It's a challenge facing many bankers: following the global economic crisis, financial institutions are focusing on domestic markets in response to regulator and shareholder demands. At the same time, as global commerce recovers, these bankers must find dependable correspondents to satisfy their clients' overseas trade finance needs.

But who can you trust as a correspondent these days? This question has many dimensions. First, with the retreat of global banks - as they reduce their risk and exit emerging markets - there are fewer partners with the right network. Second, do they have the capacity, knowledge and service focus to deliver? Finally, can this partner complement your network, without poaching your clients?

Global trade edges forward
Despite continued economic uncertainty, global trade carries on, and is recovering day by day. We see this as the world's central banks race to fill the trade finance gap, caused by the withdrawal of financial institutions and capital market players. Clearly, while overall trade is down, there is still inadequate credit to quench demand by importers and exporters.

The reality is that clients are seeking their banker's support to pursue foreign expansion, but their bank is hesitant to assume the risk. This in itself is a reversal of circumstances for bankers who, until recently, saw clients turn to Open Accounts with trade partners, rather than bank intermediaries. It seems traders also now see the value of trusted partners.

Tough questions for correspondents
The end result is that bank executives must ask probing questions of their prospective correspondents. First, do they have the right network, and are they committed to international growth? At Scotiabank for example, we continue to grow our operations in more than 50 countries. In fact, while many well-known banks have shuttered overseas offices, we've expanded our strong presence in Latin America, the Caribbean, Asia and Europe, with recent investments ranging from Mexico and Peru to Thailand and Turkey.

As noted above, an impressive global network is only an advantage if the correspondent is also 'open for business' with an appetite to lend. It is critical to validate their promises, by asking if they continue to offer LCs in your clients' markets and how they have supported their customers in the past year. This will paint a clear picture of their institution's flexibility and ability to serve your needs. This often ties to a correspondent bank's country of

Alberta Cefis Executive Vice-President & Head, Global Transaction Banking at Scotiabank

origin, and the health of its regulatory system. For example, as an international bank based in Canada, Scotiabank operates in one of the world's best regulated banking systems, according to the International Monetary Fund and the World Economic Forum. This means we can deliver on promises - with a cost of funding that reflects a solid underlying risk profile - and we remain business focused, while competitors regroup and restructure.

On-the-ground experience makes the difference
Since people are the true enablers of trade, you should ask a potential correspondent about their on-the-ground experience and knowledge, including the tenure of local representatives and trade specialists, and the number of in-house regional processing centres. Working together, these teams can deliver time-sensitive, integrated trade solutions, in days not weeks.

While best-in-class correspondent banks have a history of industry awards to prove client satisfaction, they should also have testimonials of effective solutions. For example, Scotiabank's rapid response and innovative thinking recently earned kudos from a global precious metals producer who needed urgent trade instruments on opposite ends of the world. With our end-to-end support, we delivered guarantee letters to help the client finalize a multimillion-dollar project on a small South Pacific island, followed by a rush standby LC, allowing them to launch a massive mining development on the isolated North Atlantic coast. Our speed and expertise enabled the client to win lucrative new deals and overcome extreme financial, regulatory and geographic hurdles.

The essence of the issue: today's 'flight to quality' has created challenges for bankers, and reinforced the need to source trustworthy partners, with the network, commitment and expertise to support your clients in conditions foul and fair.

Author bio: As Executive Vice-President and Head, Global Transaction Banking at Scotiabank, Alberta Cefis leads the bank's correspondent banking, trade finance and cash management group. With a 28-year career in financial services, Ms. Cefis was named among The 25 Women to Watch in Banking in 2009 by US Banker magazine.