21.01.2016

Clothing company adapts to financial climate changes

Years on from the financial crisis, there is little talk in the media about banks collapsing and going out of business and leaving customers to find new arrangements for whatever banking resources they were employing. But when a bank takes a commercial decision to move out of an area like trade finance, the effect can be just as disturbing for its clients. Their ability to trade may be severely impacted upon unless a suitable replacement package can be put into place.

A TAEFL client was faced with that particular problem three years ago when an overseas-owned bank wanted to leave the UK market. With an ‘involvement’ of some £8 million with that institution, it had to identify another bank that would take on its business and provide similar or improved terms to those on which it had been operating with its existing banker.

TAEFL secured the mandate to act for this £100 million turnover UK-based company, which is a major international trader in specialist fabrics. The credit team at Trade & Export Finance examined the company’s requirements, devised a viable structure for taking the business forward and produced an in-depth credit report which it could make available to prospective bankers.

Transition between banks aided by TAEFL

Significantly, the company was not left to fend for itself when it came to negotiating new facilities. TAEFL brought to bear its collective knowledge of – and expertise in – the banking arena to support its client throughout. The London division of a major international banking group proved to be the most suitable partner for the fabric trader, which purchases stock at auction from China and a number of European countries; trading the material back into other countries but also into China itself. The financial package – worth close on £10 million at the time – accommodated the funding of this import-export trade.

The facilities in place saw terms improve progressively as the business continued to expand, a situation which Mark Runiewicz of TAEFL described as extremely encouraging and designed to promote the interests of successful exporters. “Because we have developed a business model where our own highly experienced credit team produces credit papers which help streamline banks’ internal credit procedures, we can reduce the time taken to complete the re-banking process. In this instance, it took just eight weeks from start to finish: it would have taken nearer 4 months without our involvement.

”Given that a decision of this nature normally has to pass through an average of seventeen pairs of hands within an institution, we believe that we can provide a highly effective solution for companies which are in the position of having to change their bankers for one reason or another. We take the time to understand our clients’ businesses to an extent that it would be unreasonable for a bank’s staff to do.”

Worldwide review of banking required further changes

The international financial crisis of 2008/9 prompted an in-depth review across the financial services sector which impacted upon the way in which institutions lend to their customers. How those banking houses re-built their balance sheets became matters for more stringent regulation in the countries where they operate: how they help finance customers in the shorter and medium term has changed as a result of those capital changes.

It was with a certain inevitability that the TAEFL client has experienced a sense of déjà vu within the past few months. The banking organisation with which it had struck up a strong and stable relationship after the first upheaval embarked upon its own reviews which found it inviting the fabric trader to ‘re-align’ its banking partnerships.

That process is ongoing, and TAEFL has agreed to guide its no less successful client through the banking community of 2016. Mark Runiewicz again: “In the three years since we guided this client into a new relationship, conditions have changed in a way that few companies acting alone would have been able to track. Through our work with a broad spectrum of conventional and alternative funding institutions, TAEFL is fully up to speed in the nuances in the marketplace and how best we can satisfy our clients’ requirements.”

 

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