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our customers and to new technological possibilities,

she continues, supply chain finance structures throughelectronic platforms are such a variation of forfaiting.

However, since the beginning of this year we have

seen growing competition from ABS structures for our

supply chain finance products. As this activity had been

very strongly deleveraged following the financial crisis,

securitisation teams are now looking for new and relatively

safe assets. They seem to find them in trade finance,

offering structures to the bigger corporates whereby they

buy up all of their trade related assets, put them in a conduit

and by this method offer corporates cheaper funding.

Meanwhile, Raderschall says that banks are trying to

learn the lessons of the crisis, though some things have beenadjusted. There is confidence here. In the old days a client

would just show you the deal. They wouldnt consider any

other alternative; they would just do it. But now people shop

around and they are met with different policies, different

possibilities. That is why we say that there is an increase, but

also change, in the way business is being done.

Looking to the future, Calac concludes: I think German

industry has a good time ahead of it. There is strong

technical knowledge and excellence that goes into German

exports. Germany has benefited from increased investment

in heavy equipment by overseas customers after a reduction

in investment in various markets during the crisis We will

continue to expand our trade finance activities to support

exports and imports. We hope regulators will appreciate the

importance of trade finance for the German economy and

will accept the argument for preferred capital allocation rulesfor trade finance, which is jeopardized by the new regulatory

environment of Basel II and III.

Sooth agrees: For the future I think there will be

growth, but I think it will be tight.

For the time being, there is plenty of business to

go around and the traditional trade finance banks can

celebrate the countrys 20th anniversary and its strong

export-led economic performance. Longer term they have

to grapple with the consequences of Basel III and come to

terms with stringent profitability criteria, but that will be

another story.

Richard Willsher is a financial journalist and trainer,

perhaps best known for the seminars that he conducts

with the IFA. He can be contacted by emailing

rdw@richardwillsher.com

Volume and profits

Former IFA board member and senior specialist intrade finance at Commerzbank in Frankfurt, Waltraud

Raderschall, agrees. I dont think that any of us can

complain about the volume and profits in the business. I

wouldnt say that it is booming but we can see any amount

of business, any time of the day.

She goes on to describe the state of the market: From

the larger firms there is a huge request for supplier credits

down to the smaller SMEs. Then there are the government

programmes with the German export credit agency (ECA)

providing plenty of insured possibilities. There has also

been a change in the policy of the private risk insurance

companies. The self-retention portions have often improved,depending on the risk covered. Then there are the risk

limits within the banks to cover political and commercial

risk. Combine all of these and we are at a very interesting

moment because everything is emerging at the same time.

Supporting the export-led recovery has not been all plain

sailing for German trade financiers however. Trade finance

is essential, even for SME business, says Bernd Sooth, Vice

President of Financial Institutions Trade and Commodity

Finance at IPEX Bank in Frankfurt, but there is a gap

between the potential of the market and the willingness

among the banks to provide support, says Sooth.

He adds: Businesses need more from the banks, butthey cant provide all the services that customers need. This

is due to the risk policies of the banks due to the fact that

there have been huge mergers and much consolidation

within the banking sector. That is a problem for the

SMEs that are looking for new partners in trade finance

business because they prefer to work with German banks

rather than to seek out partners in other countries.

Stephan Schneider, who heads structured export

finance at BHF Bank in Frankfurt, notes that there are

currently discussions ongoing in Berlin to try to alleviate

the problems faced by SMEs. One proposal, for example, is

that insurers and ECAs could improve insurance provisionsfor small companies trade debts, which would enable them

to more easily discount them with banks that do not have

banking lines in place for such small firms.

The consolidation of the banking market and the

stringent controls on lines and limits has created space for

other players to enter the market not just smaller, non-

bank forfaiting houses, but also firms keen to structure

asset-backed securitisations (ABS). We see new products

which are competing, but which are not really different

from forfaiting. Since I would call forfaiting a technique to

liquidate illiquid assets, such new products are variations

of forfaiting. ECA-covered supplier finance, electronicplatforms and non-guaranteed supply chain finance are all

part of the German way of forfaiting, says Calac.

Forfaiting has evolved a lot over the last few years

adapting to the more sophisticated requirements of

11www.tfreview.com

I dont think that any of us can complain

about the volume and profits in the business. I

wouldnt say that it is booming but we can see

any amount of business, any time of the day.WALTRAUD RADERSCHALL, COMMERZBANK