“One of the lessons I have learnt in my career is that trade finance is a safe business. But in order to be safe, you have to understand what you are financing and with whom you are working. Know your customer is a basic principle of my business. I only want to do business with partners whose business I understand, and I want to work with partners who are fair.”
Dr Rudolf Putz is the Head of the Trade Facilitation Programme at the European Bank for Reconstruction and Development (EBRD). In this interview, he explains what it takes to become a development banker, what a typical career trajectory looks like for trade-focused development professionals, and how the EBRD provides trade finance to borrowers and countries that cannot be serviced by the private sector.
Q: Multinational development banks are major providers of trade finance, with large trade finance teams. I would like to start by asking you to shed some light on what a career in development banking, and specifically within trade finance, could look like. And as a follow-up, why should graduates or young professionals consider a career in a multinational development bank?
Putz: The EBRD finances projects that cannot be financed by other lenders and operates in countries where other lenders cannot cover all financing needs. Under our Trade Facilitation Programme (TFP) we help banks in our countries of operations to develop their trade finance business and to establish correspondent banking relationships with foreign commercial banks.
The EBRD invests not only into the development of its countries of operations, but also into the development of its own staff. We offer junior bankers the opportunity to attend training courses and to learn on the job from more senior bankers.
Bankers are offered the opportunity to work on projects in different countries. After several years of working in one of our teams in EBRD’s headquarter in London or in one of our resident offices staff can apply also for vacant positions in other teams and in other countries of operations. So it’s a great place for junior bankers to learn and to develop themselves.
Q: What do you look for when you hire people into into your team?
Putz: I am particularly interested in applications of candidates who have demonstrated an interest in international trade and trade finance. I’m looking at their CV, I look at which subjects they have studied at university; have they shown interest in trade and trade finance already during their studies? What have they done before joining our trade finance team? And are they really interested in contributing to the development of trade finance in EBRD’s countries of operations?
It requires an open mind to work in international teams in different geographies and difficult economic environments. A certain type of resilience is also necessary, as is a great deal of patience because in multilateral organizations the career path is similar to a career path in public service. So it requires a readiness to accept that in a development bank one’s career progression could be slower than it would be in a commercial bank.
Q: So let’s say an applicant meets all the requirements and they’ve demonstrated the necessary interest. After going through the interviews, they get hired. What’s the typical career trajectory for trade-focused employees at the EBRD? And would you say that their trajectory is different to the career trajectory in other development banks?
Putz: Usually junior bankers join our trade finance team at the level of Intern or Analyst. And just as in a commercial bank, they learn trade finance by doing.
From their very first day, new joiners work in operations. They negotiate trade finance transactions with issuing banks and confirming banks, check guarantee applications and draft and issue guarantees.
In addition, they are offered the opportunity to attend training courses. Our training courses have been developed for trade finance staff in our partner banks but we use them also for training of our own staff. We employ consultants who help our partner banks to improve their trade finance operations and train also our own staff.
In our team, junior bankers can join as an Analyst or as an Intern, and they can grow their careers up to the level of Senior Bankers. We try to develop and to keep staff because we feel that trade finances is an area that requires expertise, and this expertise grows with time.
Q: It sounds like many of the products that you offer are identical or very similar to those offered by commercial banks. Would you say there are overlaps between the work that you do, and the work of commercial providers of trade finance products? And are there ways by which trade finance providers who work for commercial banks can engage with and assist in development work without necessarily working at a development bank?
Putz: Our role is to step in when commercial banks cannot cover a risk or when the risk limits of commercial banks are already fully utilised.
Under our Trade Facilitation Programme we often offer longer tenors than commercial banks, but at the same time we also try to co-finance with commercial banks. We may, for example, guarantee the payment risk of trade finance instruments with payment in tranches and different maturities. When confirming banks are ready to cover the payment risk of tranches with shorter tenors under their own risk limits, we guarantee the longer tenors which confirming banks would not be able to cover. This explains why our products have to be aligned with the products of commercial banks. If commercial banks offer guarantee and cash facilities, forfaiting and receivables financing, then of course we have to offer the same products. However, we offer them only for amounts and tenors which commercial banks would not be able to provide under their own risk limits.
Commercial banks can also engage in development work. If they have developed new trade finance solutions, we are ready to help them to offer these solutions also to our partner banks in our countries of operation.
We also invite staff from commercial banks to be seconded to our trade finance team. Currently we have got two secondees from commercial banks in our team. They stay in our team for a period of up to two years but their salaries are still paid by their employers. This way, commercial bankers can gain experience in development banking while the EBRD can benefit from the commercial experience of secondees.
Q: As you reflect on your own career to date, what principles do you believe have contributed the most to your achievements? And did you receive any advice during your early professional years that were particularly memorable?
Putz: A pre-condition for a successful career in trade finance is interest in your clients’ business.
One of the lessons I have learnt in my career is that trade finance is a safe business. But in order to be safe, you have to understand what you are financing and with whom you are working. Know your customer is a basic principle of my business. I only want to do business with partners whose business I understand, and I want to work with partners who are fair.
I see trade finance as a partnership between banks and their clients. In international trade you always have to deal with delays in production or transport, disruption of supply chains or damage to the traded goods. But we should always try to avoid losses, and we should try to avoid disputes. And by avoiding disputes, we also avoid losses. And we should always attempt to find a solution where both partners help each other also in difficult times. Good client relationships are key to success in trade finance, and this has been a key principle throughout my career.
This post is a transcribed version of a live interview between Dr Rudolf Putz and Pouya Jafari. The interview was held as part of a joint event by the EBRD and the ITFA Emerging Leaders Committee. The interview is reproduced in full with the permission of all parties. tradeXplain would like to thank the entire Trade Facilitation Programme team at the EBRD for their help with making this event happen. A recording of the event can be accessed in full on the member page of itfa.org