SWIFT seminar beckons Bangladeshi banks

The SWIFT's (Society for Worldwide Interbank Financial Telecommu-nication) international banking operations seminar -- (SIBOS)  -- is the biggest gathering of banks and financial institutions of the world. It is held in different countries facilitating banks and financial institutions of every geographic location to participate in this seminar every year. Although the seminar is organised by the SWIFT, yet it is an open forum for all banks and financial institutions, especially for those which are actively involved in international trade and finance.
About 7,000 decision-makers and experts from banks and financial institutions from all over the world attend the SIBOS and exchange their views and ideas for mutual benefit. Relationship Managers from most of the banks in the world attend this seminar.
The SIBOS 2014 was held in Boston, the US, from September 29 to October 02, 2014 in which most of the reputed  banks from Europe, Africa, Asia, North America and South America participated. The seminar is of great importance to the bankers, especially those who are working in the Trade Finance Departments. Due to globalisation and dominance of information technology in trade and business, the volume of international trade has increased manifold.
Moreover, the nature and scope of international trade have also changed considerably keeping pace with the ever-increasing trade volume. In order to take the advantages offered by different countries, manufacturing, trading and investment are also moving to different locations on the basis of which trading pattern and strategy are being changed. Banks are continuously changing their trade service products so as to seize opportunities from the changes in international trades.
Once LC (Letter of Credit) was the only and most popular means of international trade. It is now being replaced by the Open Account accompanied by SBLC (Standby LC). Even Risk Participation and Trade Advance are becoming the most popular and attractive trade service products being offered by many international and regional banks. Because of prolonged recession sweeping the developed countries, particularly the USA and Europe, regulators and central bankers are imposing various rules, regulations and restrictions which need to be complied with by commercial banks. This compliance is also equally applicable to the counterparty of the trades. Otherwise, they may be subjected to violation.
After the financial crash in the USA in 2008, the Dodd Frank Act was introduced and all the banks/financial institutions in the US must be compliant with this law. The counterparty banks i.e. which intend to enter into transaction with US banks must confirm whether their trading banks are compliant with the law. Otherwise, their transaction may be subject to the restrictions/suspension. At the same time, the banks continuously review their own policies, on the basis of which they develop new strategies and products in a bid to cope with the changing rules and regulations.
In SIBOS, the new strategies, policies and products are discussed in details. How the industry has manoeuvred the past challenges and what are the new challenges the industry foresees are the main topics widely discussed in this seminar. Banks' new direction and main focus in the coming years are well covered in various discussions there.
Apart from these, all banks make extensive efforts to find their new trading partners so that their budgetary targets can be achieved. So this is the right forum and offers good opportunity to find appropriate trading partners and establish correspondent relationship which may play a pivotal role in increasing a country's international trade volume.
Although this seminar is dominated by the large and well-established banks, yet smaller ones  have greater opportunity too. During the seminar, the attending officials from small banks can have an exclusive opportunity to personally meet high officials of the large banks and can thereby present their prospects and interests of trading with them.
Usually the intent of trade or proposal is submitted to the Regional Relationship Manager and there is little chance for the small banks to reach the ultimate decision-makers and resultantly, a right decision remains out of reach. Attending this seminar, if effective meeting can be arranged with those high officials who are ultimate decision-makers of their respective banks, good results may be derived.
Because these high officials will not only remember the new proposal but also periodically follow it up with the respective Relationship Managers who will then be obliged to submit the proposal at the adjudicating level.  Considering the importance of this seminar and with a view to maximising the trading partners, many large banks set up their own stalls so that intending counterparties can easily meet them with their potential business plans.
BENEFIT OF PARTICIPATION IN SIBOS:  SIBOS has a great importance for banks in Bangladesh because our country has already emerged as one of the potential trading countries. The country's tremendously rising import and export volumes have attained or even exceeded the annual turnover of US$ 30 billion. There is enormous prospect of exporting many non-traditional items including varieties of cookies, spices, furniture, jute products and pharmaceuticals because the quality of these products has already reached international standard and even exceeded that of our neighbouring countries. Some appropriate measures from the business community and the government bodies are required to start export of these non-traditional products to the mainstream retail chains in the developed world where products, mainly from our neighbouring countries, are sold. With this growth potentiality, time has come for our country's bankers to be familiar with the latest concept and strategy of international trade. Moreover, they will have to establish good rapport and relationship with the potential banks so that best trade finance products and services can be provided to our business
community.
It may be mentioned here that international trade is now being carried out on the basis of network established among the trading partners including banks. So by maintaining good business relationship with the large banks, we can easily enjoy their best products and services at easy terms and prices. Furthermore, all the large banks have developed various sophisticated financial services which they sell through other banks' retail channels.
Many large banks have enormous investible funds which they do not directly provide to importers or exporters but lend to other banks for onward lending to those importers/exporters. This is the way international trade is shifting its dimension and our banks will have to be well-prepared to capture this kind of emerging opportunity.
SPECIAL FEATURES OF BANGLADESH: In spite of being a developing country, Bangladesh has some special features too. Our country has never defaulted in repaying any international payment which is very common in many other countries. This kind of default heavily downgrades the country's rating which is good and improving over time. International print media, The Economist and The Wall Street Journal in particular, have projected our country positively. Our banking industry has made a considerable progress in implementing BASEL II.
Foreign exchange reserve of our country is quite high which is viewed as a very positive indicator by the trading partners and the international rating agencies as well. The payment performance of our banks in settling international trade transactions is very satisfactory except some stray situations. With all these positive parameters, our banks can easily establish effective correspondent relationship with the potential banks of the developed world which will eventually ensure our banks' easy access to their trade finance products and services. This access will not only maximise our trading volume but also reduce import cost and increase export revenue.
It is to be mentioned that following various regulatory compliance and banks' persistent risk rating policy, banks from the developed countries will not enter into any trading activity if pre-authorised counterparty arrangement is not established.
SIBOS may be an eye-opener for banks in our country because by participating in this seminar, they can make themselves familiar with the present as well as the future challenges of international trade and can prepare themselves accordingly. In addition, they will be able to find their suitable counterparties whom they may approach to establish trading arrangements. SIBOS is the forum where all heads of Trade Finance Departments, who are the sole decision-makers, attend. Bankers from our country may take the opportunity to participate in SIBOS and thereby make a good approach in establishing trading arrangements with the prospective international banks.
PREPARATION OF ATTENDING SIBOS: Mere participation will not bring any desired result because some sorts of homework, research and well preparation are required to reap the optimum benefit out of participation in SIBOS. In our country, more than 50 banks are operating and obviously all these banks are not equally strong in terms of financial standing and compliance. Those banks which are maintaining steady growth in terms of both volume and revenue should consider participation in SIBOS. These banks have to be rated by the rating agencies, their Financial Statement should be prepared by the reputed Chartered Accountant firms and good asset quality will have to be maintained. Countries with which Bangladesh has a high volume of trade i.e. export and import, will be identified and from these countries, some banks will be selected for establishing counterparty arrangements. A memorandum will have to be prepared portraying the country's as well as respective bank's growth history, economic and financial indicators and underlying the focus of the banks and the country for the next two/three years in international trade.
Compliance issues including ALM (Anti-Money Laundering) and BASEL II need to be highlighted.  In the seminar, attending bankers must meet their counterparts of those selective banks and hand over the prepared write-ups. There should be face-to-face meetings with the high officials of those selective banks providing the details on our present and future trading potentiality and thereafter a periodic communication should follow.  
Next SIBOS will be held in Singapore in 2015. It was not cost-effective for a large number of bankers to participate in the recently-held SIBOS in Boston in 2014. However, a good number of bankers from our country should be well prepared to participate in SIBOS - 2015 to be held in Singapore. Even some officials from the Bangladesh Bank should also consider participation because they need to know how international trade is being changed and having consistency with the change, our foreign exchange regulation could be updated.
Participation in SIBOS may usher in a new era for banks in Bangladesh to capitalise the emerging opportunities created in the international trade now.
The writer is a banker in Toronto, Ontario.
nironjankumar_roy@yahoo.com