“With the first-ever BPO transaction in Austria, we’re front-running the digitisation of the trade finance business.”

“With the first-ever BPO transaction in Austria, we’re front-running the digitisation of the trade finance business.”

Commerzbank has processed the first bank payment obligation (BPO) transactions in Austria, covering the import of bus components from Germany and Italy.

The buyer, a customer of Commerzbank Austria, is TAM-Europe, located in Slovenia. The suppliers are MAN Truck & Bus, headquartered in Munich, and ISAF Bus Components, an Italy-based supplier and customer of UniCredit.

Enno-Burghard Weitzel, head of product management trade services at Commerzbank, says: “With the first-ever BPO transaction in Austria, we’re front-running the digitisation of the trade finance business.”

The BPO is an irrevocable undertaking of the buyer’s bank (the obligor bank) to the seller’s bank (the recipient bank) to execute payment on maturity. This undertaking is based on the successful matching of agreed electronic trade data on Swift’s Trade Services Utility (TSU) platform.

Commerzbank reckons companies are “increasingly recognising the benefits of the BPO, which include more efficient, flexible and faster communication and handling of transactions”.

With successful matching of purchase order and shipment data, the BPO can also serve as an enabling framework for supply chain finance – optimising liquidity and working capital, and minimising payment risk, according to the bank.

Commerzbank first went live with the BPO in October 2014. In 2016 the bank did the first BPOs in the UK and also processed the first live BPO transaction between Germany and China.

Losses

Away from BPOs, and as part of its massive job cutting spree, Commerzbank recently agreed an outline reconciliation of interests and social plan with the employee representative committees in Germany.

As reported last year, Commerzbank firmed up plans to lay off nearly 5,000 people. According to a letter by German labour union Verdi, the majority of these job cuts – around 3,000 – will be across the bank’s branch network at home in Germany.


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