Commodity Trade Financing Seen by HSBC’s Lambert as Sufficient

Commodity trade continues to attract sufficient financing amid instability in the Middle East and reduced lending by some European banks, said Jean-Francois Lambert, HSBC Bank Plc’s global head of commodity and structured trade finance.

“The world is in a complicated situation, but what needs to be financed, is financed,” Lambert said in an interview in Geneva yesterday. “There is sufficient liquidity in the market to finance commodities.”

Lambert said the market for commodity-trade finance has become “more normal,” and he wasn’t aware of any major defaults. Banks in countries that use the euro reduced their activity “a little” and haven’t pulled out of commodity finance, according to Lambert.

“The banks of the euro zone during the crisis had less access to dollars,” Lambert said. “There was a squeeze. They’re still there. They haven’t withdrawn.”

Lambert said HSBC continues to do business in Egypt, where a drop in the country’s currency has made imports more expensive. Wheat purchases by Egypt, the world’s largest buyer of the grain, have slowed, and the country had enough wheat for 109 days of consumption, the government reported March 13, down from 123 days reported on Feb. 27.

In Egypt, “wheat is still arriving and it’s still being paid,” Lambert said. “The strategic imports continue to be purchased and are honored.”

The country’s main sources of foreign currency have been tourism, the Suez Canal, strategic exports and the U.S., according to the HSBC executive, who was a moderator at a commodity-industry conference organized by the United Nations Conference on Trade and Development.

“There is less tourism, there is less Suez, fewer strategic exports, what remains is the U.S.,” he said. “It’s a country essential to global stability. We have a long-standing presence there and that’s why we remain active there.”

To contact the reporter on this story: Rudy Ruitenberg in Paris at rruitenberg@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net

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