Standard Chartered Bank expects importers and exporters to move back to letters of credit to finance their trade transactions, from the 'open account' method, reducing the risk of counter-party default. Group executive director for Hong Kong, China and Northeast Asia, Mervyn Davies, said banks generally thought the risk of counter-party default in trade transactions was rising, due to slowing economic growth in the region. He said troubled economies, such as Indonesia, were experiencing more difficulties in importing raw materials to support manufacturing operations, because suppliers were very cautious. Trade transactions on an open account basis involve sale arrangements in which an importer is given a deadline before which payment should be made to the exporter. Letters of credit are instruments backed by guaranteed payment obligations from the issuers - usually banks on behalf of the importers - and are generally considered substitutes for cash in trade transactions. Mr Davies said the migration from 'open account' to letters of credit transactions created a tremendous opportunity for his bank. 'We have invested tens of millions of pounds in our trade transactions processing capabilities,' he said. Standard Chartered achieved a 23 per cent increase in trade finance last year. The growth came from a 'private label' trade-transactions processing service the bank provided to six overseas banks.