deutsche Bank, our volumes are up over 30% compared with the same period last year. Volumes were low in the first half of last year, but they have bounced back and are now ahead of pre-crisis levels. It is interesting to note whether one should gauge trade volumes by number of transactions, or by overall value. Generally, commodity prices are still not back to where they were pre-crisis so is it better to measure only by value, or more useful to measure by number of transactions?

Trade services are certainly focused on the amount of transactions processed daily. If we were to assess in terms of value level, we would not be where we were when oil was selling at a high of US$150 a barrel.

Some commodity prices have declined this year, with copper for example dropping as much as 30%. Trade flow statistics could show that the total dollar value of trade flows may seem to decline even as transaction volumes increase. At JP Morgan we have seen a significant increase not just in terms of dollar value, but importantly, transaction volumes.

This larger flow is linked to bigger countries like China and India, but about 50% of trade business at the moment is intra-Asia. We are seeing new trade corridors to Africa, while Brazil into Asia is another example.

Dalal: We are seeing large flows coming in from outside Asia into China and other parts of Asia. Korea has huge flows to the Middle East on the back of large projects they are undertaking. Trade revenues in Citi are growing and we are handling much larger volumes this year. The transactional volumes have increased considerably.

Kumar: From our income perspective, volume has picked up and value is even higher. In terms of geographical flows, intra-Asia used to be around 50% and this is something we keep seeing. The flows between Northeast Asia and China are high, especially with regard to Korea and China. Other flows are between China and Latin America, as well as China and Africa. These grew faster than other corridors. Tenors are also increasing.

Where people were previously asking for a 90-day credit period, we are increasingly seeing, especially in South Asia, India, Bangladesh, Pakistan, as well as some places in Southeast Asia such as Indonesia, that the credit period has increased as people look for longer-term finance. This has resulted in a stress on the cash, because people are elongating payments and hence the tenor has increased.

We saw an increase in regional flows. There was more Asean trade, and we saw an increase in volume between India and China, and China and Asean. India is purchasing huge amounts of capital goods from China.

This provides us with a lot of opportunity to provide guarantees related to long-term contracts. These countries have the right mix in the cost of goods and technology. This means that India, China and Asean can trade effectively. India has its usual iron ore exports to China and that is mostly transacted on spot price, which makes the trade volatile.

Hills: When you talk about trade volumes, we’ve heard about a lot of different sectors coming in and it seems that when you put all these together there is a mishmash of oil, commodities, agriculture, manufactured goods, etc.

You have different variables in making an overall assessment when you take total numbers of either value or transactions. If you want to look at trade, and draw real conclusions from statistics, you have to separate the products into different categories.


Bennett: What are the needs of producers and intermediaries and how are they evolving?

Faizullabhoy: As global trade patterns shift east and south, needs of trade partners are changing − as the dynamics around counterparty and country risks, financing, costs and logistics change.

Risk management and assessment are clearly becoming key as our clients begin to deal with a different set of counterparties in various emerging markets. The need to ensure that trade finance and liquidity are in place before contracting is also an area where we have seen new focus.

None of these are seismic shifts − they are natural outcomes of a changing environment. The significant evolution however is the emergence of renminbi (Rmb) trade − given the rise in China as a trade heavyweight. This is a fundamental change, as it will have an impact on the use of the underlying currency to transact major trade flows. It will also provide Chinese traders and importers/exporters a way to better manage both currency risks and associated costs.

Dalal: Nowadays rather than pure obligor-based lending, banks have started looking at deploying financing structures on the back of flows which brings working capital efficiencies on both sides of the supply chain.

There are challenges for the intermediaries because they operate on low margin, high volume business and because of the nature of the business they have high credit needs. Plus they operate on back-to-back contracts and handle large values which in turn require high working capital financing.

They are the ones who suffered most during the crisis, most banks have constraints as to how much of the balance sheet to be lent to intermediaries. This is where flow-based financing truly comes into play.

Second, Rmb flows have picked up big time. There are companies invoicing in Rmb routing Chinese flows through our counters with a need to avail US dollar financing. We are seeing these flows increasing and are able to offer Chinese clients US dollar funding on the back of Rmb-denominated transactions.

Hogan: If you say from the intermediary point of view you are looking at traders of oil, and soft and hard commodities, post-global financial crisis, there has been a subtle and gradual shift. While previously there was a degree of mismatch between sources of their liquidity and where that liquidity was being used and needed.

As the growth in intra-Asia traffic picks up there is a requirement to have intra-Asia liquidity and liquidity providers in those markets themselves. So if you testify to some of the recent bilateral activity from a banking point of view − and some of the recent revolving credits that have been out into the market, a lot of those have started to take place for the Asian legs of their offices rather than traditional European legs − you can see fundraising in the local markets is actually increasing.

Kumar: It is divided into two parts, one for the commodity sector and one for manufacturing. When looking at commodities, from a producer perspective, while metals and energy are separate, agri is where we see a lot of demand.

The issue of food security has really picked up and there are people who want structures around agri-related products. In that area we have seen input finance, where the bank finances the input towards agri products, such as fertilisers, diesel and seeds, through a contract manager.

Sticking to commodities and looking at intermediaries, inventory-based finance in commodities has increased. People are not only looking at obligors, but also looking at what, beyond their own balance sheet, they bring to the transaction.

This is where structures like warehouse financing or intermediary financing, where the intermediary has a tie-up with an offtaker, comes in. These are two structures we have really seen pick up. As for manufacturing, and similarly with pre shipment, all that financing is there from a producer perspective.

In telecoms a huge amount of investment is happening too. Funds used to come through project finance. However, much of that has disappeared. What people are looking for, in this case producers of that telecoms equipment, is financing working capital.

Tenors are long, usually between 180 days and three years, or even up to five years or longer. We are seeing a lot of new structures here.

We are seeing increasing demand for prepayment products to allow, whether it is as an intermediary or end user, security of supply. We would look to fund a deposit and as a bank, take some security in terms of the underlying commodity, but working as a vehicle for longer-term contracts.

Certainly volatility over recent years has started to focus people on security of their supply chains, not just from a commodity point of view. We are seeing now the growth of supply chains within manufacturing in making sure key suppliers have access to cash and that they can maintain integrity of supply chains.

Packham: The supply chain is the theme we have seen growing in prominence in the last 18-24 months. Corporates are keen to secure their own supply chain and make sure their suppliers have sufficient working capital so as to ensure a timely conversion cycle.
The focus of our discussions with clients is on providing finance to the different parties, increasing efficiencies and to further enhance alignment of the financial and physical supply chains.

Lee: Financing supply chains for producers became important when credit was not easily available, particularly during the credit crunch. Changes in lending regulations and reduced insurance coverage on buyers were just two of the many challenges the industry faced.

This has had a trickle-down effect. In China for example, we have seen a growing number of trade clients looking at supply chain financing to address concerns and challenges surrounding credit availability and counterparty risk.

Hogan: Banks have to change risk assessment models as well. It is really about working hand in hand with credit and other departments to work out exactly how they structure and perfect security, rather than just taking pure counterparty risk.

If you are working with traders in the middle of this they generally have thinner balance sheets, so to look at how you secure on a counterparty alone will not work; you have to look at it in a slightly different way.

Parry: Clients and their customers are a lot more accepting because they are looking to manage some of their mismatch between where their funding is coming from and where their trade flows are. Some had financing sources in the past which have disappeared or become more restrictive.

Clients want banks to understand the different flows and counterparties in their supply chain as this helps unlock the credit, and makes it less likely their bankers will run away when there is a wobble because they are in and they understand.

You have also got finance departments and corporates becoming more enlightened and seeing themselves taking a broader role within the organisation and therefore keen to help, being seen to facilitate the company’s business, not just providing the funding. Thus maybe having a willingness to use effectively some of their own financing capacity, in terms of bank lines to their supply chain or to their distributors.

This is a natural progression. If you go back 15-20 years we cannibalised the market in the sense that banks would go after certain sectors of the financing of the transaction and the pricing would evolve lower and lower. We are trying to bring your bigger value add by expanding the length of time we are involved with the transaction.

We are talking about signing people up before the contract is even sold and getting ourselves in there as part of the foundation so they cannot get rid of us even if they wanted to, or someone cannot cut 20 basis points and then we lose the whole deal.

I think that is where banks are evolving by making that transition difficult because credit people look at very simple two-dimensional things. Yet if you want the value you need to bring more than just financing oil from Dubai to Singapore.

Banks can value add. The input from banks is needed even before the contract is signed. The intermediary needs to negotiate the terms between the buyer and himself, and then with the seller, especially in the structuring of project finance.

When we get into the picture, we are able to balance the needs and financial strength of the buyer, seller and intermediary so we can shift some of the risks from one side to the other, depending on who is in the better position to take the risk. That is where we get into the picture before the contract is signed, especially where our middleman has a thin or no balance sheet.

He is able to get between the buyer and seller and put the two contracts in place because we can balance the performance risk and the financing needs of the parties to the one that can take it best.

Lee: As a bank, we want to be more involved in the transaction because we believe we can add significant value to our clients’ business. From the contract negotiation stage, where we can develop and deliver an effective structure, right through to the conclusion of the process. We have also continued to broaden our capabilities as illustrated by our acquisition of Sempra.

Sempra enables us to handle physical commodities and to offer an offtake capability. If we are the offtaker, then the risk profile of the entire structure improves and that gives us the ability to create structured trade solutions for commodities, metals, oil and gas.

Kumar: This crisis has also brought good things. We have been doing supply chain for almost 10 years and always believed that knowing and understanding the client’s business is very important. We would speak to the companies and their buyers, and the companies’ buyers’ buyers. That gives us a three-level discussion of the supply chain, just to understand the other impacts and what they impact on. That has been one of the reasons we have not had the level of losses expected.

Margins also generally got squeezed on the corporate side during the crisis. Before, margins were good. But when it really squeezed down, 1% up or down in terms of cost of financing meant a lot − you would either make some money, or not any at all. That is where corporates are showing their contracts to banks and asking how they can reduce the cost of financing.

I see these two trends as encouraging for the entire industry. This is because, from an industry perspective, for banks and corporates, you are moving towards a partnership.

Where we are now in the cycle, it is still fairly fresh in treasurer’s memories that banks did disappear and financing for some contracts had become unavailable or prohibitively expensive. While that is fresh in people’s minds there is still an opportunity to get the right behaviours, right structures and partnerships.

It will be interesting to see how things are in two years time, whether these memories are retained.

Faizullabhoy: If you look back at the period after the Asian crisis in 1997-98, memories were short-lived then. However, there is a fundamental change this time around due to the scale of the crisis and the fact that major international banks and developing markets were significantly impacted.

In addition, with the shift in global trade flows, it is a totally new set of rules and counterparties that people are dealing with. I believe these will be lasting changes and will impact decisions around supply chains and the associated financing.

There has been a shift on the corporate side. If you compare treasury managers’ objectives with pre-crisis there is a shift towards focus on working capital efficiencies.

They are investing an equal amount of time with banks trying to tighten logistic supply chain and procurement processes and working with banks to deploy financing structures so they can achieve overall working capital efficiencies in their businesses. It is obvious there is a shift on the corporate side as well which in turn is further helping develop trade businesses.

Lee: Banks, especially big banks, are coming under a lot more scrutiny. The challenge for us as trade finance bankers pre-crisis was that banks were getting disintermediated by capital markets. As these sources of funds dried up, plain vanilla back-to-basics supply chain financing and trade loans suddenly became more important. Second, there was a flight to quality.

The quality of your bank crew decided whether you survived or not. If your bank stood with you and you had a good franchise you could make it. That also changes the mindset of CFOs and treasurers which is that organic growth of working capital and days payable outstanding and days sales outstanding become a lot more important, rather than just looking at new, fancy structures.

As we move back to the fundamental basics, those fancy structures now have a more negative image. This psychological fear factor will probably change and improve over time, and it could be as soon as in the next 18 months. What is going to keep banks more intermediated is the incoming sea of regulatory change.

Corporates are changing as well. You are seeing traditional buyers of trade facilities having to work closely with treasurers of the company as they expand and do different things overseas. We have seen a shift upstream to secure assets.

Packham: Through the financial crisis, liquidity did tighten significantly as a lot of corporates observed that many banks did not come knocking on their door. It became a concern for corporates as there were not as many banks able to provide supply chain or trade finance at that point. It made them question if they could rely on just one bank for their supply chain.

Furthermore, if you bring in a bank to manage a supply chain and you are a multinational, the size of the balance sheet which that bank would need to support your suppliers is huge. One bank will usually not have the risk appetite to do that. As a result, corporates are increasingly deciding to diversify and broaden their number of bank relationships. This created opportunities that were not there before for banks. It has created a scenario where there are now a lot more multi-lenders and the opportunity for more banks to provide facilities to big names.

Lee: The story pre-crisis was always about the financing, but since the crisis we have seen a deterioration of appetite for insurance cover and other open account transactions. For this reason they have to look at supply chain financing as a risk mitigation solution.

Dyer: Banks are starting to organise and align themselves to make these things into a core product and a core way of how they operate, rather than tying themselves up in all of the inter-departmental and functional disputes about where the revenue gets booked, how the risk gets recognised and how you implement the transaction.


Bennett: Food and fuel flows: are they managed in the same way? What are the links, similarities and differences from a producer, intermediary or bank perspective?

Packham: From a risk perspective, they are different. Generally, there is a much stronger secondary market for hard commodities. However, with food or even some of the selected commodities, there may not be such a market or at least one that is as liquid and accessible.

There are also storage requirements for soft commodities and not for hard commodities.

Hogan: The size and shape of the shipments is important. It has a knock-on effect. For example, with shipments of iron ore versus soya beans you are looking at quite different shipment sizes and values, and different ways of securing finance.

Credit limits for a series of transactions for a certain client soon stack up quickly.

Taking the iron ore example, the flows are definitely more consolidated. In contrast, when you look at the agri-supply chain, transaction sizes start to get a lot more fragmented.

Some supplies coming out of Australia going to Japan are between a buyer and seller that have had a relationship for 35 years. The values are very sizeable, but the involvement and contribution of banks is less apparent. When you look at the agri-supply chain, it is more fragmented as they do not know each other as well. There is a role for banks to play here where they can bridge the two. You cannot look at everything collectively. You have to break it down into different market sub-segments, as each one operates in a different way, with banks having a different role to play in each.

Hills: First, you are talking about dollar volumes, numbers that are significantly different. When you get food stuff, you can only not pay for one shipment of rice. You are not going to get another shipment of rice.

There is a similarity with oil: you are only going to miss one shipment payment of oil and you will not get another one. It is why, when you look at Indonesia, oil or rice pricing is half of what commercial stuff is because they know it is going to be in the market very quickly.

Faizullabhoy: Fuel and food are both strategic commodities – and generally not products where you would normally see major incidence of defaults. Both have also seen strong rebounds over the last year in both value and volume terms.

However, this is where the similarity ends. Fuel is an area dominated by well established, long-term players and where the convention for trade finance is very specific or unique to this industry (eg, using LOIs, payment undertakings, documentary credits with floating values tied to oil prices, etc).

On the food side, this is not the case. With the shift in global trade flows, we are seeing new players from various emerging markets and this clearly has implications around risk management and structures that would be needed to finance these trades.

Kumar: The key is that in terms of risks, they are very different. There are similarities, in that both are strategic commodities and both are collaterals. Depending on what commodity you are talking about you can get value out of it. Financing of fuel or oil has become commoditised. Operations, product and sales teams all know these processes.

When it comes to food this is still a nascent area because not all banks engage in these transactions.

However, demand for food transactions is increasing as are discussions about food security. Demand on that side will increase in terms of traditional structures.

When it comes to intermediaries, you need to be assured about the quality of the collateral manager, collateral regulations, etc. What would it take for trade finance in a particular market relating to food, or food flows, to flourish? First, what are the food flows around that market? Is it strategic, is it staple foods or not? Second, what is the legal framework in that market to support the whole structure? This relates predominantly to taking out collateral.

Third, the existence of insurers. There are firms that specialise in insurance for this, for example, crop insurance is not something that everybody could do equally well.

Fourth, logistics; if you are moving into a warehouse, are there logistics and is it sound? There are challenges. This is an area which is developing and seeing more demand and a lot of banks will increasingly start focusing on it.

Parry: There are a lot more variables surrounding these products than around the hard commodities such as oil. As you said, it is nascent for the agris. The banks and corporates realise that this is a need, and some will do well in this area over the next few years and start to get their heads around all of these variables such as weather and the strategic importance of food.


Bennett: How do international, regional and local banks come into the picture?

Pang: For international trade finance, it is always an advantage to bank on both sides of the transaction. When there is a trade dispute, the information flow you have on the end to end transaction should help to mitigate the risks. To mitigate risk, we try to form partnerships and alliances.

Hogan: I don’t think there is ever such a thing as a truly global bank. Every bank has a certain role to play. It is up to each bank to determine which role they are going to play and how they play that differently from someone else. I don’t think there is anybody that really does anything better than anyone else across all markets.

Lee: One challenge is for each bank to decide where competitive advantages are. For us the value is in supporting the international aspirations of our client base. This can be local corporates or multinationals.

Even in India, China and the wider Asia region, you tend to find that local corporates have the ability and wallet to be able to acquire and go international in a different way. Sometimes you find that even as we work with the new trade flows coming through, Chinese companies are acquiring companies in the US and doing EPC projects in Algeria or Nigeria, for example.

Understanding local markets is very important. For example, there are nuances in Algeria where the LCs are in French. If you are a global bank you can process in French, but if you are not, then it becomes more challenging.

Kumar: Even in other regional languages… a lot of our documentation in China is printed in Chinese as well as English, and the client signs both of them. Often the client only wants to sign in Chinese.
The area brings its own challenges as well for a regional and international bank. Local banks understand the market very well and that is what they are there for. It is quite important that in every market there is a decent coexistence of all the three: local, regional and international.

Hills: There is a fourth. We are basically an intermediary bank and not a local bank anywhere. Trying to have that plug on both sides can be challenging. There are strengths to this position, however. In the last 15 to 20 years, look at the way the capability of local banks has changed.

I know 20 years ago in Indonesia and Singapore if you wanted top-notch payment and trade services you had to go to foreign banks. This is not necessarily true now.


Bennett: Is it “back to basics” for trade finance structures now?

Kumar: You cannot just look at LCs on their own. You have to look at LCs in the context global trade. If you look at it from that perspective, LCs have gone up in relative terms.

In 2009 LCs declined by 2%, whereas global trade in volume terms declined by 12%. If we look at October/November 2008, LC volumes were coming down from June, but after Lehman happened in September, LC volumes were going up.

LCs are inefficient. If you ship 1 million barrels of oil from Singapore to Indonesia it takes one day, but the documents under an LC take one week to reach the importer. You would never want to go back to LCs if you have already moved to open account. While. it is back to basics, in trade finance itself there are a lot of new structures which have been brought in and should continue.

Open account continues to grow in spite of the fact that during the crisis we had a big challenge from an insurance perspective. A lot of insurers pulled lines.

The issue of inventory-based or collateral-based financing is something which will be more in focus. LCs are important in all of that, in how people are delivering financing and asking for collateral. It is primarily for various reasons; they are not only looking at the obligor, but also looking at, “Can I tie up whatever is available for that particular transaction into the transaction, so that my recoveries are better in case something goes wrong?”

Dyer: If you look at Swift statistics and how 85% of LCs have Asia at one end or the other, and as we start expanding intra-Asia trade, the LC is a familiar document. The shift into more traditionally risky markets – I use the word “traditionally”, because we have proved the OECD can now be risky − will sustain the LC. Whereas if you go into Europe or the US, it is not a familiar way of doing business.

Hogan: These are the riskier countries. Rumours of its demise are probably exaggerated. Over time the ratio of LCs versus open account traffic will decrease, but it will take a couple more cycles. They always have a place in a downturn. There was one anecdote in the middle of the crisis where even a domestic LC going from Perth to Sydney within Australia was being confirmed. On a ratio basis they will probably tail off over the next two or three crises, but they are not going to vanish overnight.

The increase in intra-Asia flows is important. If you are doing more in Bangladesh or Pakistan there is definitely a role for LCs. If the cost of producing goods in China increases then there is going to be a shift in production to other markets, and the way to get into those markets is through the tried and tested instruments and the LC is one of those. We were talking a similar story in 1996-97, and 13 years later we are having the same conversation.

Hills: Twenty-five years ago they were going to be replaced by BankTrade or TradeCard or one of those others. It will just move to the downmarket markets where you would still require LCs from their end. Maybe as countries become more financially strong and names acceptable, it will of course decline there.


Bennett: What if Swift’s Trade Service Utility (TSU) gets ICC validation and acceptance?

Kumar: If you look at it, from a BPO (bank payment obligation) perspective it is close to an LC. If you speak to customers they either want an LC or they want an open account. BPO is somewhere in-between. It gives you the advantages of an LC, but is more efficient. In terms of efficiency, it is closer to an open account transaction. I think it is a matter of time that people will start picking up on that.


Bennett: There are large TSU transactions going between Africa and Bank of China, so they seem to be working.

It seems that Japanese and Chinese banks are keener on TSU than international banks.

Pang: That depends on the markets. With trade between Japan and China, LCs are just payment instruments. Japanese banks do not depend entirely on documentation to make the payment. When you are purchasing more complex products and services, you need to see the documents and make sure they perform according to the agreement, then I think you still need the LC.

The great thing about Japan and China is that the Japanese will just pay when the goods are shipped in accordance to the contract. If there is any dispute, it will be dealt with later and outside of the transaction.

Kumar: Similar to LCs, under TSU BPO, the exporter always has an upper hand. Once you issue an LC it is up to the exporter to ship the goods. If he does not ship the goods, the importer cannot do anything under the LC; his charges are gone. If the exporter ships the goods, he gets the money. A similar thing happens with a BPO. If the BPO is there and issued, as long as the exporter conforms to the requirements he gets paid. The exporter has the upper hand.

Dyer: I always think that TSU is potentially a way in which the banking industry can still stay relevant in the supply chain in terms of moving information around. I generally perceive that challenges to the bank in terms of providing the information channel is that a lot of suppliers or buyers will not want to be using that bank or not want to use that bank’s platform.

Potentially, TSU starts becoming a more bank-neutral communication tool which would make it a lot easier to implement supply chain solutions. You wouldn’t need more and more of the suppliers or the buyers to actually use your bank’s platform. That would seem quite a compelling proposition – but one where there’s certainly no evidence that it has taken off.

Dalal: The global crisis is one reason why TSU has not picked up. The flow which wanted to come to TSU has shifted back to LCs. We are optimistic with the TSU. It is a nice tool to create financing on an open account by a bank, but we need to see the uptake.

Hogan: Some banks are quite nervous about it. If you are the incumbent and are going to contribute to something that helps displace your position, why would you do it? From a Swift point of view, they have to work out issues that banks have and help them realise there is something in it for them. They need to show there is an alignment of objectives.

Without that alignment they are not going to get the necessary weight behind the initiative.

Hills: I have been an advocate of it, but it just cannot get off the ground. I’d like to look at TSU as something that would be targeting the 80% that don’t use us now anyway, not the 20% that use us for LCs or supply chain.

Bennett: It’s the BPOs that have made me look up and say, “That has some credibility”. That is quite a recent addition to TSU. That is when people I talk to have said, ‘We are going to go with that now; I can see some benefit’.

It also allows you to syndicate risk as you can BPO a number of banks to get commitment and this is done through Swift messaging. There is no other Swift messaging you can support a syndicated transaction with at the moment. GTR