Despite the growing volume of reports of a widespread shortage of letters of credit (L/Cs) as banks grow ever more reluctant to lend money for international trade, one of the world's largest suppliers of commodities and raw materials is saying it has no problems obtaining L/Cs.

A Thai bank meanwhile is optimistic that customers will move away from exotic products and towards L/Cs for hedging purposes.

Glencore's reassurance

Glencore International says that it has had no problems in obtaining L/Cs to finance transactions according to its spokesman, Marc Ocskay.

He declined to make any further comments, despite market fears that doing business with the Swiss commodities giant is becoming riskier.

The cost of protecting against a Glencore default has increased fivefold over the last two months while Standard & Poor's in October cut its outlook for Glencore to stable from positive.

Risk mitigation

In Thailand meanwhile, Kasikornbank hopes to increase fee income to 40 per cent of total revenues from its corporate banking operations next year from 30 per cent now.

Areas it wants to focus on include risk management, cash management and supply chain management services, and the bank thinks that global market volatility should help lift demand for hedging products, such as confirmed L/Cs.

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