Through country lines and training, Lloyds TSB claims it is creating the capacity to realise its full potential in the international trade finance market. The trade finance team at Lloyds TSB is rolling out its built-up risk capacity to undertake transactions across a wide variety of emerging markets.

Certainly, the belief among the trade finance risk portfolio team is that the new range of country lines now available will empower it to use the team’s full range of expertise. It will also put the bank alongside the largest trade finance providers in the market.

“We have been progressively acquiring the lines and building our capability over the past two years,” says Shalini Khemka, director and head of risk portfolio management, Lloyds TSB, Corporate Transaction Services.

“Although the bank has been a player in trade finance for some time now, we have only made tentative steps in exposing ourselves fully to emerging market risk – making sure that the bank’s appetite for such exposures did not overstretch itself.”

But with the freedom bestowed by the new country lines, the bank is in a position to accelerate its offering.

“With separate limits in place for a wide variety of emerging markets, it is now a question of sourcing strong assets for the portfolio and managing that portfolio well,” says Khemka. “The aim is to develop a variety of risk profiles – not just a mix of countries, but a strong mix of instruments also.”

But the country lines are not just there to fill up the books. They herald a fresh approach to trade finance at the bank.

“Of course it is a major injection of liquidity into the market on behalf of the bank,” says Khemka. “This does not give us a licence to merely fill up the book. We must approach the market with precision.  Our origination efforts have to be matched all the way by our distribution efforts. Each asset has to be assessed on a mark-to-market basis, which means a continual assessment for return. The aim here is to balance origination equally with distribution. We are not looking to become a stuffy bank, sitting on low-yielding assets.”

Indeed, the bank also intends to use its new versatility to build relationships with both top-tier financial institutions (FIs) and emerging market FIs.

“The bank has allowed customers to slip through its fingers too easily in the past,” says Khemka. “The time has come for us to win back business that should have always been ours. And it is through the bank’s newly acquired capacity for risk that we can achieve this,” she says. “Our attitude to risk has broadened, and with that we see these country lines as options for new and existing customers. And while we won ‘t be throwing emerging market credit lines at clients it does mean that if clients look for trade finance in India or China, for example, we are in a position to give a very quick response without compromising our positions with partner FIs.”

In fact, the new lines will allow the bank to consolidate its relationships – meaning it can go straight to top-tier counterparties without stretching its book. Of course, the natural knock-on effect is an excellent level of service for the UK corporate client-base.

“Our new country lines will allow us to offer more sophisticated bespoke solutions with less difficulty, says Khemka,  “at heart, we are still a relationship bank.”

Indeed, creating synergies across the complete trade finance offering at the bank is another important goal. And this explains why the bank currently offers a top training course to the international trade finance community. The practical course in international trade finance, offered by International Advisory Services (IAS) at Lloyds TSB, is delivered by a leading expert in the trade finance arena. The bank expects that this sophisticated offering will complement its new country risk appetite by enhancing relationships with a variety of FIs across the international spectrum.

“We have worked hard to put together this unique training course and to ensure that it is top of the class as a trade finance educational offering,” says Nick Leng-Smith, director, training, International Advisory Services (IAS), Lloyds TSB.

The synthesis of theory and practice is embedding a culture that will enhance the bank’s reputation as a top-tier trade finance FI.

“We have always aspired to be a knowledge-led trade finance bank,” says Leng-Smith. “This is certainly evident in the sophistication of our course. And it is hoped that our new country-lines will enable us to implement this expertise swiftly in front-office operations.”

And what does this mean for change within the bank? As Khemka notes, “this is a new era in trade finance at Lloyds TSB. New team members have already been appointed and as we get stronger we expect to fill positions with the highest qualified candidates.”