DUBAI: National Bank of Dubai (NBD), an Emirates NBD company, and FIMBank plc. – a Malta-based trade finance institution – announced that Mena Factors Limited, a joint venture between the two banks, has commenced operations at the Dubai International Finance Center (DIFC).
Mena Factors is the first specialist financial institution in the GCC region to provide a one-stop-shop offering factoring and forfaiting services.
Nasser Al Shaali, CEO of the DIFC Authority, said, “The DIFC is a center for new financial product innovations, and is expecting a rapid development in the range of financial services offered to companies in the region. Small and Medium Enterprises (SMEs) are a crucial part of our economy, and by targeting this large and growing group of companies, Mena Factors is supporting the overall development of the market.
Mena Factors said it aims to meet the requirements of local, regional and international businesses across the GCC initially, and subsequently expanding to include the Middle East and North Africa region. These services are designed to have a strong appeal to those undertaking trade finance transactions and trade receivables, with a focus on SMEs.
Factoring is a form of commercial finance whereby a business sells its accounts receivable (in the form of invoices) at a discount. Factoring is considered off balance sheet financing, in that it is not a form of debt or a form of equity, which makes it more attainable than traditional bank and equity financing.
Forfaiting, or medium-term capital goods financing, is the discounting of international trade receivables on a without recourse basis.
