The Federal Reserve Board has published a research note on U.S. banks' trade finance activities, drawing on Y-14, FFIEC 009 and call report data. The note concludes that trade finance still supports a meaningful share of international trade, but the business is highly concentrated in the largest U.S. banks, has declined over time, and appears to create only limited direct risk for the banking system because it remains a small part of banks' overall activities. For the fourth quarter of 2024, Y-14 data show about USD 70 billion of trade finance loans to foreign firms and USD 30 billion to U.S. firms, while FFIEC 009 data show USD 57 billion of trade finance claims and call reports show roughly USD 15 billion of outstanding commercial letters of credit. Activity is concentrated in a small number of institutions: the five largest providers account for more than 75 percent of trade finance loans and more than 87 percent of trade finance claims, while most reporting banks show no activity in these categories. The note also finds a sustained decline in trade finance over the past decade, including a fall in trade finance claims relative to U.S. goods exports and a general downward trend in letters of credit since the global financial crisis, despite a pandemic-era jump. Direct financial stability risks are described as limited because trade finance is short-term, often secured or insured, and small relative to balance sheets. In 2024, trade finance loans represented 3.25 percent of total commercial and industrial loans and 0.4 percent of total assets for Y-14 reporters. The note adds that the more important channel for bank risk may be broader lending to firms affected by trade shocks, tariffs and trade policy uncertainty rather than banks' direct trade finance exposures.
Federal Reserve Board 2026-05-08
Federal Reserve Board research finds U.S. bank trade finance is concentrated in large banks, has declined over time and poses limited direct systemic risk
The Federal Reserve Board has published a research note finding that U.S. banks’ trade finance activities remain meaningful but declining and highly concentrated, with the five largest providers accounting for over 75 percent of trade finance loans and over 87 percent of trade finance claims. For the fourth quarter of 2024, trade finance exposures were small relative to balance sheets, and the note concludes that direct financial stability risks from these activities are limited, with broader lending to firms exposed to trade shocks posing a more important risk channel.