To date, it is mainly the US institutions that have shown an appetite for this type of risk. They have begun to offer this kind of product to their US customers operating in European export markets. Wishing to replicate their success across North America, they look for a one-stop shop package of products which can be offered across the European jurisdictions. Developing such a homogenous product is no easy task given the differences between the civil law and common law jurisdictions, particularly in areas such as effective security, trust law, and the variations in insolvency regimes. The problems are not insuperable, however.
Most countries recognise the concept of security over trade receivables.
Moreover, it is possible to provide loans and credits across borders provided the institution is regulated by a central bank in at least one EU jurisdiction. In addition, any new products will need to be customer-friendly and based on a standard package. Legal costs will need to be contained so that the upfront launch costs are not a disincentive to business. First and foremost, the provider of finance needs to be satisfied that it is compliant with the regulatory regime in the relevant countries, so that an offer of finance can proceed. Assuming that that 'first base' is achieved, a critical question is the quality of the financier's security over the borrower's assets.