Article

L/Cs heavily used by US CFOs

For a second year running, in 2008 L/Cs ranked second in the list of financial products and services most used by US-based chief financial officers (CFOs) in US manufacturing firms, according to a survey. Moreover, it appeared that L/Cs were in greater demand from a larger percentage of CFOs than in 2007. In 2008, cash management topped the list of financial products and services used by CFOs, with 63 per cent of them including it on the lists they submitted for the survey. L/Cs ranked second in the survey for Bank of America and were included in 59 per cent of the lists. Apparently in a reflection of difficult global financial markets, the CFOs surveyed were clearly more concerned about credit availability than they were in 2007. In the 2008 survey, about one-third of CFOs said their lender has restricted credit availability. In 2007, only 10 per cent said they were expecting credit to become harder to obtain.

Mumbai and India/Pakistan trade

Relations between Indian and Pakistani business people may well deteriorate depending on the level of involvement Pakistan had in the attacks on multiple sites in Mumbai that left at least 188 people dead. During previous fall-outs between India and Pakistan, traders from Pakistan found it more complex and expensive to obtain letters of credits for trades with India, but as of December 2008 there had been no such impact, according to a Pakistani business leader. During conflict between the two states in 1999 in the Kargil district of Kashmir, Indian businessmen asked their Pakistani counterparts to have L/Cs reconfirmed by international banks. A number of Indian partners made the same demand after terrorists attacked the Indian parliament in New Delhi in 2001.

China's SMEs suffer from a lack of L/Cs

A lack of letters of credit in recent weeks has added to a catalogue of problems already experienced in 2008 by China's small- and medium-sized enterprise (SMEs) sector. Thousands of SMEs went out of business in 2008, and experts suggest that 2009 will see even more SMEs moving towards the brink. More than 67,000 SMEs in China were declared bankrupt in the first half of 2008, some of them pressured by Beijing's discouragement of firms making low-quality goods. One banker said the L/C shortage at the end of 2008 made a significant impact on China's exporting SMEs. International buyers of Chinese products failed to obtain L/Cs in October, which led to significant cancellations of Christmas orders. One economist said that it was common to hear from business people that the flow of L/Cs had "suddenly ceased".

Standard Chartered tops Asia L/C rankings

For the second year running, SWIFT in 2008 ranked Standard Chartered Bank number one in terms trade transaction volumes in Hong Kong, Singapore and the UAE. The top ranking is based on an analysis of trade transaction volumes handled by the financial messaging provider for the year ending 30 September 2008. Standard Chartered continued to lead in growing its share of total market volumes of L/Cs issued, according to SWIFT's analysis.

Banking Commission to Dubai

The ICC Banking Commission's Spring meeting will be held on Tuesday 10, Wednesday 11 and Thursday 12 March 2008 at the Dubai Chamber of Commerce in Dubai, UAE. This is the first time the Commission will have been to Dubai. More information can be obtained from Whitney Jacob at e-mail wjb@iccwbo.org.

Ole Malmqvist

It is with great sadness that we report the October death of Ole Malmqvist of Denmark, an active ICC Banking Commission member for many years. Ole served as Co-Chair of the Drafting Group for ISBP 645 and as a member of the UCP 600 Drafting Group. His understated wit and perceptive comments on ICC rules, as well as his personal warmth, will be missed by all Banking Commission members.