This year’s International Chamber of Commerce (ICC) Banking Commission’s Trade Register illustrates the favourable risk profile of trade finance.
The ICC Trade Register – now in its fifth year – includes 13 million transactions from 2007-2014, and encompasses a total exposure of over US $7.6 trillion. The significant increase in data size for this year’s report provides an even more comprehensive analysis. According to Daniel Schmand, Chair of the ICC Banking Commission, “year on year the Trade Register improves its data sample and observes more transactions – making this the most comprehensive, and perhaps the most significant, to date.”
In particular, the Trade Register clearly demonstrates that trade finance is low risk, with strong recovery rates. Alexander R. Malakat – Deputy Head of the Executive Committee, ICC Banking Commission – discussed how the median result for short and medium to long-term trade finance included in the Register was “close to 100% recovery for all products.”
The report also highlights the impact of political risks – and associated sanctions – which can significantly affect default rates for medium to long-term products. The overall transaction default rate from 2007-2014 fell from 0.71% to 0.46% where transactions related to the Ukraine, Kazakhstan and Iran were excluded from the overall sample.