Magazine article Global Finance

Scf Market Pushes Banks to Focus on Execution

Magazine article Global Finance

Scf Market Pushes Banks to Focus on Execution

Article excerpt

Michael McDonough, global head of corporate trade and supply chain finance at JP Morgan Chase, sees the supplier finance market evolving to embrace more diverse industry sectors, and banks expanding the range of funding to clients.

Global Finance: What industries besides manufacturing and retail offer scope for suppty-chain-financing potential? Why?

Michael McDonough: We expect that we will start to see increased activity in the oil and gas and natural resources sectors. Clients are focusing on working-capital generation strategies, given lower commodity prices, and SCF strategies can play a part in those overall working capital plans. Additionally, we are starting to see interest from some of the larger nonhardware technology companies. As these clients grow and mature, they are generating significant scale in some of their key sourcing activities and are looking at solutions to help support their supplier base. In general, very few industries would be excluded from supply chain financing potential, as there is relevance across any corporate that sources goods or services.

GF: What do you think will be the next wave of supply chain innovation?

McDonough: The SCF market will continue to evolve in terms of finding additional funding capacity. That will take many shapes, such as club deals where multiple funding banks support a program from the outset, or using mandated lead arrangers (MLA) to provide funding capacity in hard-to-reach markets. We believe that innovation is occurring on the SCF provider side and also on the funding side. …

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