Santander Plans Launch Of Trade Finance Fund

Santander’s asset management arm will be rolling out a new fund letting clients invest in trade finance receivables, Reuters reported.

The fund is aimed at institutional and accredited investors, and this move will be the first one from Santander Asset Management into finance funds, according to Reuters.

The fund will primarily serve as a way to buy assets created by the group’s trade finance business through transactions with its large corporate clients, Reuters reported.

The pandemic has seen a boom in trade and supply chain finance, which Reuters reported encompasses situations where lenders pay a company’s suppliers on its behalf in exchange for a fee and repayment later on.

Investment funds have also seen a boost, providing capital more often for financing those transactions as they’ve been looking for income in an environment of record low interest rates, according to Reuters.

Santander’s new fund has been structured to encompass several oversight practices, and portfolio managers plan to look at which assets could be included. Reuters reported that the assets’ underlying documents will be reviewed in order to make sure they match with the mandate of the fund.

An independent investment committee, which will consist of well-known industry practitioners, will review every aspect of the fund, according to Reuters. The bank will also be one of the fund’s investors.

In separate news, many of the problems in the trade finance sector can be traced to the use of paper for conducting business. Paper has a habit of “creating bottlenecks and friction” all along the way, and PYMNTS reported that there are myriad areas of trade finance workflows that have faced issues due to their reliance on legacy tools.

Industry stakeholders should look into “mixing and matching” of technologies in order to see which ones can help address the issues best, according to Triterras Chief Operating Officer John Galani.