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Industry roundup: 30 September

Citi launches integrated ESG and multi-currency notional pooling in Luxembourg

Citi has announced the launch of its multi-currency notional pooling (MCNP) capabilities in Luxembourg, with an integrated environmental, social, and corporate governance (ESG) offering attached.

The offering is designed to allow clients to harness multi-currency notional pooling, automated ESG investments options and wider liquidity management capabilities, including target balancing, multi-bank target balancing, cross-currency sweeps and virtual accounts to meet their treasury objectives.

Citi has expanded its ESG offering as part of the launch, by fully integrating notional pooling with a new range of ESG money market fund options, available via an automated sweep from Luxembourg based accounts. This automation, combined with enhanced treasury workstation integration, should enable Citi’s clients to participate in sustainable short-time investments and automate their ESG initiatives end-to-end. 

"As companies seek ways to expand their ESG programmes, treasury departments are playing a greater role in shaping and achieving these objectives," said Stephen Randall, global head of Liquidity Management Services, Treasury and Trade Solutions at Citi. "With companies continuing to face volatility in their supply chains and cross-border business activities triggered by the Covid pandemic, Citi is actively expanding solutions to enable clients seeking to achieve both treasury and corporate sustainability objectives in an integrated manner."

The new offering in Luxembourg supports all major global currencies and is built on Citi’s Global Notional Pooling platform, providing reporting for tracking exposures, monitoring pool entities and reconciling financial benefits for clients in multiple pooling centres across the world.  With this launch, Citi now offers notional pooling solutions in 11 locations around the world.

"Luxembourg is an important treasury location for our multinational client base," commented Czeslaw Piasek, EMEA head of Liquidity Management Services, Treasury and Trade Solutions at Citi. "The launch of our integrated multi-currency notional pooling capabilities and ESG offering there reflects Citi’s strategy to continuously expand its cash management capabilities in Europe, serving clients through its physical presence across 24 countries and seamless connectivity to Citi’s global network."


Kyriba launches open API platform

Kyriba has announced the launch of its Open API Platform to enable composable technology solutions for CFOs, CIOs and treasurers, and accelerate the next generation of finance innovation. Kyriba’s Open API Platform streamlines the creation and connectivity of new applications for the company’s trusted network, which connects 1,000 banks, manages over a million bank accounts, and processes over 200 million payments worth US$15 trillion annually.

The Open API Platform is accessible through Kyriba’s Developer Portal, which connects fintech developers to Kyriba’s over 2,000 global corporate clients who have integrated Kyriba into their treasury processes, enterprise payments systems, and ERP platforms.

"Kyriba Open API Platform will radically unlock fintech innovation for enterprise CFOs and their CIO counterparts," said Boris Lipiainen, CTO of Kyriba. "Beyond simplifying and accelerating bank and ERP connectivity, fintech developers will bring new apps to the Kyriba network and empower the next generation of financial technology."

APIs are transforming the way finance and IT consume and integrate data and are the gateway to delivering real-time services, artificial intelligence, and composable digital finance solutions for CFOs and CIOs. Gartner predicts through 2024, 50% of financial application leaders will incorporate a composable financial management system approach to their solution selection. Gartner defines a composable architecture as one where highly modular applications can be composed and recomposed to deliver capabilities and outcomes that keep up with the rapid pace of business change.

"Kyriba’s Open API Platform eliminates the need for internal IT teams to deliver a patchwork of custom interfaces and RPA bots to satisfy the growing need for hyperautomation," said Félix Grévy, VP of Open API and Connectivity at Kyriba. "Our platform enables Kyriba clients and our network of development partners to accelerate product innovation and deliver composable technology solutions to eliminate fraud, mitigate risk and optimise enterprise liquidity."


Trade defaults rise amid pandemic, but performance remains consistent with long term projections

ICC, along with Boston Consulting Group (BCG) and Global Credit Data (GCD), has released its 2021 Trade Register report, confirming the impact of the COVID-19 pandemic on global trade finance default rates.  

The pandemic has produced significant impacts on global trade, driving a drop of around 10% by value in 2020, comprising approximately an 8% fall in goods trade and a substantial steeper 19% in services trade. Over a year into the COVID-19 pandemic, its sustained consequences are becoming clearer, both from an activity perspective - where trade volumes are expected to reach 2019 levels by 2022 after a constrained recovery in 2021 – as well as from a credit risk performance perspective.

For 2020, the report confirmed an increase in default rates across the majority of asset classes:

  • Import L/Cs: Obligor-weighted default rate increased from 0.40% in 2019 to 0.59% in 2020 (+0.19 ppts).
  • Export L/Cs: Obligor-weighted default rate increased from 0.04% in 2019 to 0.05% in 2020 (+0.01 ppts).
  • Loans for Import/Export: Obligor-weighted default rate increased from 0.74% in 2019 to 0.94% in 2020 (+0.20 ppts).
  • Performance Guarantees: Obligor-weighted default rate decreased from 0.56% in 2019 to 0.44% in 2020 (-0.12 ppts).

Encouragingly, the report observes that no asset class recorded default rates above the peak historic rates, affirming the relative stability of trade finance even in times of economic stress.


Gerald Group closes US$450m North American borrowing base facility with record oversubscription

Gerald Group, a large independent and employee-owned metals trading house, has announced the successful refinancing of Gerald’s North American trading hub GT Commodities LLC’s (GTC) Borrowing Base Facility (BBF) closed at US$450m.

ING Capital LLC (ING) acted as lead lender and administrative agent for the refinancing of GTC’s current secured financing facility, with Rabobank and HSBC as joint lead arrangers (JLAs). Other members of the club deal included Credit Agricole, Credit Suisse, Deutsche Bank, Bank of China, Raiffeisen Bank International and UniCredit. GTC’s BBF, which launched at US$300m, received record subscriptions of US$495m from existing and new lenders, and after scaling back closed at US$450m. The financial flexibility that the BBF provides GTC, will continue to support Gerald’s North American activities.

"Notwithstanding the continued disruption and volatility in global supply chains, Gerald Group continues to demonstrate being a stable partner across the supply chain," said Mital Patel, Gerald Group’s global head of Finance & Banking. "The Group remains focused on sustainable growth and playing a vital role in the energy transition journey towards a better future. The oversubscription and favourable pricing achieved in the refinancing shows clear confidence from commodity lenders in Gerald’s businesses. We truly appreciate the strong relationships we have with our existing banking group, and welcome the addition of three new participants to the credit facility."

"Given the significant increase of metal prices over the past 12 months, this facility increase and timely closing will enable them to continue on their growth trajectory in the North American region and execute on their strong positioning in the diversified metals space," commented Matthew Rosetti, head of ING’s Commodity Finance team in North America.

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