ICC – along with their partners Boston Consulting Group and Global Credit Data – has released its trade register provisional findings on short-term trade and supply chain financial asset performance for 2019 and 2020.
Preliminary analysis of data from these assets identified an increase in defaults in most trade finance products in 2020, which is likely at least in part attributable to the effects of the COVID-19 pandemic on the country. economic activity – and related changes in demand and supply. .
However, while the default rates for 2020 are higher than in recent years, they are not significantly outside the average default rates reported by the commercial register over the 14-year period for which the data was collected.
The factors driving business asset performance in 2020 will be explored in detail by this year’s ICC Business Register report, including an analysis of the likely ‘damping’ impact of government economic support, like emergency loans guaranteed by the state.
At the product level, a number of initial trends have been identified:
- Import of Letters of Credit: An observed increase in default rates in 2020 appears biased in favor of small and medium-sized enterprises (âSMEsâ). Debtor-weighted default rates increased by 40% to 50% overall compared to the previous year, compared to more modest increases for transaction-weighted default rates and exposures.
- Export L / C: An increase in default rates is observed compared to previous years in all methodologies, probably influenced by one-time idiosyncratic defects. Nevertheless, the overall default rates for L / C Export remain very low compared to other trade finance products.
- Loans for import / export: it appears that the increases in default rates are mainly due to two or three large exposures on companies with a number of transactions on a representative sample of banks reporting data to the commercial register ICC.
- Performance guarantees: Default rates appear relatively stable, potentially influenced in part by contracting parties extending maturities due to the unprecedented nature of the crisis.
- Supply chain finance: It appears that default rates have increased, mainly due to an increase in defaults by small entities in several regions, and potentially also as a result of better data coverage on supply chain finance (SCF) exposures in the ICC business register over time
Meanwhile, 2019 presented a more mixed picture, with moderate increases in the overall portfolio from previous years likely due to defaults by SMEs – potentially indicating an emerging slowdown in the business cycle before the pandemic.
ICC noted that these main findings are based on an initial analysis of a partial dataset – and, as such, should be treated with some caution. The ICC, BCG and GCD teams are in the process of finalizing and validating the data submissions of the member banks, with a view to publishing the final report of the ICC commercial register in early September 2021.
A new operating model for the ICC commercial register
Following the consultation of member banks, ICC also announced a change in the operating model of the initiative, in order to: (i) better differentiate its offer to members of the Trade Register; (ii) encourage more banks to submit data; and (iii) ensure the long-term commercial viability of the program.
The main details of the changes are as follows:
- Participating member banks will receive enhanced results, including more granular data feedback, dashboards, and more.
- Access to the Detailed Commercial Register Report will be paid for for non-participants (eg: investors, non-member banks); a very summary report (global default rates by product only) will continue to be available to the public free of charge.
- Prices will be differentiated depending on the size and nature of non-participants (e.g. business organizations vs NGOs vs academic / research institutions)
- A summary of the new model and respective fees is provided below
|Member banks (participants)||Other banks||Large investors and non-banks (> 50 M â¬ turnover)||Small investors and non-banks
|Academics (ICC recognized) & regulators||Associations and non-profit (recognized by the CCI)||Public (open version)|
|Fresh||Up to â¬ 15,000 (unchanged)||â¬ 40,000||â¬ 40,000||â¬ 20,000||Free of charge (to be agreed on a case-by-case basis)||â¬ 2,500||Free|
|Contentts||Detailed PDF report
Granular data tables and charts
Interactive dashboard / benchmarks
|Detailed PDF report
Granular data tables and charts
|Aggregate overall results – by product only (2-page PDF)|