Far Eastern trade finance remains active

Investment banking in the main Asian centres of Singapore and Hong Kong is in the doldrums, with many formerly profitable product areas doing little if any business.

However trade finance in general and forfaiting in particular are offering some rays of hope.

“Many exporters need funding,” explains Charles Brough, chairman of ITFA’s South Asia Regional Committee, “and this is enabling much higher margins to be achieved. While we are a long way from “normal” trading levels, both primary and secondary market deals are being finalised. Forfaiting departments are contributing quality earnings while other product areas such as syndications, commercial paper, proprietary trading and securitisation for example are doing very little. As yet we have not seen a shake out in trade finance that we are seeing elsewhere.”

Brough also advises that to date there have been no defaults in trade related business in the region, as far as he is aware. Meanwhile there is a general tendency for larger, well-funded banks to make funding available to their customers rather than buying deals in the secondary market. Nonetheless trade is again proving to be the lifeblood of many institutions, despite the global slowdown.