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( Source of the document: ICC Digital Library )
Libya withdraws offer to provide Egypt fuel on open account
In April, Libya reportedly said it was willing to supply fuel for Egypt without requiring letter of credit terms. But Tripoli is now insisting that Egypt pay for fuel imports on L/C terms, according to Egyptian media reports. Reports also say that Egypt's Ministry of Petroleum is now facing difficulties trying to finance much-needed fuel imports for motor vehicles and power stations. Several areas of Egypt have experienced blackouts for the first time since President Morsi was removed from office by the Egyptian military. The current fuel shortage is exacerbated by Iraq's refusal to fulfil a pledge it made in April to supply Egypt with four million barrels of oil per month, unless Cairo makes cash payments. Egypt's fuel shortage has been somewhat alleviated by fuel that has arrived from the UAE and Saudi Arabia.
More L/Cs signal good news for Bangladesh
A sharp increase in the value of L/Cs opened for imports of capital equipment and a decrease in L/C openings for most food imports appear to signal improved economic prospects for Bangladesh. According to Bangladesh Bank's analysis of data for the 2012-13 fiscal year, there has been a 30 per cent increase in the value of L/Cs opened for imports of capital machinery. This is usually interpreted as a sign of growth in the manufacturing sector. Meanwhile, central bank figures for the same period indicate that the value of L/Cs opened for food imports, which can place a strain on the Bangladeshi economy, have decreased for all foodstuffs except for wheat.
Banks in US target trade finance in growth markets.
Banks in the US are focusing increasingly on increased demand for trade finance as middle-market companies see limited opportunities to increase domestic sales and focus on fast-growing export markets. But as more US banks look at opportunities to sell into growth markets such as China and India, suitably qualified letter of credit and other trade finance professionals may be hard to come by, according to a consultant who advises banks on working with middle-market companies. Peter Hughes reckons that mid-sized US firms, rather than competing for business in the US, where annual gross domestic product (GDP) growth is around 2-2.5 per cent, should look at mainly Asian markets where GDP growth is between 8-10 per cent. He argues that the demand for export finance for sales to these markets has already grown dramatically and will continue to do so.
EIB introducing new trade finance instruments for SMEs
The European Investment Bank is taking steps to help small- and medium-sized enterprises (SMEs) to continue trading despite a shortage of L/Cs. EIB president Werner Hoyer recently explained how the bank is helping SMEs mitigate the effects of Europe's financial crisis by deploying new instruments to support SMEs in Greece, and by planning to do so in other troubled European economies by stepping beyond its traditional role of providing more money and by offering the new instruments. For SMEs, the bank has provided a wider and more diverse array of instruments. The guarantee fund for Greece has already proved very successful. The EIB has also signed agreements for trade finance in Greece. The Bank is now seeing what Hoyer describes as "incredible demand" from other member states for trade finance agreements and wants to extend trade finance to the other troubled EU economies of Cyprus, Portugal and Ireland. The instruments are comparable to, or are variations of, export credit guarantees.
Euler Hermes and HSBC team up to offer trade credit insurance
Euler Hermes says it has recently launched trade credit insurance solutions for HSBC Commercial Banking customers in Singapore and intends to target an Asian market hitherto reliant on letters of credit (L/C) to secure trade finance transactions. The insurance solutions will be delivered under a global distribution agreement signed by Euler Hermes and HSBC in May of this year. Through the partnership, HSBC customers trading on open account will be able to access the insurer's trade credit solutions and CEO of Euler Hermes ASEAN.