The East-West United Bank (EWUB), registered in Luxembourg, will be expanding its product line with the integration of documentary operations.
From July 2019, bank customers can use letters of credit, bank guarantees and documentary collections in settlements with their partners. Thus, EWUB is expanding its product line and offering its customers additional opportunities in international payments.
Integrating documentary operations into the standard bank product line is the first phase of the EWUB project to enter the trade finance market. The bank is focused on the development of services for exporters and importers, traders and international trading companies. The next step in the plans of EWUB is the financing of such companies and their trading activities.
Natalja Perhova, Director of trade finance at EWUB, explained: “Documentary operations are [a] convenient tool as they combine settlement, guarantee and credit functions. Most often, they are used in settlements in cross-border trade, when trading partners are located in different countries, have different legal requirements and want to reduce credit and performance risks of their counterparties".
According to various estimates, the international market for Trade Finance is growing at 3% per annum and has a relatively low-risk. At the same time, the market has a $1.5 trillion financing shortage, which is associated with a decrease in the number of banks providing this type of service and a high level of refusals by banks to customers. The problem of rejections is most acute for small and medium-sized companies and companies from emerging markets that find it harder to comply with the compliance requirements from the banks. The latter choose to work with large clients from developed markets. All this creates a huge demand for these services, which the new EWUB product is aiming to satisfy.
“The launch of documentary operations and subsequently of full range trade finance services is being implemented within the framework of a five-year development strategy of the bank, aimed at increasing client base and improving quality of services", added Sergey Pchelintsev, EWUB CEO.
The active participants in the Trade Finance market in Europe are the banks of Switzerland and the Netherlands. EWUB will be one of the few banks in Luxembourg that provides trade finance services to its customers.