Deutsche Bank underlines its Global Hausbank role in year of economic turbulence with 14 winning accolades in the Euromoney 2023 Trade Finance Survey
14 February 2023
In a year that was marked by the Russia/Ukraine crisis, huge market turbulence, concerns about energy and critical commodities shortages – topped off by rampant inflation – it might surprise some that global trade grew as well as it did.
UN trade body UNCTAD puts the total for 2022 at around US$25trn in merchandise trade, and US$7trn in services, reflecting robust growth in the first half of 2022 offset by a more subdued performance in the second.1 Given that more than 80% of global trade is made possible by trade credit or insurance guarantees,2 the role of providers to keep trade flowing was last under such a spotlight back in the 2008-09 global financial crisis. As WTO Director General Ngozi Okonjo-Iweala puts it, “trade is a vital tool for enhancing the global supply of goods and services, as well as for lowering the cost of getting to net-zero carbon emissions”.3
Figure 1: Global trade trends 2019–2022
Source: UNCTAD calculations based on national statistics. Note: Quarterly growth is the quarter over quarter growth rate of seasonally adjusted values. Annual growth refers to the last four quarters. Figures for Q3 2022 are preliminary. Q4 2022 is a nowcast
Global Co-Head of Trade Finance and Lending at Deutsche Bank
Resilient trade finance support
With Deutsche Bank having announced 2022 pre-tax profit up by 65% to €5.6bn – its best performance for 15 years – the bank’s support of its clients through the year’s challenging conditions while, in the words of CEO Christian Sewing, “providing our resilience with strong risk discipline and sound capital management” is best evidenced by the way in which it has developed its trade finance business over more than 150 years.
The Euromoney Annual Trade Finance Surveys are much-coveted awards because the rankings are determined by quantitative rather than qualitative/subjective feedback. The 2023 awards drew more than 12,000 respondents (a 12% increase on the previous year), confirming just how critical trade finance is in the current environment of economic uncertainty. Deutsche Bank’s win of 14 No 1 rankings – that include retaining the Western Europe accolade for the seventh year running – demonstrates how the bank is meeting ongoing finance needs both within its home region of Europe and further afield.
Key features of what shaped the 2022 trade finance landscape
Atul Jain, Global Co-Head of Trade Finance and Lending at Deutsche Bank comments, “We observed the establishment of new supplier relationships and value chain diversification, leading to further demand on risk mitigation by using both working capital (selling receivables) and traditional trade (request for letters of credit/guarantees).”
“Sustainability-linked logic will soon be embedded into each trade finance offering, and evolve into a market standard”
In addition, the trend observed in 2021 where mindsets changed from ‘just in time’ to ‘just in case’ inventory has continued to ramp up the demand for working capital finance. “The main concerns are now funding needs, onshoring/offshoring decisions, and organisational set-ups in terms of vertical integration,” reports Jain. Supply chains, he adds, have continued to normalise over recent months, supported by slowing demand and China’s progressive reopening after Covid lockdowns. “These constraints have been replaced by a calmer reorientation strategy from corporates taking into account the aforementioned supplier base diversification, inventory buffer levels and onshoring investments to mitigate geopolitical shocks.”
A tougher interest rates environment, says Jain “is affecting investment decisions as well as credit worthiness of counterparties in global trade”. The tighter liquidity conditions have stimulated an increased use of traditional trade finance products, such as letters of credit to help manage working capital and mitigate risk.
An increased scrutiny of corporates’ decarbonisation pledges has raised awareness of the need to have the right sustainable finance partners, who can advise how best to link their sustainability programmes with their financing needs. “We observe further public and regulatory initiatives incentivising companies to promote sustainability within their supply chains – especially in Europe,” notes Jain.
Furthermore, in the US, where Deutsche Bank held its Best Service Provider award for the second year running, corporates have traditionally used the capital markets to meet their sustainability goals. Jain sees a trend where more US companies are enquiring about sustainable supply chain finance programmes. In his view, “sustainability-linked logic will soon be embedded into each trade finance offering, and evolve into a market standard”.
Detailed results overview
Category: Market Leader
Best Trade Finance Provider: by region
Western Europe: No.1 (6th time running)
Best Trade Finance Provider: by country
Germany: No.1 (11th time running)
Netherlands: No.1 (3rd time running)
South Korea No.1 (3rd time running)
Best Service Provider: by region
North America: No 1 (2nd time running)
Best Service Provider; by country
No.1 Best Service Provider All Services: China
No.1 Best Service Provider All Services: Germany
No.1 Best Service Provider All Services: Malaysia
No.1 Best Service Provider All Services: Netherlands
No.1 Best Service Provider All Services: Philippines
No.1 Best Service Provider All Services: South Korea
No.1 Best Service Provider All Services: Spain
No.1 Best Service Provider All Services: Thailand
No.1 Best Service Provider All Services: United States of America