Just after a year since FBN Bank UK set up its structured trade finance team, the bank is already primed to take on the big players in the Sub-Saharan Africa market. GTR catches up with head of STCF John Vowell and the rest of his team.

Last year when we started, it really was the sweet spot of the market. Deals were attractively priced and a realistic approach could be adopted with deal tenors. We couldn’t have asked for a better time to start,” remarks John Vowell, head of structured trade finance (STCF) at FBN Bank UK, in London.

Last April, Vowell was given the responsibility of creating a new STCF team at FBN Bank UK, the wholly-owned subsidiary of First Bank of Nigeria. He was previously at Nedbank.

FBN Bank UK is a UK-registered bank and was incorporated in November 2002, absorbing the business of the previous London branch of First Bank of Nigeria set up in the early 1980s.

The team comprises four people, including Vowell. Original team members Chaste Nyilimana and Ayodipo Ogunmoyela, both business development managers, have been joined by Bajide Bode-Harrison. Bode-Harrison joined the team in April, moving from Nedbank, where he worked on the bank’s London STCF desk for the last two years. He has previously worked for NIgeria’s Guaranty Trust Bank.

FBN’s STF team was very much in expansion-mode from the moment it was created, standing in contrast to the general mood among banks last year.

Vowell comments: “I think banks were still suffering from the fallout from the tight liquidity during the credit crunch and this allowed us to gain a lot of traction in our business.

“We got accepted by a number of the big trading companies into their banking group. This has proven to be very fruitful.”

FBN’s initial aims were to set up a diversified bilateral structured trade commodity finance customer base with top-tier European commodity traders, producers and manufacturers, developing its portfolio in oil, metals and soft commodities. Its main mandate is to support trade flows in and out of Sub-Saharan Africa, but its focus can shift beyond Africa if their customers need support in other markets.

According to Vowell, the team has strong ambitions for the coming years.

“We hope to protect our bilateral business, participate in market transactions and are looking to increase our portfolio. Our target is a 40% increase in our portfolio across all sectors,” he explains.

FBN’s focus goes far beyond just doing Nigerian business. “On the softs side, we are doing stock financing of sugar into East and West Africa, cocoa coming out of West Africa, wheat and maize in Central Africa and East Africa, and fertiliser in Central and East Africa,” lists Chaste Nyilimana.

Deals include a one-year US$5mn uncommitted revolving collaterally managed stock finance facility financing for Multi-Trex Foods, a cocoa processing company in Nigeria.

FBN has also applied its STF expertise to deals outside Sub-Saharan Africa, arranging a €20mn revolving committed secured borrowing base facility to a Greek firm, Leaf Tobacco A. Michailides, the biggest tobacco processor in Greece. The facility financed the purchase of unprocessed green oriental tobacco, associated costs of transportation and storage, processing of tobacco and the stock of processed tobacco and receivables.

Looking to the future, Vowell comments: “We see ourselves as growing into a reliable name in the Sub-Saharan structured trade commodity finance market with a strong understanding of the continent.

“There have been a lot of banks sitting outside the market during the past 12 months. You talk to people who are not as active as ourselves and you appreciate the organisation you are working for,” he adds.

Of great significance to FBN Bank’s team is that they actually go to the Africa, and that includes the Africa beyond the confines of Johannesburg.

“We travel deep into the continent trying to understand and support our clients’ business. Every country within the continent has its own business dynamics and you require a different approach for each,” Vowell explains.

There is also a need to educate the local customers who are far from familiar with working with international banks and structured financing products.

“Putting together structured transactions and following the path you need to tread to affect drawdown under a facility can be very traumatic for a client. Reading a 60-page loan agreement, signing pledges and security, losing control of goods to a collateral manager with banks releasing goods and wrapping a whole structure around the transaction flow can be traumatic experience. We have to identify the guys on the ground that can stand up to that trauma,” Vowell asserts.