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Basle III bears down on trade finance

Basle III has been flagged as perhaps the most important development in the recent history of trade<br>finance. Within the industry, opinions are sharply divided: the only thing that everyone can agree on is that Basle III is occupying a lot of senior bankers’ time.

"Trade finance is under threat from Basle III," says Markus Wohlgeschaffen, head of global trade finance and services at UniCredit. "Indeed, it is the greatest – unintended – potential threat to the global recovery that [is related to] world trade." In contrast, Adnan Ghani, head of global trade finance, GTS, at RBS, says: "There is a reason for regulations such as Basle III. Trade has been conducted for 5,000 years and it will go on for another 5,000 years regardless of the regulatory measures introduced." There is though, a consensus that Basle III proposals to change the capital requirements associated with trade finance could therefore hamper trade itself.

A letter to the Basle Committee on Banking Supervision signed by 31 heads of banking and other financial associations (including the Bankers’ Association for Finance and Trade – the International Financial Services Association (BAFT-IFSA), the American Bankers Association, the Association of German Banks, the British Bankers’ Association, the European Banking Federation, the Federación Latinoamericana de Bancos, the French Banking Federation and the Institute of International Finance) in November outlined the chief problem.

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