Trade finance and wealth management

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Trade finance and wealth management, the two pillars of the financial centre, maintain relationships that market participants do not always emphasise. Traders and their executives, who are often very wealthy, are clients of Geneva wealth management. The banks that finance commodity trading also serve the private clientele of the traders. Trade finance funds are offered to private and institutional investors as alternative investments.

This proximity creates synergies and risks. A bank that finances a trader and manages the wealth of its executives has an overall view, but it exposes itself to conflicts of interest and to a concentration of risk. Trade finance funds sold to private investors have at times suffered losses linked to frauds in the sector, which has raised questions about the information given to investors.¹

In parallel with the transformation of wealth management towards tax compliance, described in Part E, trade finance has undergone a transformation towards compliance with sanctions and anti-corruption rules. The two pillars are converging on a single requirement: knowledge of the client, of its business and of the origin of its funds.

Worked example. A medium-sized trader has a borrowing-base facility of USD 200 million with three Geneva banks. The available amount is calculated every month: inventory valued at market price with a haircut of 20 per cent, receivables from approved buyers with a haircut of 10 per cent, hedged positions in full. If its inventory is worth USD 150 million and its receivables USD 80 million, the available amount comes to USD 120 million plus USD 72 million, or USD 192 million. A 15 per cent fall in prices reduces the value of the inventory to USD 127.5 million and the available amount to USD 174 million, which obliges the trader to reduce its positions or to provide additional security. The figures are fictitious.

Notes

SEC, press release of 26 November 2019: International Investment Group LLC (New York) accused of having concealed losses by overvaluing defaulted loans and of having sold to other clients “at least $60 million in fake trade finance loans”, with forged promissory notes and a falsified credit agreement; adviser registration withdrawn; Wikipedia (en), article “Greensill Capital”: freezing by Credit Suisse, on 1 March 2021, of USD 10 billion of supply-chain finance funds invested in Greensill products, insolvency of Greensill on 8 March 2021, losses estimated at up to USD 3 billion for investors (25 March 2021), withdrawal of credit-insurance cover (Tokio Marine, USD 4.6 billion) announced in July 2020. ↩

For general information only. This article does not constitute legal or tax advice, does not replace advice on an individual case and creates no lawyer-client relationship. It reflects the legal position as of September 2025.

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Dr Alexander Ressos, TEP

Rechtsanwalt/Attorney-at-Law

I am a Swiss attorney-at-law and also admitted as a solicitor in Hong Kong and in England & Wales, with almost 25 years of experience.

Together with my multilingual team, including Chinese, Japanese, Korean, Russian, Ukrainian and French native speakers, I advise companies and their owners from around the world on the full range of banking, corporate, commercial and tax law matters in Switzerland, including international tax planning, fiduciary services, and legal family office services including immigration & relocation or real estate investments. My practice has a particular focus on clients from growth and frontier markets in Greater China, Central Asia and the Caucasus, the rest of Asia, the Middle East, Africa and Latin America, and I equally advise clients from Europe and North America. Through an affiliated Swiss trust company, we also take care of the incorporation and ongoing administration of their companies and other structures, including accounting, tax returns and corporate secretarial services, and I serve as a professional director where required. With the support of a network of first-class cooperation partners, I also implement solutions worldwide.

My approach is to act as a trusted advisor who works directly with decision-makers, on an equal footing: I start from what you want to achieve and shape every structure, contract and tax decision around your commercial goals and how it improves your after-tax return. As “lawyers who make it happen”, my team and I stay involved until your company is set up, your structure is in place and your transaction has closed, and we remain available for any follow-on work that may be required. You benefit from bespoke solutions and personal attention, and sound, friendly and practical advice. We are not the lowest-cost provider in the market, nor do we intend to be; our aim is to deliver well-founded, proper solutions and excellent value for money.

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Trade finance and wealth management

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