Banks in the US are focusing increasingly on increased demand for trade finance as middle-market companies see limited opportunities to grow 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 (L/C) and other trade finance professionals may be hard to come by, according to a consultant who advises banks on working with middle-market companies.

Export growth

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 2-2.5per 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.

High returns

But Hughes, who is managing partner at Long Island's CLB Advisory, also says he sees a shortage of experts hampering some banks' efforts to grow their trade finance business.

Nevertheless, he reckons it would be worthwhile for banks to develop the necessary talent because the returns on cross-border business are higher than average.

L/C opportunities

Businesses involved in international trade are mainly "concerned about selling to their clients, so they are not going to nickel-and-dime you on every wire transfer or L/C," says Hughes.

He who reckons the returns for banks on such business could be as high as 30 per cent.

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