global trade finance program mark rozanski
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GLOBALTRADE FINANCEPROGRAMMark Rozanski Europe/CIS Regional HeadApril 2009
Global Trade Finance Program
GTFP helps facilitate trade and manage trade risk through a global network of over 300 trade finance banks
• Key Features:
IFC umbrella guarantee covers country and commercial
risk for emerging market trade deals
AAA rated: Basel II benefits
Responsive: dedicated trade team providing same-day
transaction coverage
Flexible: Up to 100% cover
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GTFP Program Features
• Covers all private sector trade transactions
importer must be majority privately owned
• Covers all goods in accordance with IFC’s exclusion list
• SWIFT based guarantee structured as SBLC under UCP 600
• Payable after 15 days of presenting claim
• Commercial pricing
• Dedicated IFC trade finance team providing global coverage
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GTFP Open For Business and Growing
FY2007 FY2008 FY2009(9 months)
Program Ceiling $500 million $ 1 billion $ 3 billion
Issuing Banks (cumulative)
75 banks 38 countries
113 banks53 countries
150 banks74 countries
Confirming Banks (cumulative)
106 144 169
No. of Gtees (p.a.) 564 1,008 1,232
Volume ($ billion) 0.77 1.45 1.58
Impact Of Crisis Reflected In GTFP Activity
Monthly Volume FY2008 and FY2009
GTFP Trade Instruments
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67%
28%
4%
1%
Bid andPerformanceBonds
Bills ofExchange
AdvancePayment
Post-ImportFinance
Pre-ExportFinance
Letters ofCredit
Cumulative volume: US$4B
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Transactions By Country Profile(country ranking by US$ Volume for FY09)
Export Countries1. Brazil
2. China
3. Argentina
4. Russia
5. USA
6. Australia
7. Switzerland
8. Japan
9. UAE
10. United Kingdom
11. Turkey
12. Spain
13. Germany
14. Portugal
15. Netherlands
16. Singapore
17. Uruguay
18. Qatar
19. Korea
20. Kazakhstan
Import Countries1. Nigeria
2. Pakistan
3. Brazil
4. USA
5. Lebanon
6. United Kingdom
7. Angola
8. Russia
9. Vietnam
10. Bangladesh
11. Saudi Arabia
12. Germany
13. Switzerland
14. Kenya
15. Jordan
16. Ecuador
17. Argentina
18. Netherlands
19. Kazakhstan
20. UAE
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Transactions By Product Class
AGRICULTURAL PRODUCTS, FERTILIZER AND
FOODSTUFF28%
INDUSTRIAL GOODS & MACHINERY
16%
IRON & STEEL9%
OIL & GAS22%
COMMUNICATIONS, EQUIPMENT & SOFTWARE
2%
PLASTIC & RUBBER3%
AUTOMOTIVE & PARTS9%
CONSTRUCTION MATERIAL AND SERVICES
2%
TEXTILES & LEATHER5%
CONSUMER GOODS4%
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How GTFP Works: Import L/C Transaction
IFC Guarantee
Goods
ExporterInt’l
Bank(Confirming)
Payment
Importer
InternationalFinance
Corporation
Confirm
L/C
Documents
Request
L/C Issuance
Payment
Documents
Payment
Documents
LocalBank
(Issuing)
L/C in favor of exporter
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Import Financing: Mobile phones from Finlandto Russia
• L/C issued by Russian Bank
• Confirmed and post-financed by Finnish Bank
• Tenor: 6 months
• Value: €7.7M
• IFC Coverage: 50%
FinlandRussia
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Import Financing: Cars from Slovakia to Ukraine
• LC issued by a Ukrainian Bank
• Confirmed by an American Bank
• Tenor: 5 months
• Value: US$2.8M
• IFC Coverage: 85%
SlovakiaUkraine
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How GTFP Works: Pre-Export Finance
IFC Gtee
Goods
ImporterInternational
BankExporter
Pre-export Financing Pre-export Funding
LocalBank
Request
Pre-export Advance
SBLC/ PN for
Pre-export Funding
RequestIFC Gtee for Pre-Export
Loan
InternationalFinance
Corporation
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US$6 million US$6 million
Standby L/CStandby L/C
100% Gtee100% Gtee
Pre-Export Financing: Fish From Russia to UK
US BankUS BankRussian BankRussian Bank
UKRussia
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CIS Exports Supported Through GTFP
Sunflower Oil from RussiaTo LebanonLetter of CreditSwiss Confirming BankTenor: 3 monthsUS$2M (100%)
Tires from RussiaTo KazakhstanTrade Facility LetterUS Confirming BankTenor: 13 monthsUS$15.7M (64%)
Steel Products from RussiaTo China/France/FinlandPre-Export LoanUS Confirming BankTenor: 6 monthsUS$10M (100%)
Aluminum from UkraineTo TanzaniaLetter of CreditGerman Confirming BankTenor: 7 monthsUS$375K (100%)
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GTFP Transaction Examples
NigeriaAdvance Payment Gtee
Construction of Power Plant
Japanese Engineering Co.
Confirming Bank in UK
US$ 11 million (100%)
JordanLetter of Credit
Auto parts to Iraq
Confirming Bank in UAE
Tenor: 6 months
US$ 9.8 million (40%)
MongoliaLetter of Credit
Tractors from USA
Confirming Bank in USA
Post-import financing for 2 yrs
US$ 0.9 million (100%)
KazakhstanLetter of Credit
Baby food from Switzerland
Confirming Bank in Canada
Tenor: 12 months
US$ 4.8 million (100%)
Sri LankaBid Bond
Speed Boats to Oman
Confirming Bank in Oman
Tenor: 14 months
US$ 2 million (100%)
NigeriaDocumentary Collection
Rice, Pharma, Tyres, ACs Confirming Bank in UK
Discount Accepted B/E
US$ 4.3 million (100%)
LebanonIrrevocable Reimbursement Undertaking
Construction Machinery
Confirming Bank in Austria
US$ 11 million (85%)
JordanStandby LC
Construction Project in UAE
Confirming Bank in UAE
Post-shipment export financing
US$ 7.5 million (100%)
RussiaPre-export financing
Pork meat from Brazil
Confirming Bank (Funding Bank) in Germany
US$ 1 million (50%)
PakistanLetter of Credit
Fertilizer from Tunisia
Confirming Bank in UK
Tenor: 6 months
US$ 7.2 million (70%)
YemenLetter of Credit
Rice from Pakistan
Confirming Bank Germany
Tenor: 6 months
US$ 0.75 million (100%)
ArgentinaPromissory Note
Pre-export financing
Confirming Bank in USA
Tenor: Up to 6 months
US$ 23 million (100%)
LebanonBid Bond
Construction Project in Qatar
Confirming Bank in UAE
Tenor: 3 Months
US$ 2.7 million (85%)
NigeriaPerformance Bond
Supply of methanol (5 Mths)
Confirming Bank in South Africa
US$10 million (100%)
Sierra LeoneLetter of Credit
Telecom Cables from Spain
Confirming Bank in Spain
Tenor: 3 Months
US$ 0.39 million (100%)
MaltaDiscount against Acceptance of LC dox (Third Bank LC)
Machines to West Africa
Confirming (Discounting) Bank in China
US$ 0.3 million (100%)
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GTFP Issuing Bank Coverage
AFRICA27 countries
44 banks
LATIN AMERICA AND CARIBBEAN
15 countries 37 banks
E. EUROPE/CENTRAL ASIA12 countries
25 banks
ASIA11 countries
23 banks
MIDDLE EAST & NORTH AFRICA
9 countries 21 banks
150 Banks in 74 countries
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New Target Country Coverage
Europe / CIS•Estonia•Latvia•Lithuania•Romania•Serbia•Uzbekistan
Asia•Philippines•Maldives•Lao PDR•India
Africa•Cape Verde•Cameroon•Central African Republic•Chad •Ethiopia•Guinea•Comoros
Latin America and Caribbean•Colombia•Guatemala•El Salvador•Chile•Peru•Panama•Jamaica
Mid-East/N.Africa•Iraq•Morocco•Tunisia•Libya
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GTFP Confirming Banks
Top Confirming Banks (by US$ volume FY09)
162 Banks in 75 countries
1. La Caixa
2. BNP Paribas
3. JP Morgan Chase
4. Commerzbank/Dresdner
5. Standard Chartered
6. Deutsche Bank
7. Intesa Sanpaolo
8. Citibank
9. Wachovia
10. Commonwealth Bank Australia
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GTFP Documentation
• Two GTFP Template Agreements– Issuing Bank Agreement– Confirming Bank Agreement
• Streamlined “framework” structure
• Includes SWIFT templates for application and issuance of IFC’s standbys
• Banks can join both as Issuing and Confirming Banks
• Financial covenants as required for Issuing Banks– Negotiated following IFC credit review and due diligence/KYC
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Using GTFP
• How to use GTFP:
– Check our website: www.ifc.org/GTFP for country and bank coverage
– Contact your bank or your correspondents to start a transaction
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Our Website
www.ifc.org/gtfp