Did Abengoa’s overly complex SCF programmes contribute to its downfall?

Spanish renewable energy company Abengoa's fall from grace to near bankruptcy reveals concerns about the firm’s indulgence in overly complex supply chain finance programmes.

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Comments (1)

  • Armin Eckermann
    Armin Eckermann, Eckermann Partners 25 April 2016

    Thanks for the article. I am astonishing to read “(T)he company had reverse factoring lines with 85 different banks over 20 countries, according to its financial statements.” Of course, Abengoa was a big name and even a bigger company at a time but we have to bear in mind what Reverse Factoring (SCF) means: it turns the normal Factoring business upside down. Nobody can tell me that all risk manager in those 85 different banks have fallen into a collective sleep when reading the Abengoa credit files, right? Reverse Factoring will remain unsecured bank lending despite all the talks of the Factoring industry it is not. With Reverse Factoring, the Factor can offer a bank product which is often better managed in fully regulated banks than in Factoring Companies. I would be interesting to see, who has financed them outside of the big banks named in the article: “…. Banco Santander, Caixabank, Sabadell, Bankia, Banco Popular, Cr�dit Agricole, and HSBC. Spanish ECA Cesce and the state bank Instituto de Credito Oficial also have exposure to the company.” Have those 7 names had Reverse Factoring / Supply Chain Financing in place? Or a mixture of secured / unsecured products running parallel in their credit books? Well, 78 institutions remain and I am very much interested in getting to know them and how such a collective assessment mistake could have been made. Just another testimony that tailor–made products, and I put Reverse Factoring into that category, has its problem in today’s banking world where standardization and scalability is king.

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