London - AFP
Trade finance is drying up amid the financial crisis, threatening jobs and economic growth, trade sources warned Saturday. Banks like Credit Agricole and BNP Paribas -- two of the 25 financial institutions most active in such financing -- have recently reduced their trade financing business, said a trade source on the sidelines of a World Trade Organization ministerial conference. BNP Paribas is among the top three banks in financing commodities trade in Africa, said the source. Their exit would leave a gap that other banks like HSBC may fill, but the general trend was that such financing was drying up. With European banks prominent among the world's biggest financers, the eurozone debt crisis was particularly hurting the sector. In the Balkans, for instance, financing for trade was harder to come by now as it was traditionally mainly Greek banks that had been offering such lending. Trade finance is the "lifeblood" without which global trade would stall. It comes in the form of credit issued and guaranteed by banks to importers and exporters, underpinning confidence through the whole system. More than 90 percent of commercial transactions in the world require such credit, but the current crisis is forcing banks to hold on to capital and liquidity, leading to the lending market drying up and making credit more expensive.