With post-pandemic trade on the rise, Intercredit Bank aims to help fund the expansion
By J.P. Faber
Before joining Intercredit Bank more than a decade ago, President/ CEO Simon Cruz had developed a reputation for financing some of the sexiest commercial projects on South Beach – hotels like the Delano and Raleigh, along with the Van Dyke mid-rise on Lincoln Road and other Art Deco properties. Since then, however, he has honed his skills for global clients, including loans for non-resident aliens and funding for international trade finance.
While banks that provide trade finance are not as prolific as they once were (thanks to the tightening of federal regulations), Intercredit has staked a claim to that all-important – and expanding – function.
“Right now, the bank’s activities are increasingly focused on the trade finance side,” says Cruz, with a concentration on Latin America. “With interest rates rising, trade finance is perfect because it’s a 180-day loan, so we can keep up with fluctuations up or down. It is becoming increasingly important in our portfolio.”
The way it works is straightforward and has changed little over the years. “A typical deal will be where you have a company in LatAm that wants to buy grain,” says Cruz. “You can approach it in one of two ways” – either through the buyer or the seller. Regardless of which side inaugurates the sale, representatives of the bank meet with both seller and buyer – the grain company here and the purchaser in Latin America – to assess the risk. “We meet with them physically; you have to know who the buyer is. We go down country to see their operations,” he says.
Assuming the risks are tolerable, the bank issues a 180-day loan. In the case of Intercredit, they lend up to $8 million per transaction; they also insure the loan through a third party, such as the French firm Coface, which maintains their North American office in Greater Miami. Those fees are tacked onto the loan, along with interest based on the U.S. prime rate, which the buyer repays after receiving and selling the financed goods.
Right now, Intercredit focuses on commodities such as grains, steel, and plastics, with assorted international sidelines. One of those sideline clients is CSI, a Missouri-based firm that leases $300 million worth of computer equipment and machinery annually; their Miami office leases mostly to Latin America. “Even though they are a very small bank [assets of $550 million] they are the No. 3 bank that helps us fund our transactions – out of a list of 39 lenders,” says Carlos Milian, head of the CSI office in Miami. “They share our same entrepreneurial spirit.”
Intercredit also finances residential real estate loans for Latin Americans. “We define ourselves as a community bank with a twist because we do a lot of trade finance in Latin America [but] we also specialize in non-resident aliens who are coming here – the Latin American buyer who wants a home here in the U.S.,” says Cruz, who previously worked for Chase Manhattan Bank in New York, Brazil, Barbados, and South Florida, as well as for Millennium Capital and Plus International Bank.
While Intercredit is a relatively small institution, they expect to increase their asset base to between $1 billion and $2 billion. “In terms of banking, there are a limited number of banks involved in trade finance,” says Cruz, a function usually left to large financial firms such as Hemcorp and Expo Tech. But, “My sense is that trade has been rising, and there is a ton of business out there. This is a function of the bank that is right now about 20 percent of our business – and growing.”
