- The Bank Payment Obligations (BPO) cover the supply of commercial vehicle components from Germany and Italy to Slovenia
- Transactions mark the importer’s first steps toward using the BPO for all its trade business
Commerzbank has processed the first BPO transactions in Austria, covering the import of bus components from Germany and Italy. The buyer, a customer of Commerzbank AG Austria, is TAM-Europe d.o.o., located in Maribor, Slovenia, one of Europe’s largest bus and commercial vehicle manufacturers. The suppliers are MAN Truck & Bus AG, a leading commercial vehicle manufacturer headquartered in Munich, and ISAF Bus Components srl, an Italy-based supplier and customer of UniCredit.
The BPO is an irrevocable undertaking of the buyer’s bank (the Obligor Bank) to the seller’s bank (the Recipient Bank) to execute payment on maturity. This undertaking is based on the successful matching of agreed electronic trade data on SWIFT’s Trade Services Utility (TSU) platform. Companies are increasingly recognising the benefits of the BPO, which include more efficient, flexible and faster communication and handling of transactions. With successful matching of purchase order and shipment data, the BPO can also serve as an enabling framework for supply chain finance –optimising liquidity and working capital, and minimising payment risk.
Enno-BurghardWeitzel, Head of Product Management Trade Services at Commerzbank, says: “We are very pleased that we can continue to expand our digital service offering to our clients, who along with the industry continue to demand more advanced services. With the first-ever BPO transaction in Austria, we’re front-running the digitisation of the trade finance business. These client-centred digital services are the basis of our enhanced modernisation efforts. By focusing on new digital trade finance services –like distributed ledger technology/blockchain-enabled offerings –we are paving the way for the supply chain of the future.”
Bryan Zhao, CEO of TAM-Europe, comments: “As an innovative company, TAM-Europe is very interested in adopting new technological solutions for optimising processes. With the BPO, we are following the digitalisation trend; we see it as a new payment instrument that can be a successful supplement to open account transactions and letters of credit. Gradually, we aim to handle all our trade transactions with the BPO.”
ElkeEndres, Treasury / Export Finance & Insurance, MAN Truck & Bus AG explains: “We appreciate the fast and cost-saving BPO processing which supports us in our ambition to simplify our trade finance transactions.”
Commerzbank first went live with the BPO in October 2014. The bank has since increased its BPO business, settling transactions with partner banks for multinational companies, large corporates and SMEs, both within Europe and overseas. In 2016 the bank facilitated the first BPOs in the UK and also processed the first live BPO transaction between Germany and China.