SINGAPORE (THE BUSINESS TIMES) – A set of finest practices for commodity financing was rolled out on Monday, the primary such code for the business in Singapore. This comes after the city-state’s status as a trusted hub for this lending section has taken a success of late.
The code was launched by the Affiliation of Banks in Singapore (ABS), with the assist of the Financial Authority of Singapore (MAS), Enterprise Singapore (ESG) and the Accounting and Company Regulatory Authority (Acra).
The ABS Code of Greatest Practices for Commodity Financing lays out key ideas governing prudent commodity commerce financing practices.
It supplies a benchmark for banks’ lending requirements within the sector to make Singapore extra resilient, related and aggressive as a world commodity buying and selling hub, mentioned ABS in a press assertion.
One of many two key themes underpinning the code is, at a macro stage, banks ought to perceive merchants’ company governance, danger administration practices, enterprise and transactions via due diligence and coverage necessities.
The opposite is, at a transactional stage, banks ought to receive ample transparency and management over financed transactions, items and receivables.
The code was developed by an business working group of 28 banks, in session with buying and selling corporations. These lenders – together with DBS, OCBC, UOB, Financial institution of China, Citi, ABN Amro, BNP Paribas and Societe Generale (SocGen) – symbolize nearly all of commodity financing banks in Singapore.
The Enterprise Occasions (BT) first reported in July that banks with operations within the city-state had set up a working group to propose new guidelines in a bid to lift business requirements for commodity financing.
ABS on Monday famous that the code is designed to offer broad steerage to banks, that are anticipated to make sure that the suitable insurance policies, procedures and controls are in place to look at the ideas in the very best practices in a risk-proportionate method.
Samuel Tsien, ABS chairman and OCBC group chief government officer (CEO), mentioned the code “ensures a extra strong and disciplined financing method to assist the expansion of Singapore’s thriving commodity buying and selling sector”, which includes a broad vary of individuals starting from boutique corporations to main worldwide commodity teams.
Ho Hern Shin, MAS’s assistant managing director for banking and insurance coverage, expects sturdy participation by the business in implementing the very best practices, which she mentioned will encourage better transparency and belief between buying and selling corporations and their lenders in addition to promote sustainable credit score flows.
The code additionally units out a standard set of danger administration issues for individuals on the centre of worldwide commerce. It will information collectors and “present them consolation” when financing international buying and selling corporations, famous Satvinder Singh, ESG’s assistant CEO. He added {that a} numerous vary of commodity buying and selling corporations supplied suggestions for the event of the code.
Andy Sim, Acra’s assistant CEO, authorized providers and compliance, sees the code as “a step in the fitting route” to spice up company transparency and the belief between banks and merchants.
“It will assist to advertise accountability and uphold the integrity of the commodity buying and selling sector,” Mr Sim mentioned.
The commodity-trade finance enterprise has been rocked by scandals, together with the high-profile collapse of oil trading giant Hin Leong, in addition to structural points comparable to falling costs and regulatory pressures on earnings.
Some European banks had thus been pulling again from the section in Singapore. Amongst these mentioned to be shutting or cutting down their trade-finance operations in Singapore are SocGen, ABN Amro and BNP Paribas.
BT additionally reported final month that Singapore is making an attempt to convey better transparency to the section, with different initiatives comparable to TradeTrust, an interoperability framework that connects platforms to alternate digital commerce documentation, in addition to an upcoming proof-of-concept for a digital trade-finance registry.
— to www.straitstimes.com
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