Citi launches electronic trade loan facilities for US commercial clients

Citi has launched its Trade and Working Capital eLoans solution for its US Commercial Bank clients. The solution is designed to help clients meet their current and projected working capital needs through loan advances via Citi’s eLoans platform. The platform aims to support clients by allowing qualified clients to access liquidity for running their commercial business, reducing manual touch points while also allowing the client to manage outstanding loans via repayment features. It also enhances self-service reporting via automated notifications, among other features.

The bank worked with a US software company as part of the expansion of Citi’s eLoans footprint. Citi helped support this CCB Client’s commercial banking needs by providing an uncommitted, secured post-shipment electronic trade loan facility with an accordion that meets the client’s current and projected working capital needs. The bank supported the onboarding of more than 800 counterparties, clients of the US software company, at the facility's inception and provided the ability to make cross-border payments in over 140 currencies directly via CitiDirect.

Access to Citi’s digital platform for using the eLoans offering is available at no additional cost. The bank says it could help its clients to achieve greater control and transparency for debt financing.

 

US FedNow Service goes live for instant payments

The Federal Reserve has announced that its new system for instant payments, the FedNow Service, is live. Banks and credit unions of all sizes can sign up and use this tool to instantly transfer money for their customers, any time of the day, on any day of the year.

To start, 35 early-adopting banks, credit unions, and the US Department of the Treasury's Bureau of the Fiscal Service are ready with instant payments capabilities via the FedNow Service. In addition, 16 service providers are ready to support payment processing for banks and credit unions.

When fully available, the Fed says that instant payments will provide substantial benefits for businesses and consumers, such as when rapid access to funds is helpful or when just-in-time payments help manage cash flows in bank accounts. For example, individuals can instantly receive their paychecks and use them the same day, and small businesses can more efficiently manage cash flows without processing delays. Over the coming years, customers of banks and credit unions that sign up for the service should be able to use their financial institution's mobile app, website, and other interfaces to send instant payments quickly and securely.

“The Federal Reserve built the FedNow Service to help make everyday payments over the coming years faster and more convenient,” said Federal Reserve Chair Jerome H. Powell. “Over time, as more banks choose to use this new tool, the benefits to individuals and businesses will include enabling a person to immediately receive a paycheck, or a company to instantly access funds when an invoice is paid.”

UK inflation print surprises on the downside

The UK’s Office for National Statistics (ONS) this week revealed that Consumer Prices Index (CPI) inflation rose by 7.9% in the 12 months to June, down from 8.7% in May, and down from a recent peak of 11.1% in October 2022. The ONS indicative modelled consumer price inflation estimates suggest that the October 2022 peak was the highest annual inflation rate since 1981 (the CPI National Statistic series began in January 1997). The rate in June was the lowest since March 2022.

Core CPI (excluding energy, food, alcohol and tobacco) rose by 6.9% in the 12 months to June 2023, down from 7.1% in May, the highest rate since March 1992.

The news came as a slight surprise to markets, which had anticipated core inflation would be unmoved and that headline inflation would only fall to 8.2%.

The easing in the CPI annual rate between May and June 2023 resulted from prices rising by 0.1% on the month compared with a rise of 0.8% a year earlier. Falling prices for motor fuel led to the most significant downward contribution to the monthly change in CPI annual rates. Overall, motor fuel prices fell by 22.7% in the year to June 2023, compared with a fall of 13.1% in May.

Food prices rose in June 2023 but less than in June 2022, also easing the overall inflation rate. Food and non-alcoholic beverage prices rose by 0.4% between May and June 2023, compared with a rise of 1.2% between the same two months a year ago. This resulted in an easing in the annual rate to 17.4% in June 2023. This is down from 18.4% in May 2023 and from a recent high of 19.2% in March 2023, the highest annual rate seen for over 45 years. There were no significant offsetting upward contributions to the change in the rate.

Commenting on inflation falling to a 16-month low, Douglas Grant, Group CEO at Manx Financial Group, commented: “At last, there has been an easing in inflation, hopefully showing that the UK economy is starting to fall in line with the Bank of England’s reassurances that this year will see the economy stabilise. However, repeated interest rate hikes and ongoing rising costs continue to bring financial challenges that many businesses across the country are struggling to outmanoeuvre. Considering SMEs account for around half of all private sector turnover in the UK, we need more innovative measures to ensure their survival.”

Charles White-Thomson, CEO of Saxo UK CEO, added: “Today’s year-on-year UK inflation print of 7.9% is a step in the right direction and evidence that the significant financial medicine in the form of interest rate hikes is taking effect. The big number of 7.9% is still well off the ‘no ifs or buts’ 2% target and the cost of living crisis remains painfully evident. With this in mind, we should prepare for a 25bp hike by the Bank of England on August 03. The war to defeat inflation is not over and the Governor has nailed his colours to the 2% target."

 

US trade activity shows resilience amid challenging global conditions

Transaction volumes across US supply chains grew at their fastest pace in more than two years as domestic trade activity showed renewed signs of resilience following a recent slump. Data from Tradeshift’s Q2 Index of Global Trade Health shows that the volume of new orders and invoices exchanged between US buyers and their suppliers grew at 3 points above its expected range in Q2, recovering from a level of 6 points below the baseline in the previous two quarters. 

Emerging signs of stability in the US contrast with a more uneven global picture. Total transaction volumes across the Tradeshift platform grew at 4 points below the expected range, a modest improvement on the 5-point deficit in Q1, but nonetheless evidence of a sluggish trading environment. The Eurozone and the UK followed the global trend, with trade activity in the Eurozone 3 points below expectations in Q2 compared to a score of -8 in the previous quarter. In the UK, transaction volumes grew 5 points below the baseline in Q2 compared to -7 points in Q1.

The decline in global demand has impacted the pace of China’s recovery following its lifting of Covid restrictions at the beginning of the year. Transaction volumes between Chinese buyers and suppliers rose 1 point above the expected range, indicating more steady than spectacular progress. 

Globally, order volumes stayed flat at 2 points below the expected range in Q2 and appeared to be settling at that level. Key sectors, including transport, logistics, and manufacturing, also appear to be settling into a lower rhythm after consecutive quarters of steeply declining activity. Invoice volumes fell more sharply in Q2, suggesting that supply chains must adjust to the prolonged drop in orders. 

 

Deutsche Bank joins CLSNet

Deutsche Bank has gone live on CLSNet, a bilateral payment netting calculation service for over 120 currencies. With the addition of Deutsche Bank, the CLSNet community now includes eight of the top 12 global banks.

CLS says that the service has seen a marked increase in adoption over the past year, with a year-on-year increase of over 400% in the average daily volume of net calculations in Q1 2023. This reflects the industry's growing need for risk reduction, operational efficiency and liquidity optimisation. On 21 June 2023, the service reached a record daily notional of US$306bn netted in the service.

Designed to standardise and centralise post-trade processes for over 120 currencies across various trade types, including same-day trades and non-deliverable forwards, CLSNet helps market participants reduce risk and achieve greater operational efficiency for a broad range of currency flows. Settlement risk in the FX market continues to be an area of focus, especially in emerging market currencies and other growing segments of the market.

“Joining CLSNet is a logical progression in our continued growth strategy and commitment to promoting the effective functioning of the wholesale FX market,” commented David Gary, Head of FX Trading North America, Deutsche Bank. “This move offers us not only the advantages of liquidity optimisation and risk mitigation, but also the added benefit of streamlined post-trade matching and netting processes, making our operations even more efficient.”

 

Standard Chartered reports impact of US$1bn financing initiative during pandemic

Standard Chartered has published a report on the outcomes of its US$1bn not-for-profit Covid-19 facility, a financing initiative that was launched in 2020 specifically to help clients manufacture and distribute products ranging from sanitiser and facemasks to ventilators.

The facility was set up to provide financing in the form of loans to support clients acquiring equipment and help existing manufacturers get their products to market. The report details how the bank developed a robust funding allocation framework to deliver the benefits of the programme to the right clients and how it assessed the impact of the programme.

The report cites specific examples of where this concessional funding helped clients create impact, including a beverage maker in Ghana that pivoted to making low-cost hand sanitiser at a time of acute supply shortage, and an oxygen supplier in Pakistan that was able to fulfil urgent contracts thanks to a one-week financing turnaround time. The bank estimates that, overall, its loans helped facilitate nearly 550 million pieces of PPE, two million COVID-19 tests, over 50 million vaccines, and hundreds of thousands of oxygen cylinders, ventilators, and critical medicines.

 

Airwallex collaborates with Brex to help accelerate international expansion

Payments and finance platform Airwallex has announced a partnership with Brex, a US-based financial technology company, to support its global expansion. Brex serves large multinational customers all over the world with a range of financial tools. 

The company is leveraging Airwallex’s suite of solutions, including local currency collections for its global corporate card as well as global employee expense reimbursements. Brex is leveraging Airwallex’s network of more than 50 global licenses to accelerate its market expansion. 

“Leading enterprises are expanding their footprints globally and are looking to Brex for employee spend and expense management across their operations,” said Henrique Dubugras, Founder and Co-CEO at Brex.