Bloomberg News

World Trade Financing Seen Down 15% as European Banks Pull Back

November 23, 2012

World trade financing fell 15 percent in this year’s first nine months as European banks curbed lending amid the region’s debt crisis, according to Ecobank Transnational Inc. (ETI)

Funding slid to $123.9 billion through September, Edward George, head of commodities research at Ecobank, said yesterday in an interview at the World Cocoa Conference 2012 in Abidjan, Ivory Coast. European lenders’ market share dropped to 50 percent from 75 percent, he said.

“This reflects a retrenchment of French banks,” George said. “They have to deleverage.”

French lenders such as Societe Generale SA and BNP Paribas SA (BNP) have cut sovereign-debt holdings, trimmed headcount and reduced reliance on short-term funding to help allay investor concern that the European debt crisis will worsen. Societe Generale, the country’s second-biggest bank, this month reported an 86 percent plunge in third-quarter profit.

Regional banks are capitalizing on the pullback by European competitors to add market share as emerging economies continue to swell, according to George. Developing nations will expand 5.6 percent next year, the International Monetary Fund said in October, almost four times the 1.5 pace that it projected for advanced economies.

“Asian banks are awash with dollars,” George said. “Economies are doing pretty well there. American banks are also awash with dollars, but they are being very cautious about what they are doing with their money. The Europeans have euros, but very few people want euros.”

Ecobank, based in Lome, Togo, is boosting its trade financing in commodities as European banks retrench, Chief Executive Officer Thierry Tanoh said in an interview in Abidjan on Nov. 19. The lender doubled the availability of credit lines to finance cocoa trading to $400 million in the 2012-13 season begun last month. Ivory Coast is the world’s biggest producer of the chocolate ingredient.

To contact the reporter on this story: Isis Almeida in London at ialmeida3@bloomberg.net

To contact the editor responsible for this story: John Deane at jdeane3@bloomberg.net


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