Trade loans not up to scratch: survey

RESEARCH has shown that Australian businesses involved in importing and exporting in the current economic climate are becoming dissatisfied with the trade loans provided by their financiers.

Recent analysis from banking research and advisory firm East & Partners indicates trading companies are less happy with their lending institutions primarily because of the availability of new funding and the increasing rates for lending.

East & Partners financial markets analyst Zoran Knezevic said this was the first time such a drop in satisfaction had taken place in the five years his company had been monitoring the trading sector.

"Our latest research reveals a market-wide fall in customer satisfaction with trade loans in the institutional and corporate segments," Mr Knezevic said

These results are derived from the past two months of analysis and form part of East & Partners' Australian Trade Finance Markets research program.

The program is an ongoing six-monthly research service focusing on the top 500 institutions and a structured sample of the corporate businesses with annual turnover between $20 million and $340 million.

It also includes full coverage of the SME market segment, looking at businesses with an annual turnover of $5 million to 20 million.

These smaller businesses in the SME segment have also rated their providers lower when it comes to satisfaction with trade loans.

"The fall in satisfaction with trade loans in the corporate and SME segments is a worrying change given that this is the most important aspect of the overall trade finance offering to the businesses in these segments," Mr Knezevic said.

"In light of the prevailing market conditions, this decline in satisfaction likely reflects both the rising lending rates and the availability of new funding to those that demand it."

The research also shows more businesses are indicating the need for liquidity support is a key driver of their trade finance needs.

Even among the institutional customers there is a greater focus on liquidity support.

"2009 has brought many challenges for Australia's trading businesses," Mr Knezevic said.

"The volume of trade experienced appears to have slowed and the focus is now on securing finance to fund the essential trade transactions."