Download - Trade for Corporates Overview
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Trade for Corporates Overview
Facilitating multi-banking solutions
in documentary trade finance using
SWIFTs MT 798 standards
SWIFTs Corporate and Supply Chain Markets team
June 2013
Join our LinkedIn group Supply Chain on SWIFT
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Content
Rationale for MNCs to adopt multi-bank solutions in trade finance
Role of standardisation bodies
Portfolio of industry standards
Scope of SWIFTs MT 798 standards
Use of SWIFTs FIN and FileAct
Adoption by corporates, banks and vendors
Best practices for corporates
Future developments
Benefits
Training and Consulting Services
Conclusion
Contacts
2
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SWIFT and your payments business
Trade Finance for Corporates
MNCs and multi-banking in
trade and supply chain finance
3
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Corporate challenges with traditional trade
instruments (1/2)
Export documentary credit Difficult to manage advices of export L/Cs
and amendments received from multiple
banks in paper form and via different banks
portals
Internally, difficult to collaborate between treasury and various business units on L/C
allocation and preparation of documents
Lack of visibility of each step in the transaction process
Too many discrepancies, slowing down document compliance checking
Delayed receipt of payment
Import documentary credit Treasury lacks visibility to the allocation of
credit facilities to business units for import
L/C issuance
Lack of standardised approval process for import L/C issuance
Delays in import L/C issuance
No electronic global data base of import L/Cs for real time reporting of outstanding L/Cs.
Ideally by Business Unit, Bank, Product,
Counter Party
Difficult to link import L/Cs with export L/Cs for back to back transactions
Challenging to set up permanent and transactional alarms on key L/C dates
4
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Corporate challenges with traditional trade
instruments (2/2)
Standby L/C and Demand Guarantee Management is decentralized and handled independently by each subsidiary
Difficult for central treasury to monitor the terms and the availability of Standby L/C and Guarantee facilities and improve the diversification of business allocation between the
banks
How to offer flexibility for subsidiaries but enforce standard policies moving forward?
Reconciliation of related data and settlement of fees is time consuming and prone to errors
Complex documentation management will result in increased charges
Transparency is not optimal and will result in differences between the banks and treasurys records
With different technology solutions, more challenging to on-board subsidiaries and banks
5
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Rationale for MNCs to adopt multi-banking
solutions for trade finance
Digitise and automate
Consolidate information
Standardise bank
interface
Accelerate decisions
Improve control
6
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Trade Finance for Corporates
Role of ICC, SWIFT and ISO
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Industry standards Developed by international standardisation bodies
Industry standards are industry-owned and technology-neutral.
They offer a dependable legal and operational framework.
Trade Finance instruments (E.g. UCP 600, URDG 758, ISP98, URC 522, URBPO)
MT standards (for L/Cs, Demand Guarantees, Collections)
ISO 20022 standards (for BPOs)
ISO 9362 Business Identifier Code (BIC)
ISO Country codes, Currency codes,
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SWIFT and your payments business
Portfolio of Industry Standards
Trade Finance for Corporates
9
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FIN MT 798
FIN MT 7xx
Buyers bank(s)
Seller
Sellers bank(s)
Buyer
1 2 3
Industry standards for L/Cs and Guarantees
1
SWIFT's MT 7xx are industry owned and technology
neutral standards in support of ICC's rules for L/Cs,
Standby L/Cs and Demand Guarantees
MT 798 Documents MT 798 Documents
UCP 600
URDG 758
ISP98
FileAct
MT 7XX
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Industry standards for Bank Payment Obligation
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2
Any channel /
any format /
any solution
Trade
Matching
Application
Any channel /
any format /
any solution
Seller Buyer
1 2 3
Bank
Payment
Obligation
Pu
blic
Do
ma
in
Co
mm
erc
ial
SWIFT's Trade Services Utility (TSU)
Any other inter-bank trade matching
application (TMA)
Bank portal SWIFT's SCORE Paper
Bank portal SWIFT's SCORE Paper
ISO 20022 mandatory
ISO 20022 optional
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Industry standards support end-to-end flows
Streamline the L/C, Guarantees and open account trade transactions
Automate workflow of the trade life cycle to reduce cost
Accelerate handling of discrepancies and settlement
Move to paperless transaction processing
Enhance visibility on credit lines
Application,
amendment,
Advising / confirming banks Sellers
MT 798
ISO 20022
Advice, confirmation,
amendment,
MT 798
ISO 20022
MT 7XX
ISO 20022
12
Internet
Issuing banks Buyers
Internet
Inter-bank flows
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Industry standards enable competitive vendor
solutions to interoperate
Business process-level interoperability between various software solutions
Increased choice of vendor solutions in competitive space
No need for banks to join multiple corporate portals
Reduced technical, operational and legal costs
No vendor lock-in
Application,
amendment,
Advising / confirming banks Sellers
MT 798
ISO 20022
Advice, confirmation,
amendment,
MT 798
ISO 20022
MT 7XX
ISO 20022
13
Internet
Issuing banks Buyers
Internet
Inter-bank flows
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SWIFT and your payments business
Scope of MT 798 standards
Trade Finance for Corporates
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D I S C R E P A N C Y A D V I C E R E S P O N S E
Corporate-to-Bank
Import Documentary Credits
Bank-to-Corporate
IMP
OR
T D
OC
UM
EN
TA
RY
CR
ED
ITS
A M E N D M E N T N O T I F I C A T I O N
A M E N D M E N T A C C E P T A N C E N O T I F I C A T I O N
D I S C R E P A N C Y A D V I C E
C O M P L I A N C E A D V I C E N O T I F I C A T I O N
D I S C H A R G E A D V I C E N O T I F I C A T I O N
R E F U S A L A D V I C E N O T I F I C A T I O N
P A Y M E N T A D V I C E N O T I F I C A T I O N
I M P O R T P A Y M E N T S E T T L E M E N T A D V I C E
Applicant
A P P L I C A T I O N MT 798
MT 798
MT 798
I S S U A N C E N O T I F I C A T I O N MT 798
MT 798
MT 798
A M E N D M E N T R E Q U E S T MT 798
MT 798
MT 798
MT 798
MT 798
MT 798
MT 798
MT 798
MT 798
MT 798
MT 798
MT 798
MT 798
MT 798
MT 798
MT 798
MT 798
Bank
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Corporate-to-Bank
Export Documentary Credits
Bank-to-Corporate
EX
PO
RT
DO
CU
ME
NTA
RY
CR
ED
ITS
A M E N D M E N T A D V I C E
A M E N D M E N T A C C E P T / R E F U S A L A D V I C E
A U T H O R I S A T I ON A D V I C E N O T I F I CA T I O N
C O M P L I A N C E A D V I C E N O T I F I C A T I O N
D I S C H A R G E A D V I C E N O T I F I C A T I O N
R E F U S A L A D V I C E N O T I F I C A T I O N
P A Y M E N T A D V I C E N O T I F I C A T I O N
T R A N S F E R R E Q U E S T
T R A N S F E R A D V I C E
E X P O R T P A Y M E N T S E T T L E M E N T A D V I C E
Beneficiary
C R E D I T A D V I C E
MT 798
MT 798
MT 798
MT 798
MT 798
MT 798
T H I R D B A N K A D V I C E MT 798
MT 798
MT 798
P R E S E N T A T I O N R E S P O N S E MT 798
MT 798
MT 798
MT 798
MT 798
MT 798
MT 798
MT 798
MT 798
MT 798
MT 798
MT 798
MT 798
MT 798
MT 798
MT 798
Bank
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Corporate-to-Bank
Bank-to-Corporate
Applicant
GU
AR
AN
TE
ES
/ S
TA
ND
BY
LE
TT
ER
S O
F C
RE
DIT
E X T E N D / P A Y R E S P O N S E
A P P L I C A T I O N
A M E N D M E N T N O T I F I C A T I O N
E X T E N D / P A Y Q U E R Y
C L A I M N O T I F I C A T I O N
C L A I M / C H A R G E S S E T T L E M E N T
R E D U C T I O N / R E L E A S E A D V I C E
N O T I F I C A T I O N
A M E N D M E N T R E Q U E S T
R E D U C T I O N / R E L E A S E R E Q U E S T
MT 798
MT 798
MT 798
MT 798
MT 798
MT 798
MT 798
MT 798
MT 798
MT 798
MT 798
MT 798
MT 798
MT 798
MT 798
Bank Guarantees/Standby Letters of Credit
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Corporate-to-Bank
Bank-to-Corporate
GU
AR
AN
TE
ES
/ S
TA
ND
BY
LE
TT
ER
S O
F C
RE
DIT
co
nt.
Beneficiary
A D V I C E
A M E N D M E N T A D V I C E
P A Y M E N T C L A I M
C L A I M A C K N O W L E D G E M E N T
MT 798
MT 798
MT 798
MT 798
MT 798
MT 798
Bank Guarantees/Standby Letters of Credit
18
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Corporate-to-Bank
Bank-to-Corporate
C H A R G E S S E T T L E M E N T N O T I CE
Beneficiary
CO
MM
ON
GR
OU
P Corporate-to-Bank
Bank-to-Corporate
C H A R G E S S E T T L E M E N T N O T I CE
Applicant
MT 798
MT 798
F R E E F O R M A T
F R E E F O R M AT
C H A R G E S S E T T L E M E N T R E Q U E S T MT 798
MT 798
MT 798
MT 798
MT 798
MT 798
MT 798
MT 798
C H A R G E S S E T T L E M E N T R E Q U E S T
F R E E F O R M AT
F R E E F O R M A T
MT 798
MT 798
MT 798
MT 798
MT 798
MT 798
Bank
Bank
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Trade Finance for Corporates
Use of FIN and FileAct
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Use of FIN and FileAct for C2B trade flows
(in Score)
Use of FIN Facilitates the exchange of
structured MT 798 messages
between banks and
corporates
Enables higher level of automation and back-office
integration
Specifications are instrument-specific (LCs, Standby LCs,
Demand Guarantees) and
define the vendor labeling
criteria.
Use of FileAct Facilitates the exchange of
electronic copies of documents
between banks and corporates
Any document type in any format:
Stand-by L/Cs & Guarantees:
Draft guarantee text
Scanned copy of the issued or received guarantee/amendment
Export L/Cs:
Commercial documents
Also supports ISO 20022 for BPO.
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Use of FileAct request types
tsrv.xxx.lettersofcredit to group L/C messages with documents
tsrv.xxx.gteesstandbys to group Guarantee/Standby messages with documents
tsmt.xxx.tradedocuments for bills of lading, certificates of origin etc
tsrv.fin.mt7xx.lettersofcredit to group L/C FIN messages (+ documents)
tsrv.fin.mt7xx.gteesstandbys to group Guarantee/Standby FIN messages (+ documents)
22
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SWIFT and your payments business
Adoption of MT 798 standards
Trade Finance for Corporates
23
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Corporates adopting the MT 798 standards Some are already using SWIFT for payments but this is not a pre-requisite
Corporates Use of
MT 798 for Use of
MT 798 as Live
Usage
Multi-bank
Solution
ArcelorMittal
International
Export LCs Exporter Live Misys
Alcatel-Lucent Guarantees Exporter Live Surecomp
Saudi Aramco Export LCs Exporter Live In-house
Metro Group
Buying
Import LCs Importer Live In-house
Mets Finance Export LCs Exporter Live GlobalTrade
Corporation
Reliance
Industries
Import LCs
Export LCs
Importer and
Exporter
2013 In-house
Safran Guarantees,
LCs
Importer and
Exporter
2013 GlobalTrade
Corporation
Voith Guarantees,
Export LCs
Importer and
Exporter
2013 Surecomp
24 Additional corporates are gradually
disclosing their adoption of MT 798
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35 banks adopting the MT 798 standards 13 from the top20 Trade banks
25
Market adoption of the MT 798 standards
and more
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Vendor Trade Finance
Solution
China Systems Eximbills Enterprise
CSI BankTrade
Misys Trade Innovation
Plus
MIT CREDOC
Sopra Evolan IB
Pinnacle
Solutions Inc.
(PSI)
Synergy Trade
Services (conformance statement)
Surecomp DOKA 5, IMEX
Vendor Trade Finance
Solution
China Systems Customer Enterprise
GTC @GlobalTrade
Corporate
Misys Misys Trade Portal
Pinnacle
Solutions
Incorporated
(PSI)
Synergy Trade
Services Corporate
Surecomp COR-TF
All leading Trade Finance vendors are
accredited by SWIFT (2012)
SWIFTReady Trade Finance
Bank-to-bank standards
Corporate-to-bank standards
SWIFTReady for Corporates Trade and Supply Chain
Finance
Corporate-to-bank standards
Bank Corporates
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Trade Finance for Corporates
Best practices for multi-banking
27
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Best practices for multi-banking in trade finance
28
Industry standards enable banks and corporates to increase efficiency and
minimise costs when respecting all of the above best practices
ICC Banking Commission's rules Rules
MT Cat4/7 standards ISO 20022 standards Messages
Business Identifier Code for banks and corporates (BIC or ISO 9362) Identity
SWIFT for bank-to-bank (FIN) SWIFT or Internet for corporate-to-bank Channel
SWIFTReady vendors In-house development Solutions
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Issues with proprietary formats and rulebooks
Avoid proprietary solutions and vendor lock-in
Some Trade Finance vendors have been trying to impose their technology-specific formats and proprietary rulebooks in the C2B trade finance space
Their goal is to intermediate the corporate-to-bank contractual relationship, which is actually not necessary as their role is at technology level
They also wish to force banks into their systems using corporate pressure
Corporates and banks adopting such platforms are locked into the vendor-specific rules, formats and technologies
Software solutions should be independent of each other and interoperate using Industry Standards (as it is the case for payments)
Global Trade banks have resisted adopting those proprietary solutions as each implementation generates huge implementation and running costs (software,
legal, operational, technical); usually most fees are charged to the banks
whereas those solutions target the corporates
Using Industry Standards, any change of software solution performed by one party is not impacting the other party (technology independence).
Market adoption of the MT 798 standards 29
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Issues for banks with non standardised multi-bank options
Market adoption of the MT 798 standards 30
Scenarios:
Major issues
for banks:
Corporate using a
vendor platform
forcing banks to
adopt proprietary
formats, security
and rules
Corporate re-
using its FI BIC
and the MT7xx
messages on the
bank-to-bank FIN
service
Corporate using a
vendor BIC and the
MT798 standards
on the bank-to-
bank FIN service
Corporate using MT
798 standards with its
own BIC in SCORE
Increased
vendor and
technical costs
Additional fees for
banks to pay to the
vendor; additional IT
integration
No fee for banks to re-use
SWIFT and SCORE for
trade finance
Increased
operational
costs
Additional vendor-
specific operational
processes for
limited number of
clients
Additional
customer-specific
operational
practices for banks
to develop
Single trade-specific
process for all multi-bank
corporates
Increased
legal
complexity and
costs
Parties need to
develop vendor-
specific contractual
arrangements
Parties need to
develop corporate-
specific contractual
arrangements
Parties need to
develop vendor-
specific contractual
arrangements
Standardised SCORE
agreement for cash and
trade
Increased KYC
risks
Depends on vendor-
owned legal
frameworks
Lack of visibility on
corporate identity,
resulting with likely
KYC issues
Lack of full visibility
to end-corporate
identity, resulting
with likely KYC
issues
Standardised SWIFT
registration for corporates
and re-use of BIC by
corporate
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Issues for corporates with non standardised multi-bank options
31
Scenarios:
Major issues
for
corporates:
Corporate using a
vendor platform
forcing banks to
adopt proprietary
formats, security
and rules
Corporate re-using
its FI BIC and the
MT7xx messages
on the bank-to-
bank FIN service
Corporate using a
vendor BIC and
the MT798
standards on the
bank-to-bank FIN
service
Corporate using MT
798 standards with its
own BIC in SCORE
Increased
vendor and
technical costs
Need for multiple
solutions when any
of the banks
required do not
support the vendor
platform
Proprietary
development: so
packaged solutions
and costs cannot be
shared
Re-use SWIFT
connectivity in use for
treasury and cash
management
Not following
industry
standards and
best practices
Dependency on
single vendor
solution: less
competition and
technical lock-in
Not able to benefit
from full MT798
functionality
Corporate does not
benefit from
SWIFT's FIN
Responsibility and
Liability (R&L)
Single process with all
banking partners
Increased
legal
complexity and
costs
Parties need to
develop vendor-
specific contractual
arrangements
Parties need to
develop corporate-
specific contractual
arrangements
Corporate cannot
benefit from
standardised legal
documentation
Standardised SCORE
agreement for cash and
trade
Increased KYC
risks
Depends on vendor-
owned legal
frameworks
Lack of visibility on
corporate identity,
resulting with likely
KYC issues
Lack of full visibility
to corporate
identity, resulting
with likely KYC
issues
Standardised SWIFT
registration for corporates
and re-use of BIC by
corporate Market adoption of the MT 798 standards
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Next MT 798 features
Trade Finance for Corporates
32
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Version 4 of MT 798 standards
General
Publication Jan 2013
Effective Nov 2013 (aligned with Standards Release 2013)
Incremental changes
Further clarification
Editorial corrections
Lead Bank Model
Addition of 3 optional fields at the end of every MT 798 Index Message Customer Identifier Processing Bank Identifier Lead Bank Identifier
33
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Lead Bank Model Applicant side
34
Applicant Lead Bank
Processing Bank 1
Processing Bank 2
Processing Bank 3
Advising Bank 1
Advising Bank 2
Issuing Banks
Web GUI / Host-to-Host /
FIN / FileAct
Bank-to-Bank
MT 798
Bank-to-Bank
MT 7nn
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Lead Bank Model Beneficiary side
35
Beneficiary
Lead Bank
Processing Bank 1
Processing Bank 2
Processing Bank 3
Issuing Bank 1
Issuing Bank 2
Advising Banks
Web GUI / Host-to-Host /
FIN / FileAct
Bank-to-Bank
MT 798
Bank-to-Bank
MT 7nn
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Trade Finance for Corporates
Benefits
36
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37
Benefits Corporates Banks
Consolidated Trade finance positions and increased visibility
Single multi-bank & multi-business channel
Dematerialization & standardization
Re-use bank-to-bank FIN MT7xx data fields with Corporates
Re-use of FileAct for any needed documents
to be included in the information flows
Overall cost reduction
Improved straight-through processing end-to-end
Improved overall transaction time
Only one interface development to integrate to Bank back
office (no need for vendor-specific interfaces, procedures,
contracts, formats)
Corporates and banks can make independent decisions
on technical platforms and implementations
Win-win benefits for corporates and banks
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Training and Consulting
Services
Trade Finance for Corporates
38
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Training and Consulting Services
On-site courses on MT 798 standards
SWIFT Consulting Services puts at your disposal a dedicated team of experts who provide extensive knowledge of financial
markets, message standards and back office integration
Our consultants can lead and support every phase of your project:
From assessment and analysis of your processes and needs
Design and implementation of the right solution
Support you through go live and maintenance following launch
Great asset if you decide to up-grade and integrate your in-house systems
39
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40
Business
Technical
How to use SWIFT
data to get to strategic
insights?
Do you need help
with optimal usage of
Standards?
Do you have
Redundant & manual
interventions?
What is the right
sourcing model for
SWIFT infrastructure?
How to get to 5x9s operational
excellence?
How can you further
reduce your Cost of
Ownership?
Implementation
How to get to an easy
integration of your
applications & SWIFT
Who can guarantee
risk-free installations
and field services?
Can you provide me
peace of mind post
go live? Do y
ou n
eed k
now
ledge
able
and d
edic
ate
d
assis
tance d
uring y
our
SW
IFT
pro
jects
?
SWIFTs Consulting portfolio Common problems, unique solutions
-
Trade Finance for Corporates
Conclusion
41
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Conclusion Multi-banking in trade finance is now a reality
All trade banks in the world use SWIFT's MT7xx standards with their correspondent banks
The leading trade finance banks are now extending the use of those standards to the corporate world through the MT 798; all
leading vendors have adopted the MT 798
The MT 798 can be used on any channel (Internet, SWIFT) and with any software solution; the SWIFTReady certification ensures
inter-operability between competitive vendor solutions
The growing adoption by all leading players confirms the immediate relevance of the MT 798 industry standards to the trade
finance market
42
Avoid vendor lock-in by pushing back on proprietary portals/formats
-
Contacts
Trade Finance for Corporates
43
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Contact the MT 798 bank product teams
Market adoption of the MT 798 standards 44
Banks adopting MT 798 Country MT 798 Product contact Bank of America US Paul Johnson
Banque Saudi Fransi SA Shafeek H. Al-Manameen
Bayerische Landesbank DE Florian Seitz
BHF Bank DE Edith Babuscio
BNP Paribas FR Eric Henry
BNY Mellon US Andres Ramos
Citibank US Fran Martell
CM CIC FR Tony Croizer
Commerzbank DE Sven Mueller
Crdit Agricole CIB FR Patrick Boiteau
Danske Bank DK John Enemark
Deutsche Bank DE Frank Bothe
Gulf International Bank SA Mathew Silva
HSBC HK Kate Han
ING NL Egbert Jansen
JP Morgan Chase US Merlin Dowse
KBC BE Karen Sterckx
LBBW Landesbank Baden Wrttemberg DE Rolf Seidel
Natixis FR Olivier Laborde
Nordea FI Soren Andresen
RBS US Deborah Seliski
Riyad Bank SA Medhat Sanuri
Samba SA Abdulkader A. Bazara
Socit Gnrale FR Corinne Bakok
Standard Chartered SG Ashutosh Kumar
The National Commercial Bank SA Omar Yassine
UBS AG CH Erwin Freiburghaus
Unicredit AT Markus Wohlgeschaffen
-
Contact our SWIFTReady Trade Finance
2012 partners
45
Partner Solution Contact
Joel Schrevens, Digby Bennett
+32 475 904413
Selene Chan, James Tindall
+ 44 7941 325716
Stphane Nouy
+33 (0)1 53 00 70 13
Jean-Luc Spinardi
+ 41 213 188 181
Marina Singlard
+33 5 6573 4651
Murray Freeman
+1 201 716 1236
Ralph Carbone
Pinnacle Solutions Inc.
Misys TI Plus
Evolan IB
DOKA 5, IMEX
Pinnacle
Solutions
Incorporated (PSI) Synergy Trade Services
-
Contact our SWIFTReady for Corporates -
Trade Finance 2012 partners
Partner Solution Contact
Jacob Katsman, Nick Pachnev
+1 416 627 8520 / +1 416 661 8520
Olivier Berthier, Stphane Nouy
+65 6416 4095
+33 (0)1 53 00 70 13
Ralph Carbone
Pinnacle Solutions Inc.
Murray Freeman
+1 201 716 1236
Misys Trade Portal
GlobalTrade Corporate
Pinnacle
Solutions
Incorporated (PSI)
Synergy Trade
Services (TS) Multi-bank
Corporate Site
Market adoption of the MT 798 standards 46
COR-TF
-
47
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Market adoption of the MT 798 standards