Trade finance to be a significant revenue stream in Asia: DBS

Banks may also see opportunities in open account trade or supply chain finance despite economic instability.

ABF: Bankers and analysts alike believe that trade finance is thriving in Asia despite the financial crisis in EU. What are your thoughts on this? What could be the reason behind thriving trade finance in Asia?

DBS: Ken Stratton, Global Head of Sales, Global Transaction Services
Trade finance is thriving in Asia, and many banks – including DBS – see this as a significant revenue stream for some time to come, despite economic challenges in much of the world. In fact, economic instability provides significant revenue opportunities for banks as many companies look to off-lay their counterparty or country risk by selling to banks. Some companies will ask their counterparty to open letters of credit as part of their risk aversion strategy, despite having long term relationships in place.

Open account trade or supply chain finance is another area of growth, even in difficult times. Companies look to banks to help them maximise their working capital through off balance sheet structures and supply / buyer financing solutions that cut costs and alleviate risk where possible.

Oliver Wymann: Jason Ekberg, Consultant
My impression is that liquidity in Asia has stepped being led by the Japanese banks, but we also see regionals and domestic players investing in these businesses.