BNP Paribas is lining itself up to become a prime contender for new banking business likely to materialise in Cyprus when it adopts the euro in January 2008.

One way the bank intends to win new trade business is by appealing to customers on the basis that a big banking name behind letters of credit (L/Cs) will help their international trade prospects.

New businesses

A new market for large, locally based international players who have traditionally not done business in Cyprus is expected to emerge on the island once it joins the eurozone.

Adopting the euro is also expected to provide the island's smaller businesses with new and wider trading opportunities too.

L/Cs to help

In an interview with a Cypriot business weekly, managing director of BNP Paribas Cyprus Limited, Thierry Gigant, claims that his bank's ability to provide a quick, efficient and internationally recognised L/C service will help it win new business.

Gigant argues that trade financing via L/Cs or international guarantees can be much faster and cheaper according to the interview in the Financial Mirror.

AA rating

Citing an example of a Chinese company wanting to do business, the bank executive argues that when an L/C is opened by a bank with limited geographical recognition, "the Chinese company will probably ask for a confirmation by a reputable bank." This, Gigant says, can add costs.

He argues that with its Standard and Poor's and Fitch AA ratings and its network spanning Singapore, Hong Kong, Shanghai and other emerging markets, "BNP Paribas' signature is always accepted which can ensure clients lower costs."

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