Blog

Rethinking Trade & Finance: ICC 2016 Trade Survey

The report should be read in full in order to understand context. However, a few key extracts are highlighted below:

• Only 52% of respondents reported an increase in overall trade finance activity during 2015; down from 63% in 2014 ?
• Commercial L/Cs make up 38% on average, of the trade finance product mix; down from nearly 45% in 2014 ?
• Nearly 35% of respondents reported an increase in supply chain finance deals. For commercial L/Cs, on the contrary, nearly 50% of respondents reported a decrease ?
• 21% of respondents experienced an increase in claims made under guarantees and standby L/Cs ?
• 15% of banks reported experiencing an increase of court injunctions barring payment under bank independent undertakings ?
• 13% of respondents reported an increase in the troublesome issue of allegations of fraud ?
• 40% of survey respondents anticipate increased customer driven demand for confirmations of letters or credit ?
• 66% percent of respondents reported that they experienced no change in their overall refusal rate of documents on?first presentation with nearly 19% indicating a decrease of documents rejected on first presentation under documentary credits
• AML and KYC issues are at the forefront of issues seen by practitioners to be impeding the underwriting of trade finance business, while also adversely complicating the processing of that business at the transactional level. Notably, 90 % of survey respondents pointed to this issue, in sharp contrast to 2015, when 81% highlighted this concern in the 2015 survey
• Only 7% of banks reported that their trade finance processes had been digitized "to a great extent", with 43% reporting "very little" advancement in this regard.
• Category 7 messages fell by 4.49% and category 4 messages fell by 6.79% compared to 2014 data.
• The average value of a letter credit fell sharply from USD643,000 in 2014 to USD350,000 in 2015.
• 79% of respondents indicated no change in their take-up of Bank Payment Obligations, indicating that technology- driven change is not substantially driving business practices in 2015.
• 47% of respondents indicated that their net income had increased between 2014 and 2015.

The full report can be accessed at http://www.iccwbo.org/News/Articles/2016/New-survey-findings-worsening-global-shortage-of-trade-finance/

www.tradefinance.training