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T
hese are not great days for Italian forfaiting, Enrico Seralvo, Managing Director of Intesa
but the market could be on the turn. “A fair Soditic in Milan, adds that forfaiting has been in
percentage of the Italian exports of capital use in Italy for decades and remains as relevant as
goods is made up of machinery and equipment, ever. He recalls a time when accessing export credit
supplied by medium-sized companies to medium- insurance cover through Italian export credit agency
sized buyers in emerging markets,” says Giancarlo (ECA) SACE was much less efficient than it is today.
Parente of Simest, the Italian government entity that Moreover, in those days it was not possible to
provides export-credit interest support programmes. assign SACE policies without recourse. Therefore
“The average size of export contracts does not forfaiting, especially involving banks operating
lend itself to the use of syndicated buyer credits, outside of Italy, was the most efficient way of
which are too complex to structure and to handle. ensuring Italian exporters could avoid the payment
The simplicity and speed of forfaiting is, therefore, risks of offering medium-term credit in support of
particularly welcomed by Italian businesses,” he adds. their equipment sales.
and elsewhere in the Far East, albeit that these So while it looks as if the nature of the demand
transactions are supported by short-term letters for forfaiting support has changed, the forfaiting
of credit. And I have to say that there are a lot of technique itself remains as popular in Italy as ever.
requests for ‘silent confirmation’ or discount of There, as in the rest of the international banking
usance letters of credit issued by Iranian banks.” and trade finance community, the long shadow of
This represents a general shift away from the 2008 crisis still darkens the picture. Whether
traditional discount of promissory notes and bills tighter credit terms will now be a fact of life as the
of exchange in favour of deferred payment demands of Basel III take hold, or whether forfaiters
letters of credit (LCs). Many of these are simply will find new ways to do business, we will have to
discounted by local Italian banks and held in their wait and see.
books until maturity. But the chances are that Italian forfaiters, and
Paolo Jelmoni says that banks in some of the transactions structured to support exports of Italian
larger emerging markets have plenty of liquidity goods, will continue to be significant features of the
and are therefore tending to assist their importing international forfaiting market, as ever.
customers with local facilities. This means that Italian
exporters may simply be paid at sight, without the Richard Willsher is a financial journalist and trainer,
use of LCs or medium-term financing. perhaps best known for the seminars that he
In addition, he notes that Italian exporters conducts with the IFA. He can be contacted by
are increasingly requesting capacity to discount emailing rdw@richardwillsher.com.
corporate names without the support of bank
guarantees. This also tends to impair the liquidity For more information about the International
of the market, as there are fewer counterparties Forfaiting Association see: www.forfaiters.org or
to buy such paper. In particular, banks are e-mail info@forfaiters.org.
increasingly constrained by tightening capital and
liquidity regulation. * In English: ‘discount without recourse’
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