2025 BAFT MTLA explained: How a new framework is modernising trade lending - Trade Treasury Payments

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2025 BAFT MTLA explained: How a new framework is modernising trade lending

Trade lending between financial institutions has traditionally depended on structured agreements to operate efficiently. The BAFT Master Trade Loan Agreement (MTLA), first launched in 2014, was one such framework, aimed at streamlining interbank trade finance for practitioners.

While it served the industry well for a period, the evolving financial landscape eventually began to outpace the original document. The launch of the 2025 MTLA English Law version marks a timely and necessary update.

Deepesh Patel, Editor at Trade Treasury Payments (TTP), sat down with Geoff Wynne, Partner at Sullivan, for a live podcast recording to explore what’s new, why it matters, and how this updated model better reflects cross-border finance as it stands today.

Why the BAFT MTLA needed a rethink

The original MTLA came from a need to streamline how large banks funded their smaller counterparts engaged in trade lending. It served its purpose well, offering a degree of standardisation that was useful at the time. 

But by 2025, core elements had shifted. 

Wynne said, “There was a thing called LIBOR, which was quite a convenient way of calculating interest, which many of us had lived with for many a year. That had its demise. As a result of that, something needed to change in the document.”

Meanwhile, political events like Brexit had major implications for contract enforcement across borders, and it became abundantly clear that the MTLA needed more than a few minor updates. It needed a clean slate. 

With the benefit of starting from a clean slate, the revisers made the clarity of the revamped agreement a top priority. The original MTLA wasn’t always clear about who it was for. Was it designed for loans between banks and corporates? For banks lending to other banks? 

The new version puts this to rest. Its primary use is now unmistakable. One bank lends to another, allowing the borrower to support trade finance transactions with its own clients. 

From one-size-fits-all to made-to-measure

The 2014 MTLA was structured as a single, monolithic agreement. Users had to work through dense clauses packed with optional provisions meant to cover every conceivable scenario, a structure that proved cumbersome. 

Wynne said, “If you looked at a template form, you would start asking questions like: ‘What currency, what country, where would we make a start, what interest rate?’… you would have a huge number of optional parts that you had to work.”

Instead of bundling everything into one contract, the new MTLA is modular. It begins with a master agreement that defines the relationship between the two banks. Built onto this firm base agreement, each individual trade loan is now documented through a separate request and acceptance. 

If one bank wants to lend euros from its Paris branch to another bank’s Frankfurt office, that specificity is captured in the trade loan request, not buried in the core document.

Now, instead of wading through pages of generic terms, banks can focus on the particulars that matter for each deal.

Built for the real world, not just the legal one

Legal documents often try to cover every base, which can sometimes result in a contract that reads more like a puzzle than a partnership. The new MTLA, condensed into a compact, digestible document, far shorter than many standard finance agreements, avoids this trap.

Wynne said, “There are plenty of places where you can find the wording that you want without having to put a huge amount of optionality into this master.” 

This accommodates the operational realities of multi-branch banks and global funding needs. For example, a UK bank may want to process euro-denominated loans through its Paris office. The agreement supports this kind of decision without the need to rewrite the base contract.

Wynne added, “Because it’s not currency-specific, it means that… the lender and borrower can agree on term SOFR, term SONIA, whatever they want, depending on the currency and depending on the specific transaction they want to finance.”

One of the most welcome features is the optional sustainability clause. Rather than forcing all parties to wade through green finance language that may not apply, the MTLA houses these provisions in a standalone annex. 

If a borrower wants to request a sustainability-linked loan, they can opt in. If the lender agrees, the annex becomes active. If not, the base agreement remains unaffected.

A tool for closing the trade finance gap

Trade finance is a crucial tool in global commerce, yet it is unevenly distributed. Smaller banks, particularly in emerging markets, often struggle to secure funding for their clients while larger banks may hesitate to extend credit without a clear, standardised way to manage those relationships. 

The MTLA is designed to change that. 

By simplifying the relationship between lender and borrower banks, it creates an accessible framework that can be reused again and again.

Wynne said, “The idea is that it’s a good standard. Remember, it’s an uncommitted, unsecured facility. Bank and borrower bank need to know each other and be happy to document that relationship and then to look at what the underlying use of funds will be.”

The document doesn’t dictate how the borrower must handle its client relationships. That autonomy respects the borrower bank’s local knowledge and operational context. At the same time, it gives the lender the structure and visibility it needs to ensure the funds are used appropriately. 

It won’t solve everything. But by making the lending process easier, cleaner, and more consistent, it could unlock more funding for those who need it most.

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Contracts don’t usually generate much enthusiasm. But when a standard agreement removes obstacles and encourages banks to lend into markets that need capital, it’s worth a closer look. 

The 2025 BAFT MTLA English Law achieves this by aligning form with function. A clear purpose. A modular design. Practical flexibility. Optional enhancements. All wrapped into a framework that banks can use over again without starting from scratch.

For banks operating across borders and currencies for institutions trying to meet modern compliance standards while growing their trade finance portfolios, the MTLA offers a way forward. Not by doing more, but by doing things better.