International trade has always been a fine balance of opportunity and risk. The autumn edition of FD Gameplan explores what this means for FDs, with insight and acumen from leading business strategists, and actionable analysis from our own trade experts.
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Lloyds Bank has a long history in supporting our clients in the pursuit of lucrative opportunities in the international marketplace. International trade is considered highly strategic and of fundamental importance to the recovery of the global economy, and to the long-term health and prosperity of the UK. Trade finance has been brought into sharp focus at the highest levels of business, government and international institutions – an unprecedented level of profile which is motivating direct and substantive support for importers and exporters in the form of various financing, risk mitigation and related solutions.
Trade is the primary driver of global economic recovery, and the British Government perceives that SMEs in particular will contribute greatly, especially if they engage successfully in international markets. At Lloyds Bank, we are taking decisive action and making significant investment to strengthen our proposition in trade and supply chain finance. Our recent recognition as Best Domestic Trade Finance provider in the Euromoney Trade Finance Survey 2012 is merely the beginning!
Our perspective on trade and trade-led growth is optimistic despite the difficult conditions in the eurozone, where 65% of UK trade takes place, and the ongoing challenges in the US, which is still the world’s leading consumer economy. Ongoing liquidity challenges mean the ability of exporters to provide attractive financing to buyers is once again a real competitive advantage. At the same time, finance executives are taking a much more strategic view of liquidity and working capital management – domestically, but especially in international dealings, where cash conversion cycles are appreciably longer, and commercial risk and complexity present a real challenge.
The trade team at Lloyds Bank are working to enhance our capabilities in all aspects of this business, from subject matter expertise to enhanced delivery capabilities, improved service orientation and a suite of enabling technology solutions, business processes, and trade and supply chain solutions. Trade specialists are working to better champion and promote the value of trade finance across the Bank, so that our Relationship Managers and others interacting with clients can better recognise opportunities to support their trade aspirations.
Additionally, we will work increasingly closely with selected partners and members of the UK trade value chain, to ensure we are present, visible and active in areas of greatest importance and interest to our clients. This may involve extending our capacity and capabilities in a particular international market, including current ‘hot markets’ such as China, India and Brazil, as well as looking to extend our capacity in other emerging market countries to meet our customers’ requirements. We are also taking a close look at certain sectors, such as commodity trade, where Lloyds Bank is already recognised as a leader in the UK, and others, such as manufacturing and environmental technology, where we perceive great interest among UK entrepreneurs and business leaders.
We anticipate that trade will continue to be top-of-mind among business and political leaders in 2012, and that competition in the trade banking sector will intensify. Demand for resources and commodities from China and other fast developing economies will continue to be high, even if there is some tempering of economic growth in those regions, and the evolving dynamic between the US dollar, the euro and the RMB will require careful attention and analysis over the coming year.
The UK will need to diversify trade activity by target market, by sector and by business segment – engaging more SMEs in export-based growth, with support from banks, government agencies and international institutions.
Trade finance has historically been a static business with limited innovation. However, the evolution of trade, shifts in trade flows, and the maturing of technology have combined to drive banks and trade financiers to think in new ways about cross-border business. And more recently, to think about global supply chains as complex organisms built on partnership, where financing can be an important ingredient in the success of buyers and suppliers often separated by large distances, and operating in very different business environments.
These realities are contributing to a clear shift within Lloyds Bank’s Transaction Banking and Trade business – a shift that involves understanding client requirements and devising ‘big picture’ solutions from our customers’ point of view. This cultural change, and its positive impact on client interactions, service delivery and our evolution as a trusted advisor, will become increasingly apparent over the coming months.
Trade and supply chain finance are now highly strategic activities, and this major shift in priority is at the core of an unprecedented effort within Lloyds Bank to ensure we are credibly and firmly positioned to assist UK businesses in successful pursuit of international trade opportunities. We will be working to complement our own capabilities with those of carefully selected partners in the private sector, in Government, among other financial institutions, or with leading international institutions that contribute to the smooth functioning of international trade and trade finance.
Changing the landscape of European payments
With a presence across Europe and a commitment to ‘The Unipart Way’ – a philosophy that embraces lean tools and techniques – Unipart Group is an ideal candidate for the SEPA Direct Debit scheme and is reaping the benefits of this major opportunity for enhanced efficiency. Attracted by the efficiency of collecting payments from across Europe into one bank account, the Unipart Group has used SEPA DD to replace the complexity of running different schemes in different countries and has also seen the business benefit from improved cash flow and interest rates.
With the support of Lloyds Bank, the full service logistics provider has embraced SEPA DD as an early adopter, creating opportunities to open DD payments in some jurisdictions where complexity and cost had previously made opening accounts an inefficient option.
SEPA DD is expected to become mandatory across the Eurozone for businesses of all sizes in the next few years and Lloyds Bank has been quick to facilitate the adoption of the scheme. Services such as the Mandate Management Service is enabling clients to create mandates in different languages, highlighting the Bank’s commitment to give a significant advantage for its clients with a European presence.
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Longview Winter 2011-2012, 25/01/2012
Longview Summer 2011, 25/01/2012