Five Banks Maintain Grip on US Trade Finance Market

The US trade finance market is highly concentrated, with a trio of providers maintaining a commanding position and the vast bulk of business held by a group of just five banks, according to Greenwich Associates.

The market intelligence and advisory firm reports that around 35% of large US companies do business with Bank of America Merrill Lynch (BofA Merrill), Citi and JP Morgan. The top five is rounded out with the addition of HSBC and Wells Fargo, both of which have achieved market penetration levels of 23-24%.

These banks are the
2014 Greenwich share leaders in US large corporate trade finance
, while the
2014 Greenwich quality leaders in US large corporate trade finance
are Deutsche Bank, JP Morgan and Royal Bank of Scotland (RBS).

The firm comments that despite this high level of concentration, companies have seen some significant shifts in the competitive landscape of providers over the past several years. In domestic trade finance, up-and-coming Wells Fargo capitalised on an opportunity to gain ground.

“Many of the banks are weighing the thin margins for trade finance against the increasing capital requirements from Basel III,” said Greenwich Associates consultant Andrew Grant. “We are seeing some banks actively pulling back in certain segments while others aggressively step in to fill the void.”

The firm adds that throughout this period, one trend remains consistent: The international needs of large US companies are expanding. With companies eying Western Europe, Asia and Latin America, banks with broad international networks have a clear advantage, and providers including HSBC have capitalised on this demand with strong gains in market penetration.

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