TFG Trade Briefing, 14th October 2019

Your Monday morning coffee briefing from TFG. Here are some of the last week’s updates from the trade sector. The Department for International Trade has published a revised list of temporary tariffs which would apply to UK imports in the event of a no-deal Brexit. The Finance council agreed to five pledges to support SMEs, including promising to be open to lending. UBS went life on Komgo has announced that it will receive new financing of 700m USD from its members.

What happened last week?

Bank of England to stress test banks with ‘catastrophic’ climate scenario

Bank of England governor Mark Carney has repeated the Bank’s intention to stress test banks against climate change, warning companies that fail to adapt to moves towards net zero carbon economies “will cease to exist”. Speaking in Japan, Mr Carney said the “climate pathways” the financial system will be stress-tested against will include “the catastrophic business as usual scenario and the ideal – but still challenging – transition to net-zero by 2050 consistent with the UK’s legislated objective”. Tests are due to begin in 2021. Read more →

The new head of the IMF, Kristalina Georgieva, warns of a debt time bomb

The new head of the International Monetary Fund has issued a warning over a global debt time bomb and said the world’s economy faces a “synchronised downturn”. Kristalina Georgieva said: “Our new analysis shows that if a major downturn occurs, corporate debt at risk of default would rise to $19trn, or nearly 40% of the total debt. This is above the levels seen during the financial crisis.” Ms Georgieva urged central banks to keep interest rates low “where appropriate” to tackle the weakest growth in almost a decade. Read more →

No-deal tariffs outlined as Brexit approaches

The Department for International Trade has published a revised list of temporary tariffs which would apply to UK imports in the event of a no-deal Brexit. Some 88% of goods would be exempt from import tariffs for a year, with around 80% of goods entering the country tariff-free under current trading arrangements. Mike Cherry, national chairman of the Federation of Small Businesses, welcomed the tariff adjustments in some sectors but warned: “The cold hard fact remains that two-thirds of small businesses that fear the impacts of no-deal feel they cannot prepare for this outcome. The average cost of preparation to small exporters and importers of putting contingencies in place is £3,000.” Read more →

Finance council agrees on SME support charter

The first meeting of the finance council took place on Wednesday. Made up of representatives from banks, other finance providers, government, and business, the council was created following criticism that SMEs were not being offered enough support in the run up to Brexit. The council agreed to five pledges outlining how they will support SMEs, including promising to be open to lending. FSB policy and advocacy chairman Martin McTague commented: “While the sentiment behind this charter is very noble, the proof will be in the pudding,” adding: “Talk is often cheap. We need to see these kind words followed-up by actions in the present. We can’t live off kind promises for the future.” Read more →

UBS goes live on trade finance platform

UBS confirmed it went live on at the beginning of October, facilitating services to small and mid-sized enterprises (SMEs). 

“We’re reaching out to clients on a one-to-one basis to educate them on the new platform and walk them through the process.” Read more →

Alfa-Bank and NLMK launch Foreign Trade Finance Pilot Transaction with Commerzbank and Vesuvius GmbH via Marco Polo

“We launched our first distributed ledger technology in trade finance as early as 2017. Since then, corporate blockchain solutions have been considerably elaborated, and earned our clients’ confidence and proved their applicability to real business processes. Projects such as Marco Polo create added value for clients ensuring more international trade transparency and manageability thanks to integrated bank payment, finance and discount instruments”, said Dina Merkulova, Head of Trade Finance at Alfa-Bank. Read more →

Blockchain Software Provider Komgo Surpasses USD700m Of Financing On New Platform

Geneva-based blockchain software provider komgo SA has announced that it has taken a number of steps towards achieving its mission of catalyzing the world’s commodity trade network, with almost a billion USD of financing channeled by members of the network. Read more →