Banks Jockeying for Asian Trade Finance Business

Banks are stepping up their efforts to poach the trade finance business of Asia’s top 1,000 corporates, with the incidence of unsolicited pitching on the increase, reports East & Partners Asia.

The latest bi-annual
Asian Institutional Trade Finance
report from the research and analysis firm shows that nearly half of the region’s top 1,000 corporates by revenue, excluding Japan, have been approached by a non-incumbent bank for all or part of their trade finance business in the last six months.

In the July 2014 research round, 48.4% of the top 1000 had received a trade finance pitch, against 41.2% in the previous round last January.

One leading global bank approached 8.0% of the top 1000 for their trade business, while an aggressive – and quite recent – competitor in the Asian markets approached 7.3%, up from the 5.1% this bank approached in January.

The intensified poaching efforts come as the top 1,000 indicate a higher inclination to change their trade finance provider.

While in January, 6.6% of these companies indicated they were ‘very likely’ to change their primary trade financier in the next months, that figure had increased to 7.3% in July. At the same time, the percentage saying that a change was ‘possible’ increased from 20.9% to 21.7%.

“Trade is definitely a major focus of regional and global banks in Asia at the moment,” said Darryl Ye, lead analyst for East & Partners Asia. “The increased competition is not just about trade, but creating a ‘Trojan horse’ to develop a relationship and cross sell other banking products.

“It means that trade margins are under pressure, that demand for trade finance talent is growing, and that customers are looking more critically at their trade financiers and wondering if they can do better.”

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