Transaction Banking Awards 2016

Global transaction banking is on the cusp of great change, as illustrated by the outstanding submissions in this year’s awards. Congratulations to all the 2016 winners. 

The Banker’s Transaction Banking Awards focus on innovative and customer-centric solutions that truly make a difference to clients, whether corporates or financial institutions. This year we added two geographical categories – central and eastern Europe and Nordics – due to the inspiring innovations emerging in these regions. 

The year 2016 will become known as the year virtual accounts matured. Many entries illustrated how these new structures are being employed creatively to give clients greater visibility and control over their operations.

Global and Western Europe

Winner: BNP Paribas

BNP Paribas has won a double honour, taking home both the best global bank and the best western European bank accolades in this year’s Transaction Banking Awards. The French bank has strongly positioned itself to keep pace with technological innovation, effectively using technology to create affordable products and services that meet dynamic customer requirements.

The bank was the main beneficiary from the Royal Bank of Scotland (RBS) decision to withdraw from transaction services outside the UK and Ireland; BNP Paribas was chosen as the ‘referral bank’ in 2015. RBS endorsed the people, country coverage, strong global product capability and infrastructure in transaction services provided by BNP Paribas as an alternative for its affected customers. By the end of December 2015, more than 900 entities had confirmed their choice to use BNP Paribas’ transaction services.

It is clear that digitisation is an area of major transformation and investment for BNP Paribas – and central to its growth. It has had a large impact upon the organisation, processes and client culture, and the bank is investing €1bn a year in digital initiatives. Digitisation is also transforming the competitive landscape and the bank is responding to the constant pressure to innovate in order to further expand its market.

“Apprehending regulatory changes, embracing the digital revolution, offering our clients bespoke solutions while industrialising processes, attracting talent from generation Z – challenges are everywhere, and about to profoundly change our industry. To anticipate and adapt, we are developing an agile organisation where our reaction time is a matter of weeks, not months or years,” says Jacques Levet, head of transaction banking for Europe, the Middle East and Africa at BNP Paribas.

The bank has successfully delivered innovation across its cash management, payments, supply chain finance and trade finance businesses over the past 12 months. For example, in the cash management sector it rolled out a virtual account solution, which boosts collection and reconciliation efficiency, and has a positive impact upon corporate treasury performance. 

The solution is live in Germany, Luxembourg, Spain, Switzerland, the UK, Turkey, Hungary, Poland, Bulgaria, the Netherlands and France. Belgium and Portugal are coming online this year, with other countries planned for 2017.

The bank has also developed innovative payment solutions, such as: eWare, which streamlines open account import transactions and original document management activities, while reducing risks and efforts related to manual paperwork administration; Paylib, an online payment solution developed in collaboration with two other French banks to tackle the growing problem of card fraud; and a cross-currency payment solution to help customers efficiently manage any embedded foreign exchange due to mismatches in account and settlement currency.

“Our clients demand simple solutions relevant to their own specific issues and flawlessly executed. We obviously invest in systems and people to help deliver this, but it is how we develop those solutions that is critical. The magic word here is ‘co-development’, with our clients and, sometimes, external partners,” says Mr Levet.

BNP Paribas is investing in several new technologies, including artificial intelligence, the Internet of Things and blockchain, which it believes will have a transformative impact in transaction banking. “More importantly, we are working on improving the client experience, sometimes completely redesigning the traditional client journey, including acting as an aggregator of third-party solutions,” says Mr Levet.

Central and Eastern Europe

Winner: Commerzbank

Commerzbank’s stated aim is to ensure a steady flow of trade in and out of central and eastern Europe (CEE), which is essential for the region’s continuing development. However, it is witnessing challenging economic and political issues in a number of countries.

“It is in these times when a strong and committed partner for trade finance is needed the most,” says Hans Krohn, regional head, Russia and Belarus, at Commerzbank. “Commerzbank strives to be this partner for our customers, corporates and financial institutions alike,” he adds. 

To deliver on its commitment, the bank recently upgraded its trade processing capabilities and it plans to continue to explore new ways to improve efficiency, transparency and customer satisfaction in trade finance and cash management.

In the cash management arena, the bank continues to press ahead with the revolution in digital transformation and mobile banking. Its Global Payments Plus (GPP) solution combines multi-banking functions in a web-based application. Launched from a USB signature stick, corporates can retrieve information on Commerzbank and third-party bank accounts, process them centrally and manage transactions anytime, anywhere.

In addition, the bank’s new cash management app allows clients to see real-time account balances and enjoy all the benefits of GPP on their smartphone. Another innovative feature is the ‘distributed electronic signature’ function, which allows multiple users to authorise payments 24/7 from anywhere in the world.

Commerzbank’s new treasury management system helps treasurers implement a clear, effective and cost-efficient strategy. By centralising and consolidating their payments, accounts, treasury deals and liquidity planning in one overview, companies can improve their liquidity, optimise interest rates and reduce administrative overheads.

In trade finance, Commerzbank’s CEE clients are the most active counterparts in the European Bank for Reconstruction and Development’s trade facilitation programme. Success in 2015 builds on four decades of Commerzbank’s experience across CEE and central Asia, and the bank now maintains representative offices in 14 countries, including Azerbaijan, Romania and Ukraine.

Ivica Langauer, regional head, CEE and Turkey, at Commerzbank says: “Our strong network of partner institutions and local representative offices provides us with on-the-ground expertise to drive trade. Present and future challenges notwithstanding, we will remain committed to our work in the CEE region: providing trade finance, settling payments and mitigating risks for our clients.”

Interestingly, in 2015 Commerzbank prioritised making the business case for sustainability and, in particular, sustainable trade. It produced two major reports on the topic, which identified the key drivers of sustainable practices and projected the likely course of these over the next 10 to 15 years.

Nordics 

Winner: Nordea

Nordea is spearheading a new, more modern way of servicing its transaction banking clients in the Nordic and Baltic region. At the start of 2016, its cash management division launched its Customer First programme. In the first 12 weeks, the bank collected more than 60 ideas internally and from customers, then carried out eight pilots with the potential to improve the Nordea experience. 

The programme’s key element was to begin with customers, and ask them about their needs and challenges. In this way, the bank is developing solutions that the customer wants, instead of basing development on assumptions. The customer voice has also helped Nordea get a sense of priority and urgency, because the bank hears about challenges and requirements directly from their perspective.

The new approach is underpinned by a €1bn investment in Nordea’s digital banking capabilities, which includes replacing its core banking platform, payments platform and data warehousing. Through this technology refresh, the bank aims to reduce its complexity, become more agile and ready for future developments, and shorten the time to market to benefit customers. 

It already rolled out Trade Finance Global, its proprietary front-end solution, to current customers at the start of 2016 and has plans to add functionality throughout the year. The new system gives 24/7 access and a single point of entry for clients’ trade finance needs through a secure, user-friendly interface. It also provides automated processing for fast, accurate transaction handling to full reporting, statistics and communication – anytime and anywhere, according to the bank. 

The cash management division is driving innovation through its lab, bringing together project teams in a creative, collaborative space where they can share insights, energise each other and inspire passers-by. It is collaborating with the fintech community around the Payment Services Directive 2, open application programming interfaces and payment service providers. It has also initiated a start-up accelerator programme with the purpose of gaining insights into future digital services.

“It’s an exciting time to be in transaction banking because we have a once-in-a-generation mandate to smash traditional banking paradigms and think big about the future,” says Patrik Havander, head of strategy and communications, transaction banking, at Nordea. 

“It’s also an exciting time for Nordea because we’re at the geographical hub of the fintech revolution,” he adds. “We’re using this to our advantage by forming non-traditional strategic partnerships, generating ideas through roundtable discussions with fintechs and some of the world’s most successful corporate treasuries, and working in collaboration with more than 70 of our customers on new initiatives through our Customer First programme.”

Asia-Pacific

Winner: DBS

Despite a challenging Asian market environment, with the region’s economic growth decelerating on the back of a Chinese slowdown, DBS’s global transaction services division is building out its business lines with innovative products.  

John Laurens, head of global transaction services at DBS, says: “Over the past year, we have employed customer-centric design thinking to remodel our operating construct to further embed excellence in customer sales, service and implementation. Recent mandate successes and testimonials received from customers indicate that we are on the right track.”

In the cash management space, four clients have implemented DBS’s regional liquidity management solution with regional interest optimisation, an innovative pricing model designed to compensate clients for maintaining balances on the DBS balance sheet in multiple locations and in various currencies. Customers benefit from improved yield with preferential interest on tiered, as well as regional, aggregate balance. 

In addition, the Singapore-based bank developed an omni-channel banking solution for GrabTaxi, a taxi dispatch service, using a mobile app. GrabTaxi drivers in Singapore purchase GrabTaxi credits through the entire suite of DBS’s channels, including ATMs, mobile banking and DBS PayLah!, a mobile wallet solution. GrabTaxi receives an intraday bill payment report from DBS approximately every half hour.

Another case study illustrates how DBS helped Finland-based Huhtamaki OYJ to optimise its treasury and cash management operations following the multinational’s acquisition of Josco Holdings. The bank rationalised the company’s bank accounts via its multi-currency saving account offering and offered a virtual account solution to ease Huhtamaki’s reconciliation process.

In addition to cash management, DBS Securities and Fiduciary Services enhanced its Ideal Custody offering to incorporate a seamless interface with Ideal Connect, the bank’s host-to-host solution. It also improved fund reporting capabilities and rolled out its funds distributors’ back-end outsourcing solution. 

DBS also continues to be at the forefront of digitising trade finance. In partnership with Standard Chartered Bank and Infocomm Development Authority of Singapore, it completed a first-of-its-kind proof of concept on the application of an irrevocable distributed ledger to minimise duplicate financing of invoices for trade transactions in December 2015. DBS is collaborating with A*Star’s Institute for Infocomm Research to build a predictive analytics model to detect fraud using a combination of historical internal trade database and external industry data. 

Mr Laurens says: “The future is digital, and this is why we are investing in product development that brings new and innovative solutions to our customers. It’s our focus on the customer that will keep DBS at the forefront of shaping transaction banking in Asia.”

North America

Winner: Citi

The current macroeconomic challenges and regulatory complexity in North America are demanding innovation around digital cash management and advisory solutions that provide clients with enhanced visibility, control and risk management, according to Michael Fossaceca, North America region head, treasury and trade solutions, at Citi. 

 “Clients are seeking creative working capital and payments solutions that simplify their business processes and help them manage their balance sheets. Citi is investing in advanced analytics, digital payment capabilities and workflow solutions that provide actionable information to help them meet their strategic objectives,” he says.

For example, the bank launched a digital, business-to-consumer payments solution that integrates email and text messages into payment interactions between corporate clients and consumers, creating a ‘network of networks’ to pay via a variety of payment distribution options. It has accelerated US automated clearing house payments by enabling same-day processing, ahead of the mandated deadline.

Citi also rolled out paperless processing for both account opening and maintenance on accounts in the US and Canada, allowing requests to be completed with scanned documents and secure email for rapid document exchange, digital document archiving and retrieval, and increased transparency.

In the increasingly complex regulatory environment that impacts corporate liquidity and yield goals, Citi introduced new solutions to help optimise return on cash, expand working capital and provide a regulatory view of deposits. For example, it developed Basel III-friendly, enhanced deposit and investment offerings such as a new 95-day tenor minimum maturity time deposit, in addition to the currently offered 31- to 60-day tenors; and it targeted deposit levels while allowing clients to maintain daily liquidity with new ‘tiering’ and ‘bracketing with top tier’ functionality for interest-bearing accounts.

The changing payments landscape has also affected receivables solutions. Traditional lockboxes and paper-based processes for cash collections are being replaced by electronic solutions. Citi’s Present and Pay solution set enables an omni-channel, multi-payment method process for faster cash collection, better reconciliation and reduced exceptions. The bank also launched virtual account capabilities, allowing corporate clients to improve straight-through processing while increasing information security. 

These electronic developments have led corporate clients, such as US-managed healthcare company Aetna, to consider Citi a valued partner for digital receivables in North America. “At Aetna, digital technology is a key ingredient of our day-to-day business. Citi’s virtual account solution helped meet our needs to create a robust and secure electronic process while minimising the processing and infrastructure overheads,” the company says.

Latin America

Winner: BBVA

In the past year, Latin America has faced a difficult competitive environment, with a fragmented regulatory landscape affected by the region’s economic growth slowdown. Despite these challenges, BBVA remains committed to helping clients reduce the cost of financial transactions by further digitising its transaction products. 

Jose Luis López-Sors, head of transaction banking, Latin America, at BBVA says: “In their more recurrent operations, clients want transactions to be executed in real time, with no incidents and incorporating status information. In addition, they are demanding BBVA’s regional vision in offering banking products and services, with a trend toward standardisation among countries in the region. All of our new investments in innovations are aimed at meeting those demands.”

In the area of supply chain finance, the bank recently launched local-centralised reverse factoring. The product is designed for corporates that have various subsidiaries in different Latin American countries and who manage their payments at a central level, through a global (or regional) shared service or procurement centre. BBVA banks in different countries will on-board and offer early payment to the local suppliers (with a favourable discount rate based on the buyer’s risk) or pay them at the invoices’ maturity date.

In cash management, BBVA is an early adopter in the region of Swift’s 3Skey, a personal digital identity solution, illustrating its commitment to standard common gateway interface definitions. Additionally, its global e-banking portal has a single format for all countries – the hub includes a ‘mapping’ tool capable of receiving or sending any file format, both in the client-to-bank and bank-to-client space. As of May 30, BBVA has 184 multinational customers working through its global portal and 101 customers under implementation.

BBVA has also participated in high-profile trade finance deals, such as the Metro de Lima 2 transaction in Peru. Close co-operation between its trade finance and corresponding banking divisions has benefited clients by reducing execution time and improving coordination between both ends of the transaction. As part of this effort, BBVA developed a framework to reduce the operational workload of the transactions and enable a greater focus on successfully managing the complexities of landmark deals.

In the past year, the bank has taken steps to enhance its electronic banking capabilities, which are being gradually upgraded across Latin America, and it is selectively using third-party platforms to better service its clients. In addition, BBVA is using export credit agency products as a vehicle to enter new geographies, such as Egypt, Sri Lanka and Indonesia, and markets, for example, small and medium-sized enterprises in Latin America and Spain, as well as to provide existing clients with additional services.

Middle East

Winner: HSBC

The Middle East and north Africa (MENA) region is a strategically important growth hub for key trade corridors with China, India and Europe. However, recently the region has faced unprecedented challenges. 

“The impact of oil prices on the market conditions in the Middle East and global regulatory change mean that both corporate and financial institutional clients need their transaction banking provider to help them navigate this new environment, while providing local market connectivity and expertise,” says Mark Stadler, head of commercial banking for the MENA region at HSBC.  

The bank has expanded market access for its clients and further developed its liquidity management capabilities and working capital solutions to help clients capture the opportunities in today’s market conditions. It has a large network of specialised teams in many locations, including Algeria, Bahrain, Egypt, Saudi Arabia, Kuwait, Lebanon, Oman, Qatar and the United Arab Emirates.

For example, a large South Korean infrastructure company chose HSBC Egypt to take a lead role in supporting a flagship project in the country. The client’s key requirement was for a full transaction banking proposition, covering project bonds, payments, collections, foreign exchange and e-channels. This mandate saw strong collaboration internally between different product areas in the bank – including payment and cash management, trade and receivable finance and global markets – and different geographies – Egypt, the UAE and South Korea.

In another case study, the bank helped Doha Cables respond to unprecedented demand for its products, which also increased its demand for copper from suppliers. The way in which Doha Cables was previously paying suppliers was having an adverse impact on its balance sheet, as it was provided with standard sight letters of credit (LCs) but the financing period of the LCs was funded as a conventional on-balance sheet loan.

HSBC developed a bespoke financing solution to improve Doha Cables’ external debt position. The bank recommended that the company switch to using usance payable at sight LCs. This meant the payment settlement from the buyer was made at the end of the usance term. After HSBC’s intermediation, all Doha Cables’ suppliers were happy to accept the new and innovative arrangement.

HSBC has also played an important role in facilitating regional market reforms. In June 2015, the Saudi Arabia Capital Markets Authority opened the capital market to qualified institutional investors (QFI). HSBC Saudi Arabia played a lead role in the market and worked with participants to help facilitate a smooth opening for investors. The bank introduced the first foreign investor under the QFI scheme and carried out the first trade for a QFI in Saudi Arabia.\

Africa

Winner: Standard Bank

The challenges the global economy has faced over the past year – low commodity prices, the slowdown in China and foreign exchange volatility – have been particularly prevalent in Africa, making 2016 another difficult year for the continent. 

However, the innovation coming out of different African countries is inspiring. These economies are well placed to gain from accelerating technological change that can leapfrog physical infrastructure and fuel future economic growth. 

Standard Bank Corporate and Investment Banking (CIB) is well placed to play an active role in realising Africa’s potential. It has a physical presence in 20 countries in Africa, as well as international centres in locations such as London, New York, Singapore and Beijing. In October 2015, Standard Bank opened an office in Ethiopia in order to gain a foothold in one of the continent’s fastest growing economies.

“Currency volatility, liquidity constraints and evolving legislative environments continue to define Africa’s transaction landscape,” says Hasan Khan, head of transactional products and services at Standard Bank. “Managing these risks requires on-the-ground knowledge and presence combined with the right partners. In this sense, our strategy has remained the same and continues to deliver for clients. As many other banks de-risk out of Africa, our clients across the continent are already experiencing the double advantage of our presence and partnership.” 

As part of its cash management offering, the bank rolled out an integrated mobile money solution to facilitate payments and collections from previously unbanked individuals and businesses in Kenya. Through the solution, mobile payments can be initiated over Standard Bank’s business electronic banking portal for real-time mobile payment processing, effectively eliminating manual payment processing. 

The bank’s trade finance business has scored impressive deals in challenging markets. Standard Bank highlights its role in enabling the sale of fast-moving consumer goods into Angola amid US dollar liquidity shortages. The bank structured and executed a back-to-back letter of credit (LC) transaction with risk assumption on an Angolan bank (LC issuing bank) on behalf of a South African client, in a deal worth $4.5m.

It also helped a large South African rail, port and pipeline company to enhance its working capital, cashflows and key performance indicators through a receivables discounting programme. The $111m transaction was approved within five days and executed within a 24-hour period, making it the quickest receivables discounting arrangement executed to date, according to the bank. 

Additionally, it is participating in South Africa’s largest ever locomotive project, through the issuance of an advance payment guarantee on behalf of a rail transportation equipment manufacturer.

Cash management 

Winner: Bank of America Merrill Lynch

Cash management is the cornerstone of transaction banking and has never been as important as it is today, as low interest rates and new regulations make control and visibility over working capital a top priority for corporates and financial institutions. 

While the 2008 financial crisis brought the criticality of working capital optimisation into focus, exactly how to achieve that continues to challenge many companies. This is a result of the impact of global trends such as digitisation, the changing demographics of the consumer population (for example, the millennials) and the ubiquitous adoption of mobile devices. Treasurers’ expectations have changed as their businesses have changed.

Bank of America Merrill Lynch (BAML) is providing sophisticated cash management solutions to help its clients navigate this rapidly changing environment. For example, the US bank launched an innovative virtual account management (VAM) solution. 

“Our clients expect us to develop solutions that have the potential to change the way they do business,” says Greg Kavanaugh, head of global core cash management, at BAML. “So when a client highlighted their challenges around data, dependency on customers providing a reference, the need to maintain multiple bank accounts and products being sold in isolation and not as a solution, our team built the next generation of virtual accounts.”

Unlike other offerings, BAML’s VAM solution supports payments and receipts, as well as Single Euro Payments Area (SEPA) direct debit collections. Each virtual account has its own ‘clearing recognisable’ account identifier, so electronic transactions are automatically associated with a virtual account to aid reconciliation. Furthermore, its VAM solution provides position reports that show the balances and transactions per individual and/or group of virtual accounts, supplementing physical bank account statements.

“The virtual account solution developed by BAML seems to be ahead of the competition,” says one judge, “offering the ability to process payments and collection. Most banks only offer the virtual account as a reconciliation tool (collection side). The specific [virtual account] reporting is also a differentiator from other banks, which typically embed the virtual account position in the real account reporting.”

Additionally, BAML designed a fully automated cross-border cross-currency sweep solution for a key client, so that a funding shortfall on account could be automatically remediated and thus reduce associated costs. This addressed funding needs not only in unregulated markets such as Hong Kong, but also in regulated markets such as Malaysia and Taiwan, further enhancing the efficiency and productivity of the client’s treasury operations by eliminating manual and error-prone procedures. The company can also manage foreign exchange and hedging risk by pre-defining sweep amounts and parameters.

Payments 

Winner: Yes Bank

India’s payments industry is undergoing momentous change. The financial regulator is fostering greater competition, as illustrated by the Reserve Bank of India’s green light for new payment banks in August 2015. Yes Bank, India’s fifth largest private sector bank, is one that is rising to the challenge.

According to Asit Oberoi, group president and global head, transaction banking group, at Yes Bank: “Corporates today desire ‘digital’ banking services but find it difficult to prioritise major process re-engineering at their end. Yes Bank has overcome this key challenge by providing technical expertise and superior banking services right at the corporate’s platform through application programming interfaces [APIs]. These APIs are platform agnostic and can be accessed through secured channel to make real-time payments.”

For example, Yes Bank has developed an API for Indian online marketplace Snapdeal, to make instant, 24/7 refund payments to customers using the Immediate Payment Service (IMPS). This has reduced the turnaround time for processing refunds from up to three days to a matter of minutes, enhancing the overall customer experience.

In addition, Snapdeal uses Yes Bank’s API banking platform to make merchant payments through its nodal, or special purpose, accounts. It has also been extended to allow Snapdeal’s payment gateway customers to ‘cash out’ money from electronic wallets to their bank accounts. Effectively, various departments can use the same payment system for different purposes. As one judge says: “It is a nice use of APIs for multichannel merchant payments.”

In another case study, India Infoline (IIFL), a financial services company, partnered with Yes Bank for instant gold loan disbursement for customers with and without bank accounts. Through Yes Bank’s API banking platform, a customer at an IIFL branch receives instant credit in their bank account, complete with an SMS notification. For IIFL customers without a bank account, the loan disbursement is made through an instant money transfer and card-less cash withdrawal at an ATM, instead of cash disbursement at the counter. 

Yes Bank also created a foreign inward remittance API for Western Union. The international money transfer firm’s automated payment network (APN) sends remittances to India through the API, then the bank validates the payment request and processes it through IMPS or the National Electronic Funds Transfer. Western Union’s APN receives confirmation within three minutes and the bank reference number can then be passed onto the customer.

In the future, the bank plans to develop ‘banking as a service’ to enhance corporates’ end-customer experience and provide additional services such as auto reconciliation and authentication.

Securities services

Winner: Deutsche Bank

In response to the pressures placed on clients from both market structure and regulatory changes, Deutsche Bank has ‘componentised’ its account model and service solutions within global securities services. It has also created a dedicated client solutions business with a focus on addressing clients’ liquidity and collateral needs arising from these changes.

By using this approach, the German bank can tailor its customer solutions by adapting how modules are constructed. “The rising level of sophistication with our clients has also driven their demand for a move away from ‘one size fits all’ to much more flexible and modular ‘plug and play’ service models, which in turn requires providers to shift towards open architecture platforms,” says Satvinder Singh, head of global securities services and head of transaction banking, EMEA (excluding Germany), at Deutsche Bank. “A nimble infrastructure, high quality client base and a solutions-orientated approach are vital to winning in this industry.”

In 2015, Deutsche Bank enhanced its depositary receipts offering to provide Level 3 American depositary receipt (ADR) services for complex merger and acquisition (M&A) transactions involving a special purpose acquisition corporation (SPAC) structure. The bank’s solution differs from traditional US initial public offering programmes in that it is an ADR listing in the US for an M&A transaction via a SPAC structure.

In response to the demand for alternative financing methods in project finance, Deutsche Bank developed a project agent service to support participants in project bonds by bridging the gap left by the monoline insurers between investors and the borrower. The bank offers this end-to-end solution where the agent is responsible for providing timely key data and reporting for the respective project administrative expertise during the life of the transaction. 

Reacting to the demand for greater transparency and more timely data sharing in the structured finance industry, Deutsche Bank Corporate Trust also developed the issuer services deal manager application in close collaboration with clients, to deliver a better administration service for collateralised loan obligation portfolio managers.

Deutsche Bank has provided tailored solutions to multiple clients, including an asset servicing-only model for Northern Trust and a full-service account operator model for Royal Bank of Canada. These were among the first Target2-Securities-related regional mandates to be awarded in the market.

The bank is actively exploring disruptive technologies such as blockchain. It believes that distributed ledger technology has the potential to drive efficiencies for securities. However, it also stresses that open dialogue between market participants is key to standards and common approaches to the technology.

Supply chain finance

Winner: DBS

From 2014 to 2015, DBS saw a 51% growth in turnover in its supply chain finance (SCF) business lines. The bank implemented new supplier and buyer finance programmes across Singapore, China, Hong Kong, India, Indonesia and Taiwan last year.

The Singapore-based bank’s Ideal SCF (iSCF) is a client-facing online platform that provides clients with an integrated digital interface to manage their SCF facility with DBS, enabling easier management of receivables and payables and providing end-to-end connectivity between buyers and sellers. 

With this platform, clients are able to transact from anywhere in the world and obtain real-time information 24/7, gaining greater visibility of their supply chain, according to the bank. In 2015, it added multi-language features to iSCF to support its regional footprint, and has also expanded beyond its core locations, into the UK, South Korea and the US.

Externally, DBS has been participating in thought leadership forums, such as BAFT-IFSA and the International Chamber of Commerce Banking Commission, looking at international factoring framework and market practices, as well as standard market definitions for SCF techniques. 

In a strategic deal, DBS implemented both accounts payable and receivable solutions to support a large technology company’s working capital needs and its end-to-end supply chain, enabling the client to optimise its liquidity and accelerate its growth in the region. 

The client’s SCF programme was first implemented to support the working capital needs of its domestic suppliers in Hong Kong. In order to further support the corporate’s cashflow for a new acquisition at the end of 2015, DBS extended the SCF offering to other entities for its suppliers in Taiwan and China.

DBS also implemented a without-recourse accounts receivable purchase facility of $170m, covering the sale and purchase of receivables due from one of its buyers in Taiwan. In May 2016, the facility was enlarged to $230m, which shows that the facility suitability meets the client’s requirements.

“DBS has shown flexibility and innovation in structuring solutions to meet our needs and those of our suppliers, as we have grown our supply chain for the PC and phone businesses in China,” the client testifies.

Vijay Vashist, group head of trade and SCF, global transaction services, at DBS says: “Digitisation builds scale and reduces information asymmetry, allowing DBS to effectively capture opportunities beyond a client’s direct counterparts and through the entire supply chain. With the growth of intra-Asia trade, DBS looks to partner with large Asian corporates, Western multinationals, as well as small and medium-sized enterprises, to deliver the benefits of SCF.”

Trade finance

Winner: Citi

“It is an incredibly interesting time to be in trade,” says John Ahearn, global trade head, treasury and trade solutions (TTS) at Citi. “We are seeing a totally different ecosystem with both positive and powerful outcomes for our clients.” 

With an international network of more than 600 dedicated trade professionals worldwide, covering all major markets, Citi’s expansive footprint plays an important role in its ability to support its clients’ business goals. Throughout 2015 and 2016, Citi TTS has focused on deploying new technology-based solutions, sales financing and deal originations for challenging and unique structures.

For example, Citi is investing in optical character recognition (OCR) technology to convert information in paper documents to machine-readable text, thus reducing processing time, costs and potential errors, and enhancing controls. In addition to the operational, compliance and cost efficiencies that will benefit the bank, OCR capabilities can bring significant automation to the process and increase straight-through processing rates and turnaround times, which will significantly help clients.

In addition to investing in technology, Citi has leveraged its relationships with more than 60 export credit agencies to step in when local markets are unable to deliver the required financing for large corporates. For example, K-Electric, the only vertically integrated power utility in Pakistan, needed a significant amount of US dollar funding to enhance its transmission and distribution capabilities. 

Since long-term US dollar financing is not available in the local bank market in Pakistan, K-Electric turned to Citi to arrange a $250m 10-year direct loan with Overseas Private Investment Corporation. OPIC’s involvement in the transaction was made possible by a $20.8m equivalent five-year local currency loan extended by Citi Pakistan. Both facilities have a three-year availability period, enabling K-Electric to match disbursements with its investment plan.

In the past 18 months the commodity markets have been under stress. While other banks have become more selective in providing trade finance to the sector, Citi has been able to retain and expand its commitment to commodity clients. The bank acted as one of the buy-side advisers to Castleton Commodities International (CCI), a global commodities merchant, in its acquisition of Morgan Stanley’s oil merchanting business. 

In order to support the acquisition and to refinance and upsize an existing $1.6bn borrowing base facility, CCI launched a $3.5bn borrowing base facility, and an inaugural $250m unsecured revolving credit facility. Citi played a central role in all three transactions: the buy-side advisory, the lead role on the new unsecured revolving credit facility, and the refinancing and upsizing of the borrowing base facility to $3.5bn.