A senior trade financier at Unicredit has said he is seeing a significant shift from letter of credit (L/C) to open account terms.

UniCredit Global Transaction Banking Co-Head, Claudio Camozzo, made the comment in the wake of the bank's announcement that it had successfully completed the first BankPayment Obligation (BPO) transaction ever carried out in Italy.

Italian transaction

The BPO transaction in Italy was for the payment of a commercial operation concluded between Italian industrial cooling systems producer, SPIG SpA and one of its German suppliers, a UniCredit Bank AGcustomer.

The bank credits BPO transactions with advantages in terms of a reduction in non-payment risks as well as simplicity and speed of execution.

Extended services

Last October, UniCredit and Bank of Tokyo-Mitsubishi wrote the first BPO transaction between Germany and Japan in a deal involving German industrial mixer producer RVT Rühr- und Verfahrenstechnik and Japan's Mitsui & Co. Plant Systems.

Unicredit says it is ready to extend the service to companies operating on the international market on an open account basis.

L/C comments

Camozzo, who is also a member of the SWIFT board said, "the growth of global trade is accompanied by a significant shift from the use of traditional instruments such as L/Cs to the world of the open account, and by market demand for solutions that help to manage the growing costs and risks effectively."

"With the BPO, we can offer our customer companies a solution which combines automated processing of the flows with careful cost management, prompt payments and financial options for the seller," he added.

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