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The driving force of the economy – Trade Finance in Armenia

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Gevorg-Khachatryan

Mr. Gevorg Khachatryan, Management Board Member and Deputy CEO-Director of Customer Service Department at ArmSwissBank spoke to us about trade finance in Armenia.

Mr. Gevorg Khachatryan, Management Board Member and Deputy CEO-Director of Customer Service Department at ArmSwissBank

Mr. Gevorg Khachatryan, Management Board Member and Deputy CEO-Director of Customer Service Department at ArmSwissBank

What are the opportunities for trade finance in Armenia? Or how has the landscape changed in the recent years?

As for other countries, for Armenia as well, trade is the driving force of the economy and is one of the indicators of the level of economic development. In recent years, due to the membership of Armenia in the Eurasian Economic Union and signing a cooperation agreement with Europe, the volumes of international trade have increased, and this positive tendency will continue. Consequently, parallel to this development, the trade finance opportunities have been developed for both importing and exporting companies.

Since its inception, ARMSWISSBANK has prioritized the development of trade finance and has always worked towards the development of the TF services. I can say with certainty, that current Bank’s Trade Finance services include almost all of the internationally accepted financing and risk-mitigation services, which аре satisfactory for importers and exporters alike. I can even insist that ARMSWISSBANK is also a leader in terms of its trade finance technologies.

It is necessary to mention that in the recent years, the approaches of the Trade Finance instruments’ usage have been changed, both by Armenian banks and Customers. In the past, neither the banks nor the clients differentiated the loan objective, but rather the loan resources were provided against collaterals. However, in a sharp competition environment, the banks were obliged to upgrade their financing services by making them accessible in terms of both interest rates and targeted usage of loans. The customers’ demands has risen as well regarding the services provided, not only in regards of lowering the interest rates, but also financing without pledges.

All this leads to the fact that the Trade Finance quality has been upgraded and is accessible for clients. Alongside all these, our research has shown that the potential of trade finance, both in terms of foreign trade and domestic trade finance, is great.

In 2017, your trade finance portfolio saw an increase of 73%. What do you attribute to this growth?

First of all, I would like to clarify that the 73% growth has been achieved due to several factors, not only one circumstance or one transaction. The registered indicator is a result of a number of measures aimed to increase both qualitative and quantitative index in trade finance portfolio. I do not rule out that similar qualitative growth will be registered in 2018.

So the 73% growth was mainly conditioned by the fact of considering the trade financing as the strategic direction and by taking consistent steps in that direction:

  1. Expansion of the Trade Finance instruments. We find solutions for any customer both importing and exporting, as we provide practically all kinds of trade finance services, including domestic and international factoring, financing under the policy of the Export Insurance Agency of Armenia, Letters of Credit, Guarantees, short-term import / export lending, supply chain finance.
  2. We offer the services that match most with the customer’s specific requirements.
  3. Trainings and seminars organization for Bank’s and customer’s employees.
  4. Providing currency exchange risk mitigation products together with trade finance services.
  5. Paying special attention to the sales team.

I want to stress once more that it is extremely important to implement the above-mentioned steps periodically and consistently.

There is another important aspect that I would like to draw your attention. Trade finance services, providing by ARMSWISSBANK are implemented without any property security and, as a rule, with more favorable conditions comparing with other lending products.

The set of instruments designated for trade finance offered by the Bank is of no less significance, which corresponds to the international practices. Apart from the aforementioned products, the Bank also offers its clients a range of services which reduce payment risks and the risks of foreign currency fluctuation such as Forward, Future, SWAP, and Option. Moreover, the Bank highly values improving the professionalism of its employees and ensures their active participation in different seminars, conferences and trainings. Furthermore, in 2014 the Bank was nominated for the “Excellency Award” by the EBRD for the number of the Bank employees participating in online training and their excellent results.

How important are partnerships in trade finance?

Actually, collaboration with international financial institutions and banks plays a crucial role in the process of developing and delivering trade finance products. Moreover, they are beneficial in the sense of providing  access to financial resources at a significantly more affordable prices. Having that in mind, the Bank has always fostered cooperation with international institutions and leading banks in trade financing. The Bank’s main partner in this field is EBRD, the cooperation with which has started in year 2010. During the period 2010-2018 the credit line / revolving limit verified for the Bank by EBRD in the framework of trade financing has increased by four times. Furthermore, in 2014 the bank was granted the status of “Confirming Bank” by EBRD, authorizing to make the decision to pay against the documents presented in international trade finance transactions carried out by the EBRD’s approval.

The Bank actively cooperates with ADB since 2014 (since the beginning of the cooperation till the present, the revolving limit / credit line for the Bank has doubled as well). Concerning the partnership with banks which confirm international trade finance transactions, the documentary transactions issued by the Bank are substantially confirmed by the leading Swiss Bank UBS AG. For the purpose of providing international factoring services to the clients, the Bank has joined FCI (Factors Chain International) in 2008. Summing up, I would like to note that the Bank actively works towards deepening its existing partnerships  as well as expanding the scope for new collaborations.

What are the risk factors associated with international trade finance and what is the best way to counteract them?

During its operations, the Bank has faced certain risks, specific to international trade sector, which, however, have not resulted in any major issues thanks to the Bank’s risk management approaches or the trustworthy and experienced partners. The risks are primarily related to the payments made by partners in other countries, however, we are able to collect and evaluate the information we need to make a decision by taking advantage of technologies and the means available to our partners in different countries.

How are the challenges in obtaining trade finance different for SME’s versus large corporations?

Unlike large corporations, partnering with SMEs in the framework of trade finance is more complicated and comprehensive. The difficulties starts in the sales phase. This is largely due to the fact that similar companies, as a rule, have previously worked either on a prepayment or on an open account basis, and they relate to international trade financing products as additional and costly products. Moreover, since employees of these companies do not have the appropriate knowledge and experience, our specialists are more involved in the negotiations concerning the transaction. In order to improve this situation, the Bank periodically organizes seminars and workshops for its existing and potential customers on international trade finance products.

What are the opportunities available to domestic producers when it comes to export financing and how does the bank support them?

As mentioned in the preceding paragraph, we actively cooperate with the Export Insurance Agency of Armenia and the FCI, and offer local producers the possibilities of both pre-export financing (intended for the acquisition of raw materials, packaging, transportation, customs and other costs required for the implementation of export programs) and post-export financing (provided to exporters based on assigned accounts receivables, when deferred payment term is fixed in trade contract). In regards of encouraging local producers by the Bank, the export-oriented products, unlike other financing products, do not require collateral and are offered at relatively lower prices. Once again, I would like to reassure that in case of submission of an export project acceptable to the Bank, the Bank finds the solution for any financial issues.

What are your plans for further growth and development?

Since international trade financing remains a priority for us, the Bank will use all its capabilities, including human force, technological, and relations with its partners, to further deepen its positive experience and to avail of  the existing potential as much as possible. In 2018, we intend to at least double our customer base, as well as our current portfolio. Serious efforts are being made to develop the trade finance instruments and to upgrade them to match with the internationally accepted new technologies. For this purpose, the Bank is ready to cooperate with other financial institutions as a financial resources and new technology providers, to increase the sales of trade finance instruments.

Interviews

Q&A with Clare George-Hilley, co-founder, Centropy PR

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Q&A with Clare George-Hilley, co-founder, Centropy PR 1

Clare George-Hilley is the co-founder of Centropy PR

Global Banking and Finance Magazine recently caught up with Clare George-Hilley, co-founder of fintech and financial services specialist PR agency Centropy, as the company toasts to three years of trading. We asked Clare about what life is like running an agency in the city, the trends she is seeing in the financial services space and what the future holds following the Covid-19 outbreak.

Why did you decide to set up Centropy PR?

I was looking for an opportunity to launch my own agency, both my husband and I had been in the public affairs and public relations industry for over a decade and we thought the time was right to go out on our own.

Clare George-Hilley

Clare George-Hilley

We could see that the financial services industry was surging, with challenger brands and new technology transforming traditional banks and setting new standards of customer service. There was a huge market opportunity to create and launch a PR agency that could provider first class comms support, alongside a deep understanding of complex regulations such as AML, KYC, and the GDPR. Likewise, many traditional technology firms are diversifying their offerings, to tap into the growing market opportunity posed by the fintech boom.

So, we worked on a business plan, designed a strategy for winning clients and officially launched in September 2017. Within a few months we had a growing portfolio of clients and a thriving business, since that point, we have never looked back!

How is Centropy doing now and what are you plans for growth?

The last three years have flown by and our client portfolio has grown and diversified quickly. We now manage PR campaigns for clients on everything from cryptocurrency, wealth management to payments and trading software.

We’ve also hosted parliamentary debates with key industry figures, including Members of Parliament (MPs) on topics such as the future of the financial services industry and the impact of challenger banks on traditional providers. The team is expanding quickly and we’re investing heavily in the latest training and support to ensure our team members are equipped to reach their full potential.

How do you see the next 12 months?

The Covid-19 outbreak has crippled the economy, forcing millions of people to work from home due to the very serious health risks. The knock-on effect of this crisis will lead to companies cutting costs where possible to save jobs, so tech will play a vital role in ensuring many businesses stay afloat.

We are already working with contactless payments specialists and other fintech companies that offer solutions to help companies survive and thrive despite the inevitable challenges ahead.

We aim to continue building our portfolio of expertise, testing ourselves with new challenges and delivering the best possible service to clients

 

This is a Sponsored Feature.

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Lessons from past recessions and advice for business owners during the coronavirus pandemic

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Lessons from past recessions and advice for business owners during the coronavirus pandemic 2

By Neil Davis, managing director and co-founder of Sterling Networks

What is Sterling Networks?

Sterling Networks is a professional organisation founded in 2014 which facilitates networking events for businesses across the Midlands, Oxfordshire, Wiltshire and the South West. Over 300 members attend our fortnightly breakfast and lunchtime meetings.”

What is your background prior to establishing Sterling Networks?

“During the 1990s, I worked in the corporate team for Halifax. My wife, Tracey, and I went onto own a manufacturing business, which was also called Sterling, and produced a range of gifts, merchandise and promotional items.

“We soon realised tradeshows were a great way to meet distributors and clients. From there, the business grew exponentially, and we managed to build a network of around 500 distributors. Eventually, we became ground down by the manufacturing business – in part because the local manufacturing sector was being devastated by competition from China – and took the decision to sell the business and relocate to Spain.

“After spending several years living abroad, we moved back to the UK to set up Sterling Integrity (EXPO’S) & Sterling Networks (Networking) We were inspired by a desire to help businesses make meaningful connections with one another, and we haven’t looked back since.”

The UK has recently entered a recession, brought about by the coronavirus pandemic. What have you learned from past recessions and how are these experiences helping you to navigate the current crisis?

“I’ve lived through a number of recessions and have seen the pain that insolvency causes companies on a large scale. It’s taught me that there are those who win and sadly those who lose, and that businesses must adapt to a rise in demand for certain products or services at a time of financial crisis.

“Given the nature of what Sterling Networks offers [an opportunity for business owners to connect and grow together] I decided we could build upon the brand due to the demand for new business during the pandemic. We therefore moved our networking events from face-to-face to virtual via tools like Zoom and have gained a steady stream of new members in recent months, reaching an overall total of well over 300.

“On top of that, we’ve taken new staff on during the crisis and have launched a number of new regional groups across the country. I was determined that Sterling should come out of the pandemic with a head start, so my attitude to the recession has been much more positive than those who are forecasting nothing but doom and gloom.

“We can’t pretend high street retail wasn’t suffering long before the pandemic came along, and thousands of new businesses are sure to start up to meet the demand for the products and services that people require at a time such as this. In order to develop and grow businesses need to focus on where changes need to be made to meet this demand.”

Sterling Networks has been providing emotional support to its members throughout the pandemic. What advice have you been giving to members that could be useful to other business owners?

“I try not to be too opinionated and respect other people’s views when giving advice to members, as there are always two sides to every circumstance. I’ve been careful not to say to people that they should be doing one thing or another, as I don’t know their business and its needs quite like they do. The only thing that I have been telling members is the importance of setting up one-to-ones with one another. By doing so, they can listen to the needs and concerns of other, like-minded business owners and work out ways that they might be able to help one another.

“The pandemic has meant we all have a bit more time on our hands, so the advice I would give to people is to use this extra time wisely. Not having to travel physically from one meeting to another means there is a greater opportunity to connect with more people. It’s important to remember that individuals outside of your business can be just as valuable as those within it.”

What makes you hopeful for the future and are there any words of encouragement you can give to budding entrepreneurs?

“The key events that have happened to this country during my lifetime – whether wars, recessions, or the pandemic – have enabled me to take stock of things. While these experiences are certainly challenging, we all become stronger for living through them, and it gives me great confidence that the world will ultimately improve as a result of the pandemic.

“The whole world is effectively rebooting right now, as is the business community. I like to think entrepreneurs will recognise this opportunity to take better care of their peers, and this translates to greater collaboration between organisations. Speak to as many people as you can, ask all the questions that you need to and do your homework. This might well be a difficult time for us all but planning for the future must start now if it is to become as prosperous as I know it can be.”

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Interviews

Exclusive Interview with Ugo Loser, CEO of ARCA Fondi SGR

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Ugo Loser, CEO of ARCA Fondi SGR

 Arca Fondi SGR is a mid-sized Italian active asset management company. Founded in 1983 by a consortium made up of 12 regional banks, the company has grown in time, expanding its network of distributors and its client base. Nowadays Arca manages Mutual Funds, Pension Funds and Institutional Accounts with total AUM exceeding 30 € bln, reaching more than 100 banks and financial institutions and serving more than 800,000 final clients.

What are the key contributors to ARCA Fondi SGR’s success over the past 35 years?

Arca has always put clients and distributors first. That is to say we have always privileged fair pricing for funds and developing high quality products and services for our customers. This requires constant innovation as an objective and looking for people’s talent to be free to produce its effect

Why are people the founding element of ARCA Fondi SGR and how have you sustained this vision over the years?

We work in small teams, people are young and motivated and can perform duties with a high level of autonomy and responsibility. Innovation is asked to everyone, everyday

What makes Arca Fondi SGR different from other asset management firms in Italy?

Arca is a company focused on doing what it can do very well, that is to say mutual and pension funds, services for clients and banks. We never follow short term trends but always look for long lasting impact on the industry, like we’ve done may times in the past

What products/services has ARCA Fondi SGR pioneered?

Arca has been the inventor of “Arca Cedola”, fixed-horizon, coupon paying funds, which have been with no doubt the greatest product innovation of the past 12 years on the Italian market. This type of funds, at first strictly based on bonds and later as a balanced product, has encountered an enormous success both with clients and distributors due to its simple and effective value proposition. Arca is a market leader also in the “PIR” segment of funds, a range of product focused on mid and small sized companies, that have been the best performers in the Italian stock market for the last few years. In services, Arca is a leader in technology applied to asset management. Our website, app and digital services for clients and banks are award winning, state of the art combination of data, technology and channels, and the best is yet to come on this side.

What strategies do you have in place to sustain your market position and withstand professional competition in the country?

As I mentioned, we do not waste resources on projects with dubious results, instead we constantly invest on people, products and services. The high level of profitability that Arca has been able to maintain even in difficult years for the markets of the banking sector is a further testimony that this strategy works very well

How do you use technology to create meaningful experiences for your customers?

First of all, we have created a whole new division, Arca InnovAction Lab, dedicated to technology, data and processes. This ensures projects are delivered quickly and they are free to leave bad past practices behind. Arcaonline.it, Arca’s website, provides distributors with detailed information on clients’ portfolios, asset under management and subscription/redemption requests. It monitors aggregate selling data offering to our partners a suite functions and analytics to track commercial campaigns. And if the banks branches need assistance, they may ask Sara, our digital chatbot. A broad and timely multimedia production, covering exclusive reports, comments, presentations, videos, webinars and newsletters is also available on the website.

Customers, subscribing Arca’s funds through its distributors’ network, may access Arcaclick, a dedicated area on Arcaonline.it. With Arcaclick the client can easily browse through her portfolio of funds, analyze its characteristics, view transactions and historical funds’ performance in customizable views. Arcaclick is also a powerful source of information on Arca product range: Prospectus, KIIDs and other literature is easily accessible along with news, comments and reports. Arcaclick may also be accessed via Arca Fondi App, a free application for mobiles and tables, running on both iOS and Android. Available 24/7 and in mobility, Arcaclick gives clients the opportunity access information, news and details of their personal portfolio anytime and anywhere.

What key trends will drive pension growth in 2020 and beyond?

The Italian market for pension funds is still very small and therefore there is a great opportunity to grow. Arca Fondi manages the biggest open ended Italian pension fund and it’s been constantly at the top of its rankings. As people and workers are looking for yield and to weather short term volatility, the pension fund is very well poised to profit from this trend.

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