Major banks in the trade finance industry have hit back at Dealogic statistics that show global trade finance volumes falling for the second consecutive year.
The Global Trade Finance Review 2013 from Dealogic, a deals registrar, show that total trade finance volumes fell by 31% last year to US$125.1bn, with 22% fewer deals done in the space. ECA financing fell by 42%, ECA-guaranteed loans fell by 35%, structured commodity finance transactions were down in volume by 22%, while syndicated trade finance volumes were the outlier, almost tripling from US$7.6bn to US$19.8bn.
However, the market has claimed that Dealogic’s statistics are misrepresentative of a year in which trade finance, as measured by other metrics, rose.
Ashutosh Kumar, Standard Chartered’s global product head for cash and trade, tells GTR: “The Dealogic data is not a full representation of the trade finance market. The value of LC trade in 2013 alone was 25 times more at US$$3.124tn (Swift). How can the global trade finance volume decrease 32% to US$124.1bn from US$181.5bn in 2012 if the value of LC trade grew by 9.4% (ie US$268bn)?”
A source at a major European bank – who wished to remain unnamed – says that the organisation submits to Dealogic, but is “is now in the process of deciding whether to discontinue going forward”.
The source continues: “Dealogic relies on banks to submit, and there are enormous discrepancies between institutions. For example, my organisation categorically does not submit bilateral loans as we have confidentiality agreements with our clients. Hence if a bank can move up the ranking because they submit bilateral loans, then you must wonder to what extent they treat their client data.”
However, Dealogic has defended the validity of its league tables and deal registers to GTR. “If our data wasn’t good, banks wouldn’t have subscriptions with us,” says a spokesperson for the company’s syndicated loans and project finance team.
Dealogic only aggregates deals which have mandated lead arrangers which, says the spokesperson, allows them to “capture where the market is and where the market is moving to”.
The company admits that the data is reliant on the submissions of banks, but are confident that in the areas in which they publish league tables, their information is comprehensive and indisputable. “Our strongest coverage is in the ECA market,” says the spokesperson. “We work with all the top banks in that space and they’re very happy to disclose info to us. Other areas where we don’t publish league tables such as supply chain finance and commodity finance, the coverage may not be complete.”
The comparison with Swift isn’t exactly like-for-like. Swift captures bank-to-bank transactions and is used on an almost wholesale basis in trade finance. The implication with Dealogic is that it is to be used to gauge the trends in the large-scale trade lending business, rather than an all-inclusive loans database.