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Australia’s Commonwealth Bank has entered into a processing partnership with Wachovia Bank whereby all import and export business of the bank, from letters of credit and collection to open account, will be processed through Wachovia by November through a white labelling solution. The import book stands at around 50% of Commonwealth’s trade book.

Wachovia was chosen as a processing partner as a result of a competitive tender process in 2004 and has been handling import processing for Commonwealth since July. Implementation of the final piece of the agreement takes the partnership one step further to include export business.

John McFadden, managing director for trade product management and product delivery at Wachovia in Charlotte, NC, says: “Wachovia and its predecessor banks have been long-term players in the trade services business. We’ve built very large and significant market share among institutional and corporate clients. In Asia we Have built our branch network to support the trade business (the largest of these operations being in Hong Kong) and have invested heavily in technology. We have built a full suite of web-based delivery options which is integrated with our back office processing for importers and exporters as well.”

Wachovia realised some time ago, says McFadden, that it could supply other banks with these services and started offering in-sourcing capabilities 10 years ago. Over the last five years, however, the scene has changed, with trade services becoming far more labour- and capital-intensive. “If you want to stay at the forefront, you need to constantly invest and stay ahead,” he says. “This provided some banks with an opportunity to work with a partner like Wachovia to allow them to have a market reach they wouldn ‘t have had otherwise. This is a strategically attractive option for banks like Commonwealth.”

“Commonwealth Bank has always been an active trade bank, however to take our business to the next level a significant investment in technology was required.” says Mike Reidy, executive manager, trade services, at Commonwealth in Sydney. “The bank had taken a measured approach to determining the direction of the business and how best to meet ever increasing customer expectations for technology and innovation.”

“Leveraging the partnership with Wachovia, enables Commonwealth to provide our customers with access to a range of proven, innovative solutions demanded by some of the world’s largest corporate organisations,” claims Reidy. “For us the real appeal of Wachovia is the opportunity to exploit the intellectual capital available from a diverse multinational bank.”

Wachovia has around 70 agreements in place with various partners around the world. A key to Wachovia’s approach in buiding such arrangements is its “Partner not Competitor” philosophy. It is not looking to add to this number with other Australian banks, says Reidy. McFadden adds: “We are not looking to acquire corporate customers from Australian banks.”