FOR BANKS, TRADE finance has historically been considered a relatively unexciting market, despite being fiercely competitive and crucial for revenues. However, several slow-burning trends are changing how global trade is conducted and financed, while the financial crisis has reaffirmed the significance of trade finance’s relatively stable revenue streams and its centrality to client relationships.
“At a macro level, trade finance will always be important because trade is the lifeblood of the economy,” says Adnan Ghani, global head of trade finance at RBS. “For banks, trade and global transaction services [which also includes cash management] are anti-cyclical and have therefore become a centre of attention during the current global downturn. Moreover, compared with other forms of financing, trade is a low-capital activity, has stable earnings and the returns on capital are good.” ...
