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Eurozone Stress Test Failures Show a Real Need for Non-Bank Solutions

- October 24, 2014 11:35 AM | Categories:

Probably the most significant news for vendors that are creating assets for investors via their technology (procurement, einvoicing, networks, etc.) is the fact that banks lack capital. No more evident is that than 25 banks failing a Eurozone stress tests (19% surveyed) while up to 10 of those continue to have a capital shortfall. See this WSJ piece. This is extremely material. What it means is banks either raise capital, shed assets or both. This will penalize companies, banks and countries that banks deem require too much capital. Tom Elliott, deVere Group’s international investment strategist commented: “If the stress test is […]

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Inventory Finance and Balance Sheet Management– Pushing the Envelope

- October 23, 2014 3:37 AM | Categories:

For a company like Starbucks, which has major spend categories such as coffee, cocoa, tea, sugar and dairy products, commodity price risk represents a primary market risk, generated by purchases of green coffee and dairy products, among other items. If someone could take the risk of holding that inventory off their balance sheet until they needed the products for conversion, that would be have tremendous balance sheet implications. Companies are spending a lot of time on how to reduce inventory. Strategies that exist today include the following: Use Copackers – A copacker is a contract packager that provides a turnkey service […]

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Financing Future Supply Chains

- October 22, 2014 4:01 AM | Categories:

Banks have gaps in their supply chain finance product portfolios and are not lending to certain segments of the market (e.g. SMEs). Banks complain of reduced loan demand, but that is only coming from sectors that they are still open to finance. With the rise of platform providers that augment information to enable transfer of assets, what will the market look like in 5 years? Vendors sell accounting and integration software to banks to facilitate factoring, trade finance, forfeiting, asset based lending, invoice discounting and other techniques. But these solutions only see content from one side of the relationship. The […]

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Banks Trade & Supply Chain Business Under Silent Attack

- October 21, 2014 4:24 AM | Categories:

157242394 Why banks should care about new models of open account trade credit? Banks have developed trade and supply chain finance capabilities to service the open account trade flow. For the most part, the success here has been limited, as banks typically serve only one side of the transaction and have limited structured data outside of purchase order and invoice data. As Jason Busch commented recently, “A new era of capabilities brought forth by the rise of purchase-to-pay (P2P), order-to-cash (O2C), e-invoicing and supplier/business networks combined with third-party capital sources is challenging the existing bank ecosystem in the trade financing area.” […]

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Are P2P models the death of Factoring? CFA Webinar to explore

- October 20, 2014 6:06 AM | Categories: ,

Noose There is much spin and confusion going on around new models for finance. And of course a massive movement to create non bank entities to fund wholesale and consumer credit. The trick is understanding the information that enables the transfer of assets. Many of the solutions in the market started out as some integration proposition and now threaten various banks areas – factoring, trade & supply chain, commercial finance, etc. I will be presenting a webinar “Is a P2P and Financing Comet About to Hit Factors?”. The webcast, hosted by Commercial Finance Association (CFA), the international trade association dedicated to […]

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IMF says Shadow Banks could endanger Global Financial Stability

- October 20, 2014 3:12 AM | Categories:

imfLogo_large I just downloaded and scanned the International Monetary Fund (“IMF”) report on Shadow banking. You know when the IMF talks about shadow banks comprising the global financial stability, that this is a big issue. IMF believes Shadow banking, broadly defined as credit intermediation outside the conventional banking system, constitutes about one-fourth of total financial intermediation worldwide. I did a brief post on this a few months back which proved to be quite popular. See Size of Shadow Bank Market Grows What the market lacks is data. I asked the question are we pushing risk where it cannot be seen? The […]

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European Banks need to raise 700+ billion in new capital

- October 17, 2014 3:30 AM | Categories:

Morgan Stanley estimates that the 27 biggest European banks need to raise total requirement $732 billion to $777 billion by 2019. That’s the equivalent of either shedding three JPMorgan banks or issuing new bonds that can be considered part of capital. Regulators are looking to have these banks add to core capital to ensure that in future crises the senior bond holders take losses and not taxpayers. Equity is expensive. Suffice to say all of this will have an impact on future trade credit pricing. Right now, banks are still fighting for deals, and margins are particularly thin on supply […]

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BNP Paribas lacks USD clearing capabilities – impact on commodity trade

- October 16, 2014 3:23 AM | Categories: ,

The logo of BNP Paribas is seen on top of the bank's building in Fontenay-sous-Bois, east of Paris As part of BNP’s punishment for violating U.S. sanctions against Sudan, Cuba and Iran, in addition to being fined $8.9 billion, a New York banking regulator suspended the French bank from clearing transactions in energy trade finance for the whole of 2015. BNP has a huge energy franchise with over 200 front-office professionals in North America, London and Singapore serving the Bank’s global client franchise for oil and oil products, base and precious metals, agricultural commodities, carbon and investor solutions.  They help finance the production, the transformation and the marketing of various commodities such as energy and metals. The ban […]

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Supply Chain Finance Platforms should rethink business models

- October 15, 2014 2:11 AM | Categories: ,

13900884393bkpr-1 As I watch the race to go after the large pie that represents trade credit on corporate balance sheets, many of the platform providers have different business models and forms of revenue creation. A platform business provides: A network layer that connect all the sides – Buyers, Sellers, Banks, Others Tools and rules layer to provide the necessary visibility and certainty required for finance partners to make decisions A data layer and structure that drives customer interactions in web, mobile and other digital channels. In addition, some will offer supplier adoption services which can include web training, document management and […]

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RBS selects Taulia to close Gap in Supply Chain finance offerings

- October 14, 2014 12:41 PM | Categories: ,

rs1 The recent announcement that The Royal Bank of Scotland (RBS) has partnered with Taulia to offer its corporate clients dynamic discounting with e-Invoicing comes at a time when many banks are watching this space. The general banker consensus is that there is an increased “buzz” for a select group of the noted providers but it is still “early days”. Knowing the bureaucracy in banks to both select vendor partners and then onboard a vendor can take years, not months, it was good to see RBS determine a strategy for the best of their own clients. After going out with RFI […]

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Payment delays undermine Supplier Relationships – my personal experience with one Bank

- October 14, 2014 2:03 AM | Categories:

lant Companies can go bankrupt waiting to be paid. Okay, that can be drastic, but if you are dealing with a gorilla and you are a mouse, chances are you have to march to their drum. Big Buyers make the rules. And sometimes they can use tricks and delay tactics made up by back office minions to delay payments by months. Yes months. Let me relate a personal story. I am currently dealing with a Bank for a small invoice. The amount is outstanding since end of June. Yes, it’s October. I will keep the bank anonymous because it is not […]

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Basware and Arrowgrass go after non confirmed invoice market

- October 13, 2014 3:54 AM | Categories:

02022-68-1376146513 Basware recently announced their financial offering, a suite of Supply Chain Finance capabilities that are both buyer and seller driven. One is called Basware Factor and they are partnering with Arrowgrass Capital Partners, a $5bn London hedge fund, to develop an electronic invoicing service in the latest move to capture business credit that has stayed on corporates balance sheets in the form of payment terms. Arrowgrass, spun out of Deutsche Bank in 2008, is one of the largest post crisis hedge funds. What makes this financial product so interesting is that it is true factoring, which works with sellers and […]

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