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Introduction to theIntroduction to theTrade Facilitation ProgrammeTrade Facilitation Programme
Cairo, 23Cairo, 23rdrd April 2012 April 2012
Export Production Transport Storage &
distribution Receivables
TFP application areasTFP application areas
Facilitates financing of all stages of the trade chain
TFP – How does it work?TFP – How does it work?
EBRD supports the development of trade finance in partner banks by
Basic and Advanced Trade Finance training courses and advisory services Guarantees that cover risks arising from trade finance transactions in favour of
Confirming Banks– TFP guarantee agreements are signed with local issuing banks (IBA) plus
agreement with confirming banks (CBA) all over the world– Currently: 100 Issuing banks and over 800 Confirming banks
Short-term advances/financing to banks in the Countries of Operation for trade finance purposes
– TFP Revolving Credit Agreements are signed with local banks (RCA)– Currently 56 RCAs
TFP Facilities - Two Main ComponentsTFP Facilities - Two Main Components
Trade Facilitation Programme(EUR 1.5 bln. million framework)
Trade Finance Guarantee
Facility(fully operational
since 1999)
Trade Finance Cash Facility -
Revolving Credit Agreement (RCA)(launched in 2000)
TFP – Guarantee TransactionTFP – Guarantee Transaction
Always involves a local bank (“Issuing Bank”) which issues a trade finance instrument (e.g. a letter of credit) and a foreign bank which confirms it to the exporter (“Confirming Bank”)
The trade finance instrument (e.g. L/C) ensures that the exporter receives payment upon or after delivery
EBRD Guarantee covers payment risks of the Issuing Bank to the Confirming Bank
Different from/complementary to export credit insurance: Stand-by letters of credit (L/C) (under UCP 600) usually issued within 24 hours Cover all types of trade finance instruments issued by EBRD client banks: letters
of credit, including deferred payment/post-financing; bank payment guarantees; bid bonds, performance bonds; advanced payment guarantees; stand-by L/Cs, etc.
Issued only to Confirming Banks, not to exporters or importers Payable 15 days after receipt of first written demand Cover up to 100% of the commercial and political risk which cannot be covered by
commercial banks, commercial credit insurance or ECAs Cover exports, imports and distribution of imported goods in EBRD countries of
operation, irrespective of the country of origin (no origin rules) Tenor: max. 3 years Amounts: no minimum amount
TFP - GuaranteesTFP - Guarantees
TFP: Structure and ApplicationTFP: Structure and Application
Confirming Bank,Worldwide
Issuing Bank,Country of Operations
BuyerSeller
L/C Issuance with request to confirm (L/G Issuance with counter-guarantee,
other banking trade finance instruments) Application for L/C openingL/C Confirmation
EBRD issues a Stand-By Letter of Credit covering the risks of Issuing Bank
towards the Confirming bank
SALES-PURCHASE AGREEMENT
Example – Import of foodstuff from Europe Example – Import of foodstuff from Europe to Egyptto Egypt
An Egyptian supermarket chain buys foodstuff from Italy
An Egyptian bank issues a letter of credit, confirmed by an Italian bank
EBRD guarantees up to 100% of the political and commercial payment risk
Example – Exports from Egypt to Example – Exports from Egypt to FYR MacedoniaFYR Macedonia
An Egyptian company sells air conditioners plus spare parts to an importer in FYR Macedonia
A Macedonian bank issues a letter of credit, confirmed by an Egyptian bank
EBRD guarantees up to 100% of the political and commercial payment risk
Example – Exports from Egypt to Example – Exports from Egypt to Russian FederationRussian Federation
An Egyptian exporter sells fruits to an importer in Novorossiysk, Russia Federation
A Russian bank issues a letter of credit, confirmed by an Egyptian bank
EBRD guarantees up to 100% of the political and commercial payment risk
All types of goods, commodities and equipment, except for EBRD’s general exclusion list and environmental exclusion list
Facilitated by:– L/C, SBLC, payment guarantees and counter-guarantees– trade-related promissory notes and bills of exchange– bid, performance bonds, contract guarantees– construction guarantees, leasing guarantees– credit card and other payment guarantees
Types of Goods and Types of Goods and Trade Finance InstrumentsTrade Finance Instruments
How Egyptian banks can join the How Egyptian banks can join the EBRD TFPEBRD TFP
Issuing Bank or/and
Confirming Bank
100 Issuing Banks (IB) in 18 Countries100 Issuing Banks (IB) in 18 Countries
Country IB # Armenia 9Azerbaijan 7Belarus 9Bosnia & Herzegovina 2Georgia 6Kazakhstan 5Kyrgyz Republic 2Lithuania 1Latvia 1
Country IB #FYR Macedonia 5Moldova 4Mongolia 2Romania 2Russia 26Serbia 7Tajikistan 4Turkmenistan 1Ukraine 7
TFP – Issuing Banks Selection Criteria TFP – Issuing Banks Selection Criteria
Readiness to develop trade finance business with local importers and exporters
Acceptable credit standing
Diversified loan portfolio; limited lending to related parties
Transparent ownership structure
Integrity of owners and management
Corporate governance
Money laundering procedures
Environmental due diligence
800 Confirming Banks in 77 800 Confirming Banks in 77 CountriesCountries
TFP – Confirming Banks Selection CriteriaTFP – Confirming Banks Selection Criteria
• Readiness and interest to develop and conduct trade finance business with EBRD countries of operation
• Advanced and experienced trade finance procedures and operations
• Standardised confirming bank agreement (signed by 800 banks)
Trade Finance Cash FacilityTrade Finance Cash Facility
Local Company
Local Bank (EBRD’s borrower)•Takes local company risk
•Borrows from EBRD•On-lends to the local company
EBRDTakes local bank risk and lends to the local bank against sub-borrower base
Repayment to EBRD EBRD’s disbursement
loan repayment loan disbursement
Case study – Import of insulators into Case study – Import of insulators into KazakhstanKazakhstan
Saint-Gobain Isover (Finland) sells heat insulator to an importer in Kazakhstan
Bank in Kazakhstan request a cash disbursement from the TFP of the EBRD
EBRD disburses EUR 0.5 million for 1 year to cover the post-import financing
Case study: Export of wine from MoldovaCase study: Export of wine from Moldova
A Moldovan wine producer requires pre-export finance for purchase of agro-chemicals and equipment and export of wine to Russia
EBRD grants a loan to a Moldovan bank which the bank can use to fund a loan to the Moldovan exporter (amount USD 170,000, tenor 8 months)
Financing of distribution of imported goods:Financing of distribution of imported goods: EBRD provides liquidity in form of cash advances in EBRD provides liquidity in form of cash advances in local or foreign currency to client bankslocal or foreign currency to client banks
1.THROUGH DEFERRED PAYMENT L/C EBRD
2. THROUGH CASH ADVANCES
Peugeot RussiaSales contract
in EUR Sales
contract in RUB
Car dealer in Russia Loan facility
in RUB
tenor 3 – 6 months After delivery
TFP cash advances in RUB
Bank in RussiaSales Contract in EUR Guarantee
facility in EUR
Opens L/C in favour of Peugeot France with payment 3 - 6 months after delivery
Peugeot France
Car dealer in Russia
Peugeot France
Bank in Russia
TFP guarantee facility in EUR
EBRD
EBRD TFP - Factoring FacilitiesEBRD TFP - Factoring Facilities
EBRD grants loan facilities to local banks and factoring companies to fund their portfolio of domestic and export factoring transactions.
Tenors: max. 6 months, revolving; typically 90 days. Closely matching asset conversion cycle with monthly up-
dates on list of invoices which have been financed. First factoring facilities were approved in 2007 for
Promsvyazbank Russia and Ukreximbank in Ukraine and Credit Bank of Moscow in 2008.
• Total number of transactions: 12,000• transactions issued by 142 banks in 22 countries
of EBRD’s Operation
• confirmed by 356 banks in 56 countries
• Total amount of trade supported:EUR 7.83 billion
• Amount of EBRD guarantees and cash advances:EUR 7.1 billion
Achievements to Date (1999 - December 2011)Achievements to Date (1999 - December 2011)
EBRD TFP EBRD TFP Business Volumes p.a. 1999 - 2011Business Volumes p.a. 1999 - 2011
-
200
400
600
800
1,000
1,200
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Volume, € mln
TFP – 1,616 Trade Finance Transactions in 2011TFP – 1,616 Trade Finance Transactions in 2011
1. Belarus (381)2. Russia (300)3. Georgia (277)4. Ukraine (144)5. Armenia (141)6. Kazakhstan (117)7. Azerbaijan (80)8. Moldova (64)
9. FYR Macedonia (63)10. Bosnia & Herzegovina(14)11. Serbia (13)12. Tajikistan (9)13. Croatia (5) 14. Turkmenistan (4)15. Kyrgyz Republic (2)16. Mongolia (2)
EBRD TFP – Exports from Egypt to EBRD TFP – Exports from Egypt to Eastern Europe & CIS countriesEastern Europe & CIS countries
- Cosmetic products to Armenia
- Rice to Bosnia and Herzegovina
- Air conditioners to Croatia
- Charter flights to Georgia
- Marble and granite to Macedonia
- Oranges and fruits to Russia
- Medicine to Tajikistan
- Machinery to Ukraine
TFP in Egypt TFP in Egypt
4 Confirming Banks: - Commercial International Bank
- Egyptian Gulf Bank
- National Bank of Egypt
- Suez Canal Bank
Issuing Banks: Q3 onwards
TFP – Technical Cooperation ProjectsTFP – Technical Cooperation Projects
EUR 6.5 million have been used for TFP TC consultancy services and trainings of over 1,000 trade finance professionals from 210 banks in 17 of EBRD’s countries of operation
TFP Trade Finance Training & TFP Trade Finance Training & Advisory Projects 2010 & 2011 Advisory Projects 2010 & 2011
Topics: Trade Finance PracticesAdvanced and Structured Trade
FinanceFactoringUCP 600Fraud PreventionCorrespondent BankingRestructuring Trade Finance
DealsLegal Proceedings in connection
with defaulted trade finance transactions
e-learning
Projects were generously sponsored by Taipei China, Switzerland, Italy, the Netherlands, New Norway Cooperation Fund, Western Balkans Fund, Early Transition Country Fund, Special Share-holder Fund of EBRD.
EBRD E-Learning ProgrammeEBRD E-Learning Programme The ICC’s technology partner Coastline Solutions has
assisted EBRD to develop an online training programme, incorporating ICC content on rules and operations in trade finance;
Project funded by the EBRD’s special shareholder’s fund and offered free of charge to Issuing Banks in EBRD’s countries of operations.
To date over 300 trade professionals from over 80 banks in 21 countries have enrolled.
EBRD Trade Finance e-Learning ProgrammeEBRD Trade Finance e-Learning Programme
2012 Graduation Ceremony – 7 Feb in 2012 Graduation Ceremony – 7 Feb in Moscow Moscow
In partnership withIn partnership with
5th Annual Russia & Eurasia Trade & Export Finance Conference
Best students received further scholarships and sponsored training programmes in leading European confirming banks and training companies
EBRD TFP - Co-Financing PartnersEBRD TFP - Co-Financing Partners ACE Global Markets (AGM) & Lloyd´s of
London Confirming Banks Donor Risk Sharing Funds Export Credit Agencies FMO Netherlands OPEC Fund for International Development Private Investment Funds
EBRD – Best Development Bank in TradeEBRD – Best Development Bank in Trade
Readers of Global Trade Review (GTR),Trade & Forfaiting Review (TFR) and Trade Finance Magazine have voted the EBRD “Worldwide Best Development Bank in Trade in 2008, 2009, 2010 and 2011”
EBRD invites other development banks, commercial financial institutions, export credit agencies and donors to co-finance or co-finance with the EBRD
EBRD TFP – Advantages for EBRD TFP – Advantages for Issuing Banks and Confirming Banks in EgyptIssuing Banks and Confirming Banks in Egypt
Banks in Egypt can join the programme as Issuing Banks and/or Confirming Banks and benefit from EBRD’s network of more than 800 Issuing Banks and Confirming Banks worldwide
Benefit from EBRD’s high level trade finance training programmes and advisory services (offered free of charge to Issuing Banks in Egypt)
Benefit from EBRD’s additional risk taking capacity when foreign commercial banks cannot provide sufficient risk cover or liquidity; sometimes also longer tenors (maximum 3 years) and/or higher transaction amounts than commercial banks can provide
Fees and interest charged only in case of utilisation and in line with the pricing charged by foreign commercial banks
Fast decisions and processing, usually within 24 hours EBRD invites commercial banks, insurance underwriters and development
agencies to co-finance with the EBRD
EBRD TFP – Conditions for joining EBRD TFP – Conditions for joining the TFP as Issuing Bankthe TFP as Issuing Bank Meet all covenants and conditions of the
EBRD Issuing Bank agreement Regular reporting to the EBRD (financial
reports, reports on underlying trade finance transactions for which TFP facilities have been used, statistics, etc.)
www.ebrd.com/tfp
ContactsContacts
Financial Institutions – Trade Facilitation Programme TFP)
European Bank for Reconstruction and Development
One Exchange SquareLondon EC2A 2JNUnited KingdomTel: +44 20 7338 7614Fax: +44 20 7338 6119/7029e-mail: [email protected]
www.ebrd.com/tfp