'BAFT' provides trade finance tool for exporters and banks

Business America, Feb, 1995 by Eric M. Price

Since the mid-1980s the banking industry has rapidly expanded its trade finance capability following a period of sharp retrenchment as a result of the LDC debt crisis. This expansion coincided with a surge in U.S. exports and a growing export infrastructure. Overall, banks are in a good position to sustain this focus on export finance and to assist exporters seeking trade finance and banks in marketing their services to potential customers. The Bankers' Association for Foreign Trade (BAFT) provides Access to Export Capital (AXCAP), a free database service which links exporters seeking specific trade financing to banks which provide respective trade finance services.

The AXCAP database houses a national catalogue of banks involved in trade finance and inventories the trade finance services, branches, and officers of each bank. More specifically, AXCAP inventories different services offered by government export credit agencies and identifies which banks have experience or preference toward the respective program. In addition, the AXCAP database pinpoints which banks devote funds to financing environmental exports to Asia and which banks are interested in entering this market.

The AXCAP database project is BAFT's response to the all-too-frequent complaint from exporters that securing both public and private sector trade financing is a long and frustrating process. Therefore, BAFT designed and developed AXCAP to close the information gap and initiate individual exporter/bank relationships.

The AXCAP database began on November 1, 1993. Exporters contact a trade specialist (1-800-49-AXCAP), who pinpoints the exporter's specific trade finance need and, subsequently, runs a database search using the respective criteria. The resulting match of institutions (between one and five) is faxed to the exporter, and each financier receives the exporter's information, eliminating cold-calls for trade finance. The report includes direct phone numbers for trade finance officers as well as listings of products and services each institution offers. The exporter can call the officer, or the financier may take the initiative and contact the exporter. Literature from government agencies such as Ex-Im Bank, the United States-Asia Environmental Partnership (U.S.-AEP), Department of Commerce, and the Small Business Administration (SBA) is also available to exporters and banks.

AXCAP has seen requests for financing assistance in excess of $2.3 billion. Of this total, AXCAP has been able to place $1.65 billion with potential financiers. Nearly $400 million is still under consideration by financial institutions. Of the deals contacting AXCAP, $5 million in U.S. export transactions have either been completed, or are in the process of occurring.

As of January 25, 211 financiers were registered with AXCAP. These include U.S. banks, foreign banks, and non-bank financiers, such as factors and forfaiters, and the services and government programs each has available for exporters.

To build the AXCAP database, BAFT designed a bank registration form which identifies the trade finance services each individual bank offers and which branches and departments provide the particular services. BAFT mailed the AXCAP bank registration form to over 1,000 banks. Additionally, BAFT requested that the SBA District Offices, the Department of Commerce District Export Councils, and state trade associations circulate the registration form to their respective members and constituents.

To finance the AXCAP project, BAFT received two-year funding from the Economic Development Administration of the U.S. Department of Commerce and additional funding for two years from U.S.-AEP.

The U.S.-AEP is a coalition of Asian and American businesses, community groups, and governmental institutions. The coalition enhances environmental protection and promotes sustainable development in Asia and the Pacific by mobilizing U.S. environmental technology, expertise, and financial resources. U.S.-AEP is supported by a U.S. Agency for International Development (AID) program under the guidance of the U.S.-AEP Working Group of the inter-agency Trade Promotion Coordinating Committee. Tropical Research and Development, Inc. is the technical support contractor to AID.

AXCAP's provider, the Bankers' Association for Foreign Trade, is an association of banking institutions dedicated to fostering and promoting international trade, finance, and investment between the United States and its trading partners. Fundamental to BAFT's philosophy are open access to financial markets, the concept and practice of "national treatment," and open non-discriminatory trade practices. To meet these objectives, BAFT:

(1) serves as a source of exchange of information among financial institutions which operate in the United States and have international banking activities;

(2) serves as an educator of its members and the public by organizing and providing seminars, lectures, convocations, and publications on topical areas of international business;