Barclays campaigns for trade finance concession
Basel III rules on capital requirements risk jeopardising the provision of trade finance, with the greatest impact on Europe’s small and medium sized enterprises, Barclays claims.
The lender’s global head of trade and working capital, Kah Chye Tan, is therefore urging regulators not to damage the ability of banks to allow SMEs to trade globally.
Over 70% of Barclays’ trade finance clients are SMEs and Mr Tan believes it is crucial that the cost of capital for a low-risk activity like trade finance is differentiated from high-risk activity.
He explains: “The difference between a 90-day trade finance transaction and a 10-year Project Finance transaction is as large as the difference between a 30 day credit card and a 30 year housing loan.”
Adding: “Both Basel III and CRD IV rightly recognise the difference between a credit card and a housing loan as there are different correlation curves for these two products.
“Similarly, a different correlation curve is needed for trade finance.”
According to Barclays, recent International Chamber of Commerce research, which examined more than 10 million trade finance transactions, found a default rate of just 0.00026%, or one in 3,800.
Category: Banking News, Barclays News, Business Banking News
Visited 831 times, 4 so far today
Comments (0)
Trackback URL | Comments RSS Feed
There are no comments yet. Why not be the first to speak your mind.