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International Chamber of Commerce (ICC)
Banking Commission
THE WORLD BUSINESS ORGANIZATION
The World’s Essential Rule-Making Body for the Banking
Industry
Gerardo Gutierrez-Olvera
President of Trade Finance Committee, ICC Mexico
Mexico City, 6 October 2015
ICC Global Survey on Trade & Finance
2015
Key Findings
ICC has hundreds of thousands of members in 130
countries:
Companies of all sizes and from all sectors
Chambers of commerce, national and local
Business associations
Privileged partner of intergovernmental bodies
UN, WTO, G20, MDBs
ICC is the world business organization:
Its mission is to promote cross-border trade and investment
THE WORLD BUSINESS ORGANIZATION
SERVING WORLD BUSINESS
ICC is the premier provider of services to world business
– World Chambers FederationA global forum for chambers of commerce
– Commercial Crime ServicesFighting fraud, maritime piracy and commercial crime
– CommunicationsVoicing business positions through traditional and social media
channels media and the ICC website
– Publications Publishing business books
– Training and ConferencesOrganizing and hosting events, training seminars and
workshops of topical interest
THE WORLD BUSINESS ORGANIZATION
SERVING WORLD BUSINESS
ICC formulates business policy and builds consensus
ICC keeps pace with the changing business environment, formulating
policy in the following areas, according to the needs of its members:
Digital Economy
Environment and Energy
Intellectual Property
Marketing and Advertising
Taxation
Trade and Investment Policy
THE WORLD BUSINESS ORGANIZATION
POLICY
Arbitration and ADR
Banking
Commercial Law and Practice
Competition
Corporate Responsibility and Anti-
Corruption
Customs and Trade Facilitation
ICC BANKING COMMISSION
REACH AND GLOBAL NETWORK
Asia
Africa
Caribbean
Europe
Middle East
North America
Pacific
South America
A truly representative global forum
600+ institutional members spread over + 100 countries
THE ICC BANKING COMMISSION
A leading and trusted rule-making body for banking
and trade finance
Rules & Guidelines Market Intelligence
Policy
& Regulatory
Dispute
Resolution
+ Training & Certification
SPECIALIZED TRAININGS AND EVENTS
November 2015
Paris, France
- ICC Banking Commission Technical Meeting
January 2016
Singapore, Singapore
- Supply Chain Finance Summit
April 2016
Johannesburg, South Africa
- ICC Banking Commission Annual Meeting
ICC BANKING COMMISSION – PROVIDER OF
LEADING MARKET INTELLIGENCE
ICC Trade Register ICC Global Survey ICC/IMF Market Snapshot
on Trade & Finance
Measuring Global Risks
in Trade Finance Markets
Measuring Performance and
Shifts in Trade Finance
Markets
Snapshot of the Current
Status of Trade Finance
Markets
ICC Market Intelligence Products help leaders make informed
decisions on World Trade Finance
ICC GLOBAL SURVEY ON TRADE & FINANCE
2015
ICC GLOBAL SURVEY ON TRADE & FINANCE
2015
• 7th edition
Well-established market intelligence tool for the whole trade & finance
industry, expanding year by year in scope, worldwide representation and
relevance
• 482 Survey respondent banks across 112
countries +60% in participation compared to 2014
broad geographical reach enhances the richness of the data collected
• 16 institutional and contributing partners
Industry actors from around the world pool their knowledge to develop a
valuable global view on the pressing issues of today in trade finance and
beyond
• Report released 29 September 2015
2015 Global Survey at a glance
GLOBAL AND REGIONAL TRENDS IN TRADE FINANCE
• Trade finance overall on the rise - Respondents reported an
increase in the demand for
traditional trade finance
instruments to cover the
potential risk of default under
commercial contracts
- 63.3% of respondents have
reported an increase in overall
trade finance activity
- 61.2% of banks have increased
their capacity to meet trade
finance demand
- 25% of respondents consider
trade finance significantly less
risk than conventional lending
• Refusal rates under L/Cs falling
- 65.6% of respondents did not experience an increase in refusal rates of documents
under L/Cs in 2014
- 67.8% of respondents expect the downward trend in refusal rates of documents under
L/Cs to continue
GLOBAL AND REGIONAL TRENDS IN TRADE FINANCE
• Global trends in trade finance – Asia strong despite
slowing trade growth
- 25.2% of respondents indicated that their main centres
for trade processing were in Asia, followed by Europe
with 21% and then North America with 14.1%
- 39% of the trade finance transactions concluded by
respondents so far in 2015 have been driven by
Asian markets
GLOBAL AND REGIONAL TRENDS IN TRADE FINANCE
• Trends across Latin America
- Overall, Latin America reported a trade deficit for the
second consecutive year in 2014
- Latin American trade deficit is mainly due to the fall in the
trade surplus in Argentina, Chile, and Venezuela, and the
widening of the trade deficits in Brazil, Columbia, and
Peru
- De-risking and regulatory changes are adversely
affecting trade finance flows and financial inclusion,
particularly in higher risk emerging economies in Latin
America
- According to the Florida International Bankers
Association (FIBA): Basel III reforms have created some
unintended consequences in Latin America, where a risk
weight of up to 150% may be required on short-term
loans related to trade finance. By comparison, the risk
weight for developed countries runs closer to 20%
GLOBAL AND REGIONAL TRENDS IN TRADE FINANCE
IMPACT OF COMPLIANCE
• The impact of compliance – widening the trade finance gap
- 46% of banks surveyed terminated correspondent relationships due to
the cost or complexity of compliance
- 70% of respondents reported declining transactions due to AML/KYC
- Almost all respondents expect compliance requirements to increase
during 2015
- 80% of respondents cite anti-
financial crimes compliance
requirements as a significant
impediment to trade finance –
compared to 69% last year
TRADE FINANCE GAPS
• SMEs continue to be disadvantaged in trade finance transactions
SMEs account for 53% of all rejected trade finance transactions. By contrast, 79% of
the trade finance transactions for large corporates are accepted
TRADE FINANCE GAPS
• SMEs are a key part of the economy
- SMEs constitute over 95% of all firms, and account for
approximately 60% of employment globally
- The top priority for SMEs is access to information
about export opportunities
- The productivity gap between small and large firms is
particularly large in developing countries Small firms in
Germany, for instance, achieve around 70% of the
productivity of large firms. In Brazil, small firms realise
less than 30%
Research conducted by International Trade Centre (ITC)
TRADE FINANCE GAPS
• Filling the trade finance gap
- ICC encourages new or alternative financiers to support trade
- ECAs and MDBs have been filling the trade finance gap (often through Trade Facilitation
Programs)
SWIFT TRADE FINANCE MESSAGING VOLUMES
• Overall SWIFT trade finance messaging volumes decreased
• In 2014, SWIFT trade volumes
decreased by 1.79% – compared to a
decrease of 0.65% in 2013
• In 2014, the average value of an LC
(MT700 only) decreased by
US$10,000 to US$643,000 – from
US$653,000 in 2013
SWIFT TRADE FINANCE MESSAGING VOLUMES
• Asia-Pacific dominates global SWIFT trade finance messaging
volumes
- Asia-Pacific continues to register a great volume of MT 700 (used by banks when issuing an LC)
with 70% (import) and 76% (export) of the world traffic in 2014 – most of which is intra-regional
SWIFT TRADE FINANCE MESSAGING VOLUMES
• Elsewhere the picture varies
- The region that shows the highest annual decrease in export trade traffic is Africa,
where it has decreased by 18.74%. This is followed by Central and Latin America,
where export trade traffic has decreased by 6.4%, and North America, which is
down by 6.05%
- The Chinese RMB is the second most used currency, having represented 10.17%
of the total value in 2014, an increase compared to 9% in 2013 (US$ was the
currency that represented 80% of the total value of LCs issued via SWIFT).
KEY TRENDS IN EXPORT FINANCE
• Export finance proving profitable
Export finance remains a profitable
business for the vast majority (79%)
of those in the industry
The majority of respondents surveyed
(35%) believe the export finance
market will grow by 1-10% in 2015
Research provided by TXF for the ICC Global Survey
on Trade Finance
KEY TRENDS IN EXPORT FINANCE
• The export finance industry observed a significant decrease in pricing
and fees in 2014
- Only 10% of export financiers
reported an increase in fees
over the past year
- Only 12% reported an increase
in pricing
Research provided by TXF for the ICC Global Survey
on Trade Finance
KEY TRENDS IN EXPORT FINANCE
• Legal and regulatory hurdles the biggest to export finance
• Most financiers do not
believe Basel III will have
an impact on their
competitiveness
• Legal and regulatory
hurdles are the biggest
obstacle to conducting
export finance in new
markets
• 42% of export financiers
believe a lack of
understanding of the
product and associated
risks is withholding more
institutional investors from
entering into export
finance
Research provided by TXF for the ICC Global Survey
on Trade Finance
KEY TRENDS IN EXPORT INSURANCE
• Business trends in export insurance
• The volumes of export credit insurance reported for 2014 reached a total amount of
US$1.875 trillion – an increase of 4% from the previous year
• Of this total, more than US$1.7 trillion represented short-term (ST) export credit
insurance, while medium and long-term (MLT) cover provided by official export credit
agencies (ECAs) amounted to just over US$166 billion
• Claims paid to customers by ECAs under MLT transactions amounted to US$2.427
billion in 2014
• The highest amount of claims paid per country were due to defaults in: Iran (US$916
million); Russia (US$296 million); Ukraine (US$187 million); USA (US$172 million);
Kazakhstan (US$97 million)
Research conducted by Berne Union
KEY MESSAGES ON TRADE FINANCE IN LATIN AMERICA
• The impact of regulation across Latin America
- De-risking and regulatory changes are adversely affecting trade finance flows and
financial inclusion, particularly in higher risk emerging economies in Latin America
- In Latin America, a risk weight of up to 150% may be required on short term loans
related to trade finance. By comparison, the weight for developed countries runs
closer to 20%
- SMEs have been most severely impacted – given they represent approximately
80% of companies involved in trade in Latin America, but account for less than 15%
of total trade financing
KEY MESSAGES ON TRADE FINANCE IN LATIN AMERICA
• The Latin American trade deficit continues
- Latin America reported a trade deficit for the second consecutive year in 2014
- Imports of Latin American goods by the region’s three main trading partners have
declined during the first trimester of 2015:
China – by 28%
US – by 6%
EU – by 3%
- The weakening of commodity prices has been severely felt across Latin America
- Oil prices dropped drastically between June-October 2014 – falling by 20%
KEY MESSAGES ON TRADE FINANCE IN LATIN AMERICA
• Positive performances across Latin America
- The only commodity that had a positive performance was coffee – with price
increasing by 40% through October
- Tech revolution has prompted an increase in the trade of mobile technology
- Brazil exported US$300 million worth of mobile equipment in the first quarter of
2015
- Peru exported more than US$160 million of mobile equipment over the first quarter
of 2015
THANK YOU!
ICC Banking Commission
The leading and trusted
authority for trade finance