Concerns over the sub-prime issues are beginning to affect trade finance pricing in the south-east Asian economies, according to speakers at last week’s Federation of Indian Chambers of Commerce and Industries (FICCI) Indian Banking Association (IBA) conference held in Mumbai.
Speaking during a trade finance and supply chain focused session, Asif Raza, Asia Pacific head of trade and logistics management at JPMorgan outlined the growing importance of trade finance in the Asian market and the increasing demand for new financing solutions. He also spoke of the importance of robust risk mitigation solutions and integration of trade flows being carried out on an open account basis and supply chain financing.
He went on to tackle the effects of sub prime problems overflowing into the Asian market. Speaking to GTR after the conference he remarks: “Recent sub-prime events and growing short-term investment needs are putting pressure on liquidity in the region, and leading to a slight increase in pricing in certain markets, and an increase in the cost of funds.”
Risk mitigation tools such as secondary loan sales, credit derivatives, insurance, multilateral and ECA support and structured products were also discussed.
Raza’s speech formed part of a panel session on trade finance and supply chain issues headed up by Y Googoolye, deputy governor of the Bank of Mauritius.
Also talking during the session was J Chandrasekaran, chief general manager at State Bank of India. He spoke of the huge potential for trade finance solutions in India, estimating potential revenues of over US$2bn in the next five years. He discussed the growing variety of trade products in the market, from traditional solutions such as LCs to the more unusual such as Forex and derivatives.
Subin Subaiah, senior vice president, Asia head, global treasury services – financial institutions at Bank of America was also on the speaker panel.
The “Global Banking: Paradigm Shift” conference was held between September 12 to 14 in Mumbai, and was given the theme of “Managing Transition”.