Dr. Rouben Indjikian, faculty in the Walker School of Business and Technology on the Webster University Geneva campus, chaired and spoke at 14th Global Commodities Finance annual conference in Hotel President Wilson, Geneva, on the 8-9 June. Dr. Indjikian is traditionally invited to speak at this very well-known Euromoney annual event for international commodity finance community. On this occasion he chaired the second day of the conference and was a part of panel discussing how to plug the financing gap emerging due to more stringent bank regulations and find financing solutions for both small and large commodity producers.
The conference participants were meeting in a persistent situation of predominantly buyers’ markets, where in spite of geopolitical and other adverse events, supply and stocks were relatively abundant, and in spite of efforts of exporters such as OPEC to regulate the level of production, prices were kept at lower end levels with expectations of relatively stable prices in coming couple of years.
In spite of low interest rates the short term bank trade credit was mainly available to major players. Other smaller commodity producers and traders were facing increasing hurdles to get access to bank credit due to more stringent regulations, and are mainly serviced by more expensive specialized in commodities funds and other non-bank finance providers. In commodities as in other sector of economies, in spite of announced policies to support SMEs, the latter are still facing the reality of major banks sidelining them due to stringent compliance requirements and quite demanding approach on documentation and criteria. That creates additional costs and barriers for SMEs, which at the end have to go to more responsive and less regulated funds and other institutions.
The conference programme contained a very interesting discussion of CFOs of trading houses, and a panel of major banks' heads of commodity finance. At the same time it was mainly centered on looking at alternative forms of financing, including possibilities for cooperation between banks and funds and other financial service providers while trying to cater variety of needs of especially the smaller commodity producers and traders.