TFG heard the latest in structured trade & receivables finance from a global transaction banking perspective. We asked Saqib Mustafa from Santander’s GTB team to give us an overview on how credit insurance is being used as a risk mitigation and capital efficiency tool for producers and traders, as well as the latest commodity finance trends from the bank. The interview was held at ExCred Commodities London.

Featuring: Saqib Mustafa, Structured Trade & Receivable Finance, Santander

Host: Deepesh Patel, Editor, Trade Finance Global

Trade and Receivables Finance Trends – Banker Perspective

DP: What are the broad trends in commodity finance in 2019?

I look at the traders, producers and the miners, and from where I sit, the focus is on working capital optimization. Clients are finding innovative ways to improve their balance sheet position to be more competitive and efficient, and that includes using risk mitigation using insurance; we work closely with their customers to ensure how they can improve or grow their businesses by offering them better costs, or more efficient pricing.

DP: Are you working with more insurers in the market?

Yes, we are. As a bank have been using credit insurance for many years, and we see usage increasing.

We have relationships with many different brokers in the market and underwriters, which is growing. We look at syndicating and sharing transactions with other parties when there is an appetite for a particular type of risk or geography.

DP: Does the credit rating of the underwriter / insurer matter to the bank?

Yes, it does, to some extent, because if we are using insurance as a risk mitigant and we use that to optimise capital, then a better credit-rated insurance would consume less capital.

Insurance does have a factor to play here among other things, but we also do our due diligence on a particular transaction – it’s not just credit insurance that we consider – the transaction itself has to stand on its own, meet our underwriting criteria, framework and risk policy.

This podcast was in partnership with the Excred Commodity conference series.