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The great trade finance dislocation
10 November 2011
John Ahearn, global head of trade at Citi, spoke at the recent BAFT-IFSA conference in New York about Basel III’s impact on trade and related financial sectors with reference to the European debt crisis.
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Citi
Basel III
BAFT-IFSA
export finance liquidity
EU crisis
capital costs
AVC
counterparty risk
As banks struggle to come to terms with their European exposure there is a massive dislocation happening as large volumes of trade assets have come up for sale.
Speaking at the 21st Annual BAFT-IFSA Conference on International Trade in New York, John Ahearn, global head of trade at Citi, observes: “Those banks that are selling are taking enormous haircuts on some of these assets in order to get them off of their books. So people are looking at trade and asking – if it is such a great asset class then why is this happening? Why are banks putting their trade assets up for sale, or their export and agency finance businesses? Well, a lot of this has to do with the impact of Basel III.”
While there is an official timeline for implementation with a long burn-in period, Basel III is already here. Every bank will want to be able...
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