Releasing cash from trade flows

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21 June 2010

Dickon Harris talks to Lars Millberg, SEB’s head of GTS Corporates, on today’s market, the bank’s recent merger of its cash and trade business, and why it is good to be an emerging market bank.

Trade Finance (TF): The last time we spoke you discussed some general market predictions, have any of them come true?

Lars Millberg (LM): One of the things we expected to see was an increased use in traditional documentary credits.

There has been a tremendous plunge in export volumes over the last year. But despite a 40% drop in Swedish exports we have actually seen an increase level of the usage of the letter of credits (LCs) among our customers. Overall trading volumes have dropped but the number and frequency of LCs has increased. If you compare the number of LCs to the drop in our export markets you can see more and more customers are using those instruments for even stable markets like Japan and Italy where the customer might want to confirm LCs on Italian bank risk, for example. Pricing on the instrument and margin on the instruments has...

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