5 new banks join Trade Finance Distribution Initiative

The new additions include ABN Amro, Commonwealth Bank of Australia, Crown Agents Bank, London Forfaiting Company and Natixis. They join trade finance banks including ANZ, Crédit Agricole, Deutsche Bank, HSBC, ING, Lloyds Bank, Rabobank, Standard Bank, Standard Chartered and SMBC, as well as four other banks that have not been named, who have been part of the project since it was formed.

In April this year, 14 leading global financial institutions came together to create the Trade Finance Distribution Initiative in an effort to establish the USD 25 trillion trade finance industry as a more appealing asset class for institutional investors. In Africa, the move by the leaders to create a continental free trade area augurs well with the trade finance asset class. Leading pan-African banks such as Ecobank and Standard Bank are well positioned to take advantage of the development and emulate global banks to create standards meant for Africa.

However, there have been some major changes in the trade distribution space in the last couple of years. HSBC (USD 740 billion trade facilitated annually) has shifted its stance from a book and hold operator of trade finance assets to one of originate and distribute, and its distribution volumes have expanded from USD 2 billion to USD 20 billion in just 36 months. The bank is now highlighting its commitment to trade by rolling out the final piece of its global trade asset distribution network, highlighting the potential of this asset class which African banks should emulate.