As Basel III regulations come into play, banks looking for a quick fix to bulky balance sheets are divesting their trade finance assets, creating a gap in the market that investor groups and other alternative financiers are keen to fill.

With advanced economies still languishing in the doldrums, trade between Asia and Latin America is driving global economic growth, and it appears that this blossoming relationship is mutually beneficial. However, could protectionist policies in Latin America dampen this ardour?

The effects of the European retreat from trade finance in Asia are now apparent as a number of players are stepping in and new trade patterns are taking shape. 

As Europe's banks come to terms with the economic impact of Basel III's rules on capital requirements, their demand for trade finance deals in Latin America through the International Finance Corporation has waned. But this leaves the door open to North American and Asian banks looking to increase their presence in the region.

Singapore’s strategic location in Asia is proving a boon to the city state’s transaction bankers, particularly as they seek to capture banking business from the world’s changing trade flows.

Industry experts are concerned that impending regulation will obstruct the route to global recovery unless it is modified to make allowances for trade financing. Writer John Beck