Commerzbank and UniCredit complete first BPO live transaction in UK
The banks say with the backing of the ICC Banking Commission and Swift, there has been a “growing demand for, and an increasing number of”, BPO transactions, as a “proven” digital settlement tool.
Raphael Barisaac, global head of trade products at UniCredit, says the solution “combines automated processing of the flows with careful cost management, prompt payments and financial options for the seller”.
The solution also consists of the “irrevocable” undertaking of the buyer’s bank towards the seller’s bank to effect the relevant payment as the invoice falls due. This undertaking of payment is made based on the electronic matching of trade data between participating banks on the Swift Trade Services Utility platform.
While the BPO is a new instrument in trade finance, the banks say it is also an enabling framework for supply chain finance, following the requirements of the market for providing liquidity and mitigating risk along the supply chain.
Looking back a bit, Commerzbank processed its first two live transactions supported by a BPO, one for a German SME and one for an international group based in Belgium, in October 2014. Since then, the bank has “successfully” settled BPO transactions with SMEs, large corporates and multinationals.
For UniCredit, this is the latest in a number of BPO deals in recent years. In October 2014, UniCredit completed the “first ever” BPO transaction between a German and a Japanese company. Some weeks ago, UniCredit completed the first Romanian BPO.
As the “first” bank to facilitate a BPO transaction in Germany, Italy and Romania, UniCredit has since extended coverage to countries such as Bulgaria.