Thursday, October 18, 2018 Stamford, CT USA — New tariffs on Chinese goods and other actions by the U.S. Trump administration have increased uncertainties over world trade and threatened to disrupt global trade flows. In the second quarter of 2018, U.S. imports from China experienced a short-term spike, as businesses looked to get goods on the water ahead of the imposition of tariffs. This rising volatility in global trade is casting a shadow on the outlook for international businesses.
Research shows that signs of a softening in global trade are emerging. Tariffs and other geopolitical issues are already causing a realignment of global supply chains, hastening the development of intra-Asia trade and causing operational headaches for treasury officials at large companies around the world.
In Europe, for example, corporate demand for cross-border trade finance remains largely stable for now. But clients voice concern about a range of geopolitical factors including U.S. tariffs, U.S. sanctions on Iran, turmoil in Turkey, and Brexit. Geopolitical and trade policy uncertainties also appear to be softening demand for trade finance to support international trade among companies in the United States.
“From the perspective of banks, a slowdown in global trade caused by geopolitical events would be at least partially offset by a growing need among large companies in Asia, Europe and the United States for trade finance products and services that help mitigate mounting levels of sovereign and counterparty risks,” says Greenwich Associates consultant Gaurav Arora.
2018 Greenwich Share Leaders—Asia
Downward pressure on pricing has prompted global banks to reassess their Asian trade finance strategies. Faced with declining margins, they are opting to compete for business only when it makes sense from a profitability perspective. This is opening new opportunities for local and smaller banks, many of which are upping the quality of their platforms, and most of which are more than ready to compete on the basis of price. In this dynamic market, HSBC stands out as Asia’s most-used trade finance provider, followed by second-ranked Standard Chartered Bank, and BNP Paribas, Citi and DBS, which are tied for the third spot in terms of penetration of large Asian companies.
2018 Greenwich Share Leaders—Europe
Europe’s biggest banks will have one important advantage—at least in the year ahead. Fewer large European companies plan to shift their business among banks. The biggest beneficiaries of this slowdown in “money in motion” will be the banks already leading this market. That list is topped by BNP Paribas, followed by UniCredit, Deutsche Bank, HSBC, and Commerzbank.
2018 Greenwich Share Leaders—United States
U.S. companies are consolidating their trade finance business with their lead banks—and their biggest credit providers. The biggest beneficiaries of this trend are the largest corporate banks that already dominate the U.S. trade finance market. That list is led by Bank of America Merrill Lynch, J.P. Morgan and Citi, which sit in a three-way tie in terms of market penetration, followed by Wells Fargo and HSBC.
Click here for the Greenwich Report and list of 2018 Greenwich Share and Quality Leaders in Global Trade Finance.
Click here for the 2018 Greenwich Excellence Awards in Global Trade Finance.