There are no longer borders, although there are risk factors whose coverage is essential to successfully complete an international business project.
Spanish business owners seek security and financial advice. Financial institutions, existing clients, and entrepreneurs alike can become valuable partners when conducting major business deals anywhere in the world.
Without a doubt, the banking sector has made a strong commitment to international business. One only needs to look at the figures for international trade in our country to understand their interest. According to a recent report by the Chambers of Commerce, Spanish exports will grow by 3,9% in 2003 and by 4,4% next year. The same report highlights that Spanish sales abroad increased by 7,05%, reaching €58.411 billion in the first five months of the year.
For 2003 as a whole, the Chambers of Commerce anticipate a gradual recovery of the global economy, supported by the stabilization of crude oil prices, improved growth capacity and job creation, and favorable performance in financial markets. The WTO (World Trade Organization), for its part, estimates global trade growth of around 6,4% for this year and next. Furthermore, Jordi Serret, Director General of COPCA (Catalan Trade Promotion Consortium), believes that "international trade is conducted only with countries outside the Eurozone. Germany, France, and Italy should be the domestic market for Spanish businesses."
Individualized solutions
But what international services does the Spanish businessperson seek? Nothing more and nothing less than the same level of service abroad as in Spain. From debt collection to local currency financing, including exchange rate risk hedging, everything has a place in international banking.
The internet and new technologies have found fertile ground in the banking sector. This explains why Transactional Banking Services (collections and payments via electronic banking and cash management) are the most in-demand services among Spanish businesses, according to Germán Domínguez Rodríguez, Director of Global Banking Services at Societe Generale.
Managing the treasury of an international company requires balancing the various balances in different currencies across all its subsidiaries. "It wouldn't make much sense for a company with continuous unremunerated cash surpluses in a subsidiary in Central Europe to find that another of its subsidiaries, in Asia, for example, had to resort to lines of credit to finance its expansion in the region," says Maurits Mulder, Managing Director of Fortis in Spain and Portugal.
Online banking facilitates the creation of customized solutions for each business owner. For every problem, there is a unique solution. For every market, specific advice. "The personalized attention and guidance of corporate clients, provided through the role of the business manager, serves as the central point from which the range of services the company needs, supplied directly from the manufacturers of each product, is complemented," explains Pedro Sáez Regalado, Director of Corporate Banking and the Americas Division of Banco Santander Central Hispano (SCH).
Customers for life
Banks don't want one-off clients; they want to find a client and deepen their relationship with them. Juan Carlos García Centeno, director for Spain and Portugal at the Royal Bank of Scotland, provides Spanish business owners with products and services for doing business abroad, whether they are a bank client or not. "RBS is a relationship bank; we're not interested in a single transaction, but in a long-term relationship. After a few years, we're arguing about who pays for the coffee," says García Centeno. Relationships with banks have a cost, but obtaining real-time information and the resulting resource optimization can be vital for a company's survival.
The work of modern international banking goes beyond traditional paper discounting or intercountry transfers. Trade services, related to foreign trade operations and their financing, such as documentary credits, remittances, or forfaiting, are key components in advising exporters.
And also, consultants…
But there's more. A lack of knowledge about new markets, business practices, or the reliability of certain suppliers or clients can derail viable business projects. In this regard, the bank acts as a consultant. "We try to encourage, guide, and support Spanish entrepreneurs, but also provide them with reliable local advice," says Pedro Sáez Regalado of SCH.
Royal Bank of Scotland goes even further. "We like it when the client buys one of our shares and we buy one of theirs. We want our clients to make money. We want to be partners," says García Centeno. Víctor Beser Sastre, Director of Foreign Trade at Banco Popular, shares this view, convinced that what business owners need is "a reliable partner that, during their expansion into third countries, informs them and facilitates contacts; allows them to open accounts in any of those countries without leaving Spain; and subsequently, through its online banking application, provides them with access to information on collections and payments and the ability to manage them from their own offices."
The physical presence of a subsidiary of a Spanish bank in the area where it wants to do business is always important. "Having a local bank allows you to offer a full range of local banking services and products, not just occasional ones. Furthermore, the level of service between the parent company and the subsidiary tends to be more comparable in terms of credit limits, risk management, pricing, guarantees, and so on," says Pedro Sáenz Regalado of SCH.
The vast majority of large banks operating in Spain have subsidiaries almost everywhere in the world or agreements with local banks. Spanish banks have focused primarily on Latin America, but Fortis and Societe Generale have subsidiaries all over the world, from North Africa to China. Does anyone think we aren't living in the age of globalization?
Currency risk
In a single day, the effect of local currency fluctuations on a Spanish company's bottom line can be devastating. "Price swings of 1% are common in the currency markets, so hedging through forward contracts is essential," says Antonio García Rebollar, president of Renta 4 Gestora.
The latest upward revision of US GDP growth for the second quarter of the year, released in late September, caused the euro to weaken against the dollar. US GDP grew by 3,3% between April and June, compared to the first quarter figures, two-tenths of a percentage point higher than the previous estimate, leading the single currency to fall to $1,1443.
Experts believe the euro has upside potential against the dollar once it surpasses the 1,1500 and 1,1525 marks. "The positive outlook for the euro is a sign of dollar weakness, not of inherent strength in the European currency," confirms García Rebollar.
At the recent Dubai summit, the seven most industrialized countries (the G-7 group) called for more flexibility in currency markets with an implicit message for Japan to stop intervening in the yen in order to favor its exports.
Although there are many products and services, in our next installment (in the November issue) we will highlight some specific products that some banks offer to support the activities that Spanish companies carry out abroad.
Any questions about this news?
Talk to Coexia, the AI of the foreign trade
International business service providers
Barcelona Free Trade Zone
Public entity for economic revitalization, operates as an engine of industrial development in the Barcelona area.read more...
VUI - One-Stop Shop
The One-Stop Shop for Internationalization (VUI) is a space for information and advice.read more...
Asturex
Asturex, Foreign Promotion Company of the Principality of Asturias, SA is a capital company.read more...
PROEXCA
PROEXCA is a public company attached to the Ministry of Economy, Knowledge and Employment.read more...
Chamber of Madrid
The International Business Department of the Madrid Chamber of Commerce supports companies.read more...
Chamber of Spain
The Spanish Chamber of Commerce is a public law corporation and advisory body.read more...