Post-pandemic economic headwinds, supply chain disruption and increased requirements to align with environmental, social and governance (ESG) considerations have prompted a recalibration in the perceived risks faced by trading counterparties according to Standard Bank.

It says this has led to an increase in demand for letters of credit (L/Cs) and L/C confirmations to mitigate buyer payment risk, financial institution payment risk and country risk.

As a significant provider of L/Cs and L/C confirmations in the African market, the bank says it has played an active role in facilitating these transactions on behalf of multinational corporations, local corporates and small- and medium-sized enterprises (SMEs).

Network and digitalisation

Standard Bank says in an article on the News 24 website that it has become a leading provider of L/Cs and L/C confirmations through its extensive network of institutional relationships and the adoption of digital technologies to enhance the speed and accuracy of document checking required to complete these transactions.

The bank was the first in South Africa to implement the Traydstream platform, which utilises optical character recognition and machine learning technologies to review and scrutinise documentation presented under L/Cs and other trade finance transactions.

ESG and supplier financing

To align with ESG considerations, Standard Bank says it recently launched the first solution in its ESG Trade Finance portfolio. It comprises an ESG overlay for working capital facilities, to complement the bank's established ESG-linked term lending and revolving credit facility offering.

The bank adds that its supplier financing programmes may overcome the challenge of supply chain continuity by enabling suppliers to receive early payment on their sales to the anchor buyer.

The article, Standard Bank spearheads trade finance solutions for sustainable development in Africa, written and sponsored by Standard Bank and published on the News 24 website can be found here.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.