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Export credit: who’s buying?
20 December 2011
John Geddie looks at some of the obstacles to secondary market distribution in export credit.
Read more:
export finance
export credit
deleveraging
trade finance distribution
export credit distribution
secondary market
Eu2,500,000,000,000. This is the estimated amount European banks will have to cull from their balance sheets over the next 18 months according to a report by Morgan Stanley. The figure equates to shrinkage of 5% in overall risk-weighted assets, of which a substantial part is expected to hit export finance.
The billion dollar question for export finance bankers is simply, where will it all go? Outside of the eurozone there is still liquidity in the market but even for those select banks that can still fund in dollars, there are now some concerns over their credit position. Also distribution in export finance is underdeveloped; it is a relatively new phenomenon brought on by the global financial crisis. Even in recent years while some institutions sought to actively manage their balance sheet, the market makers, notably the French banks, continued to book and hold huge long-term assets.
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