ITFA Young Professionals roundtable
Young trade professionals: the European perspective GTR and the International Trade and Forfaiting Association (ITFA) Young Professionals network hosted a roundtable in Poland in September to discuss the current risk environment, innovations in technology and the needs of young professionals in the marketplace.
Hall: We’re going to start off talking about trade finance in Europe. At the moment, we have slow growth: the European Union’s GDP grew by only 1.9% last year and just 0.3% in Q2 of this year. We have questions over free trade agreements; we have increasing doubts over the future shape of the EU; and the global market is entering into a period of uncharted territory. We can see this reflected in the H1 2016 trade finance revenues of the 12 largest global corporate and investment banks, which dropped by 9% this year. With that, and with the growing instability in Europe, be it financial, such as in Greece; social, such as the migrant crisis that we find affecting the south of Europe; or political, such as Brexit and the pan-European rise of far-right politics; what does this mean for the future of the risk landscape for our business?
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Wilmink: There is more political uncertainty in the market, which would imply higher pricing. However, with the low interest rate environment, less growth and fewer assets around, and all market participants still hungry for assets, this has actually resulted in lower pricing. Clients are in the driving seat and clearly we are working in a buyers’ market. Hall: So you think that the rewards versus the risks you have to take are imbalanced? Wilmink: Exactly. Pojnar: When it comes to plain vanilla products in trade finance, I’m not sure if they are in danger because when the risk is higher our products become more popular, because all the counterparties want to secure themselves. Borowiec: We do get compliance problems with countries vital for Polish exports, such as Poland’s