Commerzbank has processed the first Bank Payment Obligation (BPO) transaction in Austria.

The Slovenian bus and truck manufacturer that participated in the transaction says the BPO will be used alongside letter of credit (L/C) and open account transactions in its trade financing operations, but only for the time being.


The deal covered the import of bus components from Germany and Italy. The buyer, a customer of Commerzbank AG Austria, was Slovenia based TAM-Europe, one of Europe's largest bus and commercial vehicle manufacturers.

Munich based MAN Truck & Bus and Italy's ISAF Bus Components, a customer of UniCredit, were the suppliers.

BPO features

A BPO provides an irrevocable undertaking from the buyer's bank to the seller's bank to execute payment on maturity.

Transactions are processed by successfully matching agreed electronic trade data on SWIFT's Trade Services Utility platform.

Optimising processes

TAM-Europe's CEO, Bryan Zhao, says his company is very interested in adopting the BPO alongside other new technological solutions for optimising processes.

"With the BPO, we are following the digitalisation trend; we see it as a new payment instrument that can be a successful supplement to open account transactions and L/Cs," he said.

L/C doubts

But he casts doubt on the continuing utility of L/Cs in the company. "Gradually, we aim to handle all our trade transactions with the BPO," he added.Commerzbank's first live BPO transaction was executed in October 2014, since when the bank has used this type of transaction for multinational companies, large corporates and SMEs, both within Europe and overseas.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.