[TorryJens]

http://www.thebanker.com/World/Singa...rength?ct=true

Singapore's standing as GTS hub goes from strength to strength

By Jane Cooper | Published: 01 March, 2012 on the Banker

Singapore’s strategic location in Asia is proving a boon to the city state’s transaction bankers, particularly as they seek to capture banking business from the world’s changing trade flows.

While commodities have been shipped through Singapore for centuries, the city state's banking industry is carving itself out a reputation as a hub for transaction services that support global trade.

The strategic importance of the port was recognised as far back as the 19th century when Singapore became a trading outpost of the UK's East India Company. These days, however, banking services to support this trade are increasingly being done out of Singapore and the financial transactions match the trading that has long been done in the physical world. Singapore’s transaction banking industry is also witnessing a shift in trade patterns: Chinese companies are now coming to Singapore to use it as an outpost to export to the West, and intra-Asian trade flows are on the rise.

Andy Dyer, Australian bank ANZ’s head of transaction banking for Asia-Pacific, Europe and America, says: “Singapore has always been an important hub for transaction banking, whether it is cash management, trade or securities.”

“The shift from West to East has accelerated in the past two years and Asia has become more important to corporates and banks. That elevates the position of Singapore – along with Hong Kong – which is a natural regional hub for Asia as the region becomes more important in the global context.”

Changing roles

Trade patterns are also become more diverse than the traditional West-East divide, and ‘South-South’ trading routes are also emerging that connect Asia, the Middle East, Africa and Latin America. HSBC research notes that “in the same way that trade between the developed nations exploded in the 1950s and 1960s, we expect the 21st century to see turbo-charged trade growth between the emerging nations”.

The role of China and India in the global economy is increasing, and Singapore is well-positioned between the two countries to capture these emerging trade flows.

“Singapore is at the crossroads of international trade,” says Krista Baetens, the country manager for Singapore of the Netherlands-based ING Bank. “You can see it,” she adds, gesturing to the view of the port from her office window. As one of the busiest shipping ports in the world, these container ships creeping across the horizon are global trade in action, underpinned by a network of transaction banking products and services.

With a regional office in Singapore, ING Bank is able to capture the trade flows between Europe and Asia and vice versa. Ms Baetens says that Singapore’s role in international trade is increasing, particularly because intra-Asia trade is on the rise.

This trade has meant that Singapore has become a leading hub for cash management. Suman Chaki, Deutsche Bank’s head of global transaction banking for Singapore, describes the city state as a “true blue” trading economy, and despite the global slowdown it still experienced a significant growth in trade volume. According to Singapore government statistics, on a year-on-year basis, total trade rose by 5.9% in December 2011. This was also a 12% increase on the previous month.

Thinking big

The proportion of trade going through Singapore is also significant, considering it only has a population of 5 million. Figures from the World Trade Organisation (WTO) show that Singapore’s trade-to-gross domestic product ratio between 2008 and 2010 was very high, at 404.9%. And in terms of world trade rankings, Singapore was 14th for exports and 15th for imports in 2010, according to the WTO.

There is not just optimism about the physical trade passing through Singapore, but also in the transaction banking business that supports it.

Alan Goodyear, RBS’s head of transaction services for Asia-Pacific, says: “Our transaction services business in Singapore achieved strong year-on-year growth despite tough market conditions. Our cash management services, including liquidity management, advanced significantly in spite of the low interest rate environment. We also expanded our trade finance business last year, especially in the areas of traditional trade and commodities financing.”

Ashutosh Kumar, Standard Chartered’s global product head of corporate cash and trade, adds that commodity trade finance is an area that has seen growth in Singapore in recent months, and what has been traditionally done out of Europe is now increasingly being done from Asia. “More commodity companies are talking about moving to this part of the world,” says Mr Kumar. He adds that the shift had already begun before the financial crisis of 2008, but now that many European banks are no longer as active “there is much more demand from a trade finance perspective”.

Mr Kumar says that Singapore’s trade has grown both in terms of exports as well as imports. In December 2011, for example, total exports increased by 7.5% in December 2011, year on year, after an 8.2% increase the month before. Total imports increased year on year by 4% in December 2011, after a 17% increase in November, according to government statistics.

Treasury centre

Singapore is the largest trans-shipment port in the world whereby goods are imported, value is added, and then they are re-exported from the hub. George Nast, Standard Chartered’s global head of product management for transaction banking, says that it is not just trade finance that has been an area of growth for Singapore’s transaction banking business, but the city state has world-class treasury management too. “Singapore has the ideal platform to build a treasury centre,” says Mr Nast, who highlights the benefits of its talent pool and regulatory framework.

[snip]

there are so much more kudos in the article i can't replicate all of them here....too long. you have to read it for yourself the whole enchilada.