HSBC in £4bil SME trade financing boost

LONDON: HSBC, bucking the trend among some European banks, is increasing its exposure to trade finance by making £4bil of credit available to small and mediumsized enterprises that trade, or are planning to trade, internationally.

The launch of the HSBC International SME Fund reflects the bank’s view that global trade will enjoy sustained growth in coming years, especially in Asia and Latin America, offering opportunities for firms in Britain and elsewhere that are willing to look beyond their home markets.

“We are ringfencing a portion of our balance sheet to ensure funding is there at a higher level for those international SMES that want to trade,” said Alan Keir, global head of commercial banking at HSBC .

HSBC, Europe’s biggest bank, is the market leader in global trade finance with a 9% share, according to an analysis by an independent consultancy. Last year it facilitated trade worth Us$500bil and booked revenues in doing so of Us$2.5bil, a sum it hopes to double in four or five years.

Keir declined to go into detail but said HSBC’S global trade financing business was stronger than expected last quarter, except in France.

HSBC is building its trade financing book at a time when some other banks, under pressure to shed assets to meet mandatory capital adequacy ratios, are pulling in their horns.

French banks, which accounted for a quarter of global trade finance, have been particularly affected by dollar funding shortages for eurozone lenders, the Bank of England said in its most recent Financial Stability Report. “The euro area is the United Kingdom’s largest export market and so a reduction in the availability of trade finance could constrain UK exporters,” the bank said.

Keir said some European banks had scaled back their international ambitions to focus on their domestic balance sheets, offering opportunities for HSBC and others.

“It hasn’t stopped the global banks continuing to lend, and it hasn’t stopped the emergence of some very good competitors from fastergrowing markets,” he said.