Every June FCI publishes its Annual Review giving an overview of progress made by the world's biggest and most important factoring network. The Annual Review also presents FCI's annual figures as well as global factoring statistics. In this extract, we explore America's Regional Updates, presented by Mr Alberto Wyderka, FCI's Regional Director for the Americas.
2021 Figures
The Two-Factor System volumes (international factoring), which can be operated only if the bank is a member of FCI, show that the Americas Region was the one who experienced the highest growth in relative terms, 24.1%, going from an annual volume of EUR 2.63 billion to EUR 3.26 billion. Dividing the region into two sub-Regions, North (the US and Canada) and LA&C, the breakdown of these figures shows a clear trend and import characteristics of the North sub-Region (EUR 2.5 billion, growth 25%) compared to LA&C (EUR 0.8 billion) almost entirely exporter, except for Chile (where the Bank of Chile sets the import trend with the largest market volume). The volume of invoices traded in the region grew by 39%, while the global growth was 16.26%. Still, the largest volume is found in the North sub-region. However, there was also significant growth in LA & C, which is very promising. In conclusion, despite Covid-19, the region experienced growth in general in all the ratios analysed, which is very encouraging.
Legal, Regulatory and Advocacy
The end of 2021 allowed us to resume visiting trips to members and prospects. The first step was participating in the Assembly of FELABAN (Latin American Bank Federation), where meetings were held with banks and regulators. International factoring is consolidating in the region, as we saw in its volumes and the possibility of financing exporters and countries’ growth and development. Domestic factoring already has the marked course as a commercial financing tool. One aspect that generates concern among the actors is the correct implementation of the assignment. The issue is practically settled in countries with a factoring law or where electronic invoicing works. In this regard, we are collaborating with the Associations and government entities to create policies and regulatory frameworks that will pave the way for the correct and healthy development of our industry sustainability.
Promotion and Awareness
Visits and in person meetings were threatened due to the pandemic and were conducted virtually. A Regional Conference was held at the beginning of the year, with substantial participation of members and observers. Virtual training conferences were recurring topics. Virtual meetings with factoring associations were held where we participated in presentations and dissemination of the domestic and international business and market situation, like webinars organized by FELAFAC (the Latin American Factoring Federation) of which we are members. The follow-up given to FCIreverse through meetings, presentations, and technical demonstrations was significant, which positioned the region at the head of our organisation in promotion and high degrees of progress with banks. Education was the other field that was always prioritised in the region. A webinar held in October brought together over 600 participants, making it the largest presence held in this area by FCI. In November, Mr. Çagatay Baydar, Vice-chairman, and I attended FELABAN, which was highly positive. I continued visiting several members and prospects in the US and Mexico, two of the key countries, to increase our network.
Membership Mobilisation
The challenging world economic crisis, derived from the outbreak of the Covid-19 virus and the redirection of budget allocation, in some cases, postponed banks’ decisions regarding their affiliation to FCI. Four new members were obtained in the region, but these reasons mentioned above somehow influenced not achieving the budget of 6 new members. However, the expected termination budget of 5 members luckily did not occur when only two members terminated their membership. Another good sign is that one of our former members in Peru, a large bank well known to all, is reviewing their reincorporation in our community. Unfortunately, the region does not have a development bank committed to our industry and FCI, like the Afreximbank and the EBRD, which exert considerable influence. I aim to achieve a similar approach with some development entities and work together.
Challenges
The evolution of Covid-19 impacted all political/economic decisions, then came the incomprehensible situation in Ukraine. Undoubtedly, growth will be affected, and the challenge will be necessary. It is to be expected that inflation and interest rates will increase. Many companies were able to survive Covid-19 thanks to financial aid granted by governments. Many of them have not yet adapted to survive without that subsidy. However, they will have to face the increase in inflation, interest rates, and a still contracted demand. We must not take our eyes off the political changes in the region. The negative political influence of Venezuela, Cuba, and Nicaragua impacts other countries’ credibility and risk. Chile is accommodating its new socialist government, and results are still to be seen. The quality of service regarding communication between correspondents has deteriorated, showing a need for improvement.
Outlook 2022
The aggression against Ukraine has impacted the value of oil and gas, affecting countries worldwide and impacting the value of commodities and value-added products from the region. These events affect the risks and appetite to assume them, although the coverages are growing gently for now. Banks generally opted for the retail business as strategic above other offers such as foreign trade. However, there seems to be a reversal of the banks, the NBFIs, and fintech, to return to export financing through instruments that mitigate their risk, opening the doors to factoring between correspondents. FCI needs to develop and grow more in countries like the US, Canada, Mexico, and Brazil, to encourage FCI membership growth in other nations. In the same way, we will continue promoting and disseminating our FCIreverse and Edireverse solutions. The Americas Region is where our offer was spread consistently, effectively, and with follow-up. It is a solution that, due to the multiple areas that intervene in making the final decision, requires a long start up/ decision process. But we have high hopes and very near to positive decisions from several banks.
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