So many words ....


This week I attended the 5th Annual Nordic Region Trade & Export Finance Conference in Gothenburg. I was there a couple of years back. Halfway through the program I had the following thought: There are so enormously many words in this room - just like last time I attended. It would be interesting to group all those words to see which ones were used the most. There are so many "buzz word" flying around – that they simply loose their meaning. For example:

 

 

I could continue the list ….

 

Does this mean that it was a bad conference? No - it was not. But there were some "highs" and some "lows" for sure. The presentation technique differs a lot. It still surprises me when a presenter runs through 32 slides packed with words in 25 minutes. There is no chance on earth that anyone would be able to read the content on those slides. I also get surprised when - under a topic of "new ways of thinking" a presenter spend a long time carefully explains all the mergers his company has been through since nineteen eighty something.

 

It strikes me how abstract some of the presentations and discussions become. It is like it is forbidden to talk about normal "earth bound" issues. But most of all it surprises me how many times I have heard all of this before. Is there really nothing new? The only "new" on the agenda was the BPO - and the only "news" about that was that the coming rules; the URBPO was discussed at the recent ICC meeting in Mexico - and that SWIFT hope that they will be approved at the next ICC Banking Commission meeting April 2013 ... I have used a couple of blog posts on the BPO – so I will not discuss this any further in this one.

 

So many words - so much Hype ….. and so little news....

 

It is of course easy to criticize ... But what was missing then? Well - one example of a topic would be the following: most major banks - I.e. the ones doing trade finance are all subject to major "cost cutting programs." The result of this is that there is none or little focus on maintaining the competences of the trade finance staff. Is the knowledge slowly but steadily flowing out of the banks? And what is the consequence of that? In addition - training customers is expensive - so if you are Volvo I am sure the banks will still be there offering trade finance training – free of charge. But what if you are Mr. Small Exporter Inc? Will the banks still offer advise and training? Free of charge? Unfortunately it seemed like it was mainly the big corporates that attended the conference. It would have been interesting to hear from small and medium sized companies.

 

Anyway - coming back to the conference - as said there was also some "highs." The first high was no doubt the presentation by Mr. Matti Malminen from Konecranes. Besides being a perfect presenter - he expressed his views in a direct and "down to earth" way. He described the various financing products they use. This is a pallet containing the following:

 

Deferred payment LC

Post finance LC

Bills of Exchange (with support of ECA’s)

Top slice leasing arrangements

Buyer’s credit – supported by ECA guarantees

Own balance sheet with support rom credit insurance markets

 

The products of Konecranes is very tailor-made (container cranes for sea ports) and therefore there are some demands to the banks; e.g. that they have experience with relevant ECA; that they are easy to access by the seller and the buyer – and that they are ready to meet the buyer at an early stage – i.e. to travel! (sound like costs :-)

 

Due to the fact that the goods are tailor-made the LC instrument is often used. Mr. Malminen expressed the same frustration as I often hear about the LC. It may be hard to comply with the LC terms and conditions – and the documents may be refused based on minor discrepancies. There may be many reasons for that. One is that LC requirements may not be perfect when the LC is issued. They do a lot to train their sales staff in order to make sure that the LC’s received are optimal…

The above was just a few statements from the great presentation from Mr. Malminen. The next issue of the LCM newsletter Trade Services Update (http://www.tradeservicesupdate.com) will include a feature article about the conference – and will offer more information about the presentation by Mr. Malminen.

 

The last panel of the conference was also a pure pleasure to witness. Mr. Göran Albertson (Volvo), Mr. Peter Geisler (ABB) and Mr. Anders Alftenius (Getinge) discussed the primary financing challenges in the corporate climate. Mr. René Petersen from Haldor Topsře was also scheduled for this panel – but due to the fact that it was rescheduled he was unable to be there. That was a shame indeed. Anyone that knows Mr. Petersen is aware of his strong and clear views. He was missed!

However - those experienced professionals explained in a good and clear way what is important for them - and not least what they expect from their bankers. Mr. Albertson stressed that he expects that the banks knows their business - what do they do and where. In other words, the bank should not just show up and ask: what do you need? Based on their knowledge of the company the bank should suggest products and areas to discuss - when they might be able to help.

Further the corporates expect their bankers to provide the relevant training - within the relevant areas - e.g. Trade Finance. (Huu sounds like costs again).

Overall the corporates saw as a challenge the decreased risk willingness of the banks - and of course the pricing. Which according to the banks will increase - e.g. due to increased capital requirements.

 

In his presentation (mentioned before) Mr. Matti Malminen expressed the view that he did not care about the banks calculation methods - or for that matter their capital requirements. He only cares about availability of products and financing … and of course pricing ... Let that be the main lesson learned from the conference.

 

Take care of each other – and the LC!

Kim

 



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