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The Banking and Corporate Finance Training Specialist International Trade Finance A 3 Day Masterclass This course is presented in London on: 13 – 15 November 2018 This course can also be presented in-house for your company or via live on-line webinar

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The Banking and Corporate Finance Training Specialist

International Trade Finance

A 3 Day Masterclass

This course is presented in London on:

13 – 15 November 2018

This course can also be presented in-house for your company

or via live on-line webinar

http://redcliffetraining.com [email protected]

+44 (0)20 7387 4484

Course Overview

Participants will: Learn to identify customer needs and recommend appropriate product solutions Learn how to assess various risks to both bank and customer in international trade

transactions Understand ways of mitigating the underlying risks associated with trade finance

transactions and carry out the processes involved in documentary collections, documentary letters of credit and guarantees

Explore the purpose and application of the various International Chamber of Commerce (ICC) rules and practices used in international trade

Have an introduction to core trade finance products

Explore the current market place including Brexit, Trump and the traditional bands of clients

Learn about financial crime compliance & sanctions Understand the risk based approach and the impact on trade finance Get to grips with DDD, FATF, TI, CPI and their impact

Understand and identify the traditional risks Review the key products and how the customer analyses his risk

Master an understanding within the supply chain management and finance Learn about the traditional letters of credit and the four contract concept Explore the standby letters of credit and their history & origin

Learn about exporting finance issues and controlling credit exposure Explore the effective use of collections for short-term finance

Get to grips with the international demand and contact guaratees/bonds Learn about the commodity sector and its players

Day 1

The trainer is a leading trade finance practitioner and trainer with almost 40 years banking experience. Prior to taking early retirement, he was responsible for the risk

management of the UK trade book for a top international bank, with whom he had spent his whole banking career as a Relationship Manager, Credit Risk Approver, Trade Finance Manager and latterly their Trade Portfolio Risk Manager.

He has provided training to banks globally on trade and receivables finance, risk

mitigation, AML and sanctions compliance, is ACIB qualified and has completed the ICA Certificate in Trade Based Financial Crime Compliance issued by the University of Manchester Business School.

Day 2 & 3

Your course director has spent more than 40 years in the banking and financial sector, much of it in a senior managerial/Director role. He is a former Institute of Banking Lecturer,

having gained distinctions in the exams. He is a subject matter aspect on all aspects of retail, corporate and global banking, including risk management and regulatory compliance. He has lectured extensively to both leading global financial institutions and to

smaller bespoke specialists. He has delivered extensive programmes in all parts of the world including the USA, Europe, MENA, Africa and Hong Kong. He is currently an accredited

Master Trainer at the world’s biggest global bank.

Course Objectives

Background of the Trainers

http://redcliffetraining.com [email protected]

+44 (0)20 7387 4484

Day One Introductions

Trainer & participants What do you know?

Aims and objectives. Course context.

What is Trade Finance? Benefits of trade finance to businesses and banks

Introduction to the trade cycle Incoterms 2010

Summary of terms The advantages/disadvantages to Importer/Exporter in the use of Incoterms 2010 Principal methods of settlement

General Risk Considerations Trade finance products vs open account

Financial Crime Compliance - AML, CFT and Sanctions Know Your Customer (KYC) and Customer Due Diligence (CDD) Correspondent Bank risk

Counterparty risk Credit risk

Case Study: Short exercise to check understanding of Incoterms application. Key characteristics of Commercial Documents used in international trade

Invoices (commercial, tax, customs, consular, pro-forma invoice) Marine/Ocean Bills of Lading

Title, transfer Control of goods (transferable B/L v. straight consigned) Delivery considerations

Other forms of transport document Multimodal Transport Document

Air Transport Document Road, Rail or Inland Waterway Transport Documents Non-negotiable bills of lading

Insurance Policy/Certificate Other certificates (Certificate of Origin, Inspection Certificate, Phytosanitary, etc)

Bills of exchange Exercise - using examples of commercial documents to help participants to understand their technical content, the significance and importance of particular

documents.

Core Trade Products Import / Export Documentary Collections

Letters of Credit Guarantees

Import / Export Documentary Collections Principal parties (buyer, seller, presenting bank, remitting / collecting bank)

Benefits to importers and exporters of Documentary Collections

Course Content

http://redcliffetraining.com [email protected]

+44 (0)20 7387 4484

Relationship between principal and banks

Role of banks (incl. correspondent banks / agency arrangements) Legal and practical issues re the duties of the banks involved in handling collections Conditions for release of documents

Areas of risk: Usance collections

Partial payments Avalisation (so rare would exclude) Release of goods on trust

Procedures for Protest of Bill of Exchange (B/E) and underlying risks Complexities of the ICC Uniform Rules for Collection (URC 522)

Case Studies a) to consider the needs of an exporter or importer and suitability of using

Documentary Collection in a cross-border transaction and / or b) to check understanding of the collections procedure and the practical

application of the URC 522

Documentary Letters of Credit

Principal parties (buyer, seller, issuing bank, advising bank, confirming bank) Benefits to importers and exporters of Documentary Letters of Credit Relationship between buyer, seller and banks

Advantages / disadvantages of letters of credit Risk factors re issuing letters of credit

The autonomy of letter of credit operations (Independence Principle) Importance of the application form (legal issues) Instructions to issue/amend credits

Workability of the credit Jurisdiction

Introduction to the International Chamber of Commerce UCP 600 Rules: Structure and obligations under letter of credit;

Availability of credits, expiry date and place for presentation Availability by payment, deferred payment, acceptance, deferred payment standard

for examination of documents; dealing with discrepant documents, waiver and notice of refusal;

Examination of documents Key elements of the main articles of UCP 600

The standard for examination of documents: “no conflict” rule – article 14 Processing non-compliant documents as Nominated/Confirming Bank Processing non-compliant documents as Issuing Bank

Risks arising from non-adherence to UCP 600 Legal cases and ICC Banking Commission opinions

DOCDEX – dispute settlement mechanism of ICC for trade finance Analysing irregularities in documents

http://redcliffetraining.com [email protected]

+44 (0)20 7387 4484

International Standard Banking Practice ISBP 745 (2013 Rev)

What constitutes an “alteration” or “addition” to a document, when and how should these be authenticated?

How should documents be signed, if this is not explicitly stated in the credit? How should one handle typing errors on documents regarding the name and address,

different addresses of same company, etc.?

Advising, confirming, reimbursing credits

Obligations and Risks associated with the Advising Bank, Nominated Bank, Confirming Bank

The use of the Bill of Exchange in Letters of Credit

Application of the Uniform Rules for Bank-to-Bank Reimbursement ICC 725 Assignment of procceds

Case Studies a) to consider the needs of an exporter or importer and suitability of using a

Letter of Credit in a cross-border transaction and / or

b) to check understanding of the collections procedure and the practical

application of the UCP600

Other forms of Letter or Credit A review of the purpose, procedure and risks associated with: Irrevocable / revocable

Usance credits Transferable Credits

Back-to-Back Credits Red and Green Clause Credits Revolving / Reinstatement Credits

Standby Credits Synthetic Credits

Guarantees Types of guarantees:

Tender/bid bonds Advance payment guarantees

Performance bonds Retention money guarantees Warranty Guarantees (Maintenance guarantees)

Bail bonds Payment guarantees

Indemnities/counter guarantees Risk Assessment (including risk weighting) Wording of Guarantees

Demand under guarantees: issues Extend or Pay demands

Expiry and Cancellation Uniform Rules for Demand Guarantees 758: main principles, URDG 758 guarantee sample wording, sample clauses

Case Study to review guarantees which caused a loss to the bank. Discuss the

practical application of URDG 758 and potential for use in local banking practice and legal jurisdictions.

http://redcliffetraining.com [email protected]

+44 (0)20 7387 4484

Financial Crime Compliance

Consituent parts (money laundering, terrorist financing, sanctions breaches) Current examples

An introduction to the nature of compliance risk in cross border transactions Why are international trade transactions increasingly a target for abuse? The consequences of non-compliance (for banks, corporates and individuals)

Risk assessment from FCC perspective Case Study: Participants work in groups to consider the needs of various SMEs

and to identify the appropriate product solution.

Summary of day’s learning

Opportunity to refresh clarify key points, clarify Review main learning points.

Day Two

The Current Market Place Recent evolution and current developments

The challenge of emerging markets The challenge of China

Brexit President Trump New products

The traditional three bands of clients: Global and Large Corporate, MME’s, the rest! Understanding trade finance at a fundamental level.’

Typical users of Trade Finance products and services

Financial Crime Compliance & Sanctions Understanding the risk based approach Impact on Trade Finance

TI, CPI and its impact FATF

DDD and the need to obtain a clear line of sight across the value chain Money laundering methodologies

Ghost payments and variations Under/over invoicing and variations Documentary fraud

PEPS Sanctions

Risk mitigation, management and transfer Case Study: Delegates will be asked to consider a real case to identify FCC risks and suggest how they may have been managed and mitigated

Traditional Risks – The Critical Issues

Understanding, identifying and managing risk Credit risk, Market risk & Operational risk Sovereign, Political / Country risk

Institutional risk / Bank risk Corporate and other critical risks

Importer and Exporter’s risk Other risks in the transaction and how to mitigate them (transport risk, warehousing,

force majeure, etc.)

Risk mitigation, management and transfer

http://redcliffetraining.com [email protected]

+44 (0)20 7387 4484

Case Study: An example using three different payment methods. Delegates will be

asked to identify and explain what type of client would choose one in preference to the other two and why, to illustrate risks in reality.

Review of Key Products How does the customer analyse his risk?

Which products does he use and why? Payment in Advance

Open Account Collections – Outward & Inward / Clean & Documentary Letters of Credit (covered in more detail below)

Risks and opportunities Control possibilities

Case Study: Showing how clients sometimes see the world of risk in a different way to bankers.

Supply Chain Management & Finance

The origins of SCM and what does it mean in practice Understanding the issues in SCM – “the tug of war” between supplier & buyer Bringing about a “balance” between parties for effective processing

Understanding about movement of ‘information’ ,’goods’ and ‘cash’ Supply Chain Finance Main SCF models: accounts payable - centric, accounts receivable,

BPO Review the risk aspects of SCF Case Study: Showing how Reverse Factoring works and how both Buyer Centric and

Seller Centric models are being employed.

Letters of Credit (L/Cs) Traditional L/C’sThe four contract concept

Confirmations Red Clause

Green clause Revolving L/Cs Evergreen

Transferable L/Cs Back to Back L/C structures

Case Study: Showing how different types of LC’s are used, why this is the case and what difference it makes to the risk profile.

Standby Letters of Credit

History and origin The dominant trade finance product Uses

Risk management Issue and assessment

Pricing Understanding the applicability of ISP98 and UCP 600 for standbys Fraud and unfair calling

Case Study: Using a standby in practice

Export Finance issues Looking at the big picture Understanding the purpose of borrowing

Country risk issues

http://redcliffetraining.com [email protected]

+44 (0)20 7387 4484

The reality of title and control Negotiation under letters of credit

Discounting of deferred payment L/C, acceptance credits (with or without recourse) Case Study: Delegates are asked to consider how to fund an export order using different types of contract arrangements.

Controlling Credit Exposure – Formulating a Limit Understanding and explaining the trade cycle The use of time lines

Assessing and appreciating funding gaps Case Study: Using time lines and facility plotting to spot double finance and

identify the actual funding gaps and customer needs.

Day Three:

Structuring Finance for the Trader Analysing the trade flows

Assessing facility size and structure Specific lending with identifiable maturity dates Appreciating and controlling sources of repayment

Case Study: An example of a medium size business using structured finance.

Effective Use of Collections for Short-Term Finance Using collections as financing opportunities

Identifying and mitigating risks Maintaining control

Supporting the Trader

Using the goods as collateral Assessing the value of goods

The value of pledges and trust receipts The need for structured lending Case Study: How to use goods as security for a trade deal.

Warehousing of Goods Warehouse location Management assessment

Legal frameworks Obtaining and retaining title and control

Risks and responsibilities of Collateral Managers Cost versus control Case Study: Warehousing in practice using a real example.

International Demand and Contract Guarantees / Bonds

Scope and Application – an introduction (suretyship v. demand guarantee) Indemnities versus guarantees

Different types - Bid, Performance, Advance payment, Warranty and Retention bonds Rules governing guarantees and bonds

Legal jurisdiction and expiry date issues Value of using URDG 758 – ICC Rules for demand guarantees Impact of non bank competitors – COFACE, Euler Hermes

Case Study: Using these in practice.

http://redcliffetraining.com [email protected]

+44 (0)20 7387 4484

Receivables Financing

Mechanics of Factoring and Invoice Discounting Forfaiting – an important adjunct to the TF mechanism

Role of Credit Insurance Mechanics of Securitisation FCC risks

Case Study: A real example showing how this makes a huge difference to working capital.

The Commodity Sector and its Players

History and origins of the commodity industry Understanding the nature of ’commodities’

Analysing the players – growers / producers; traders and end-users Financing of commodities Looking beyond the balance sheet

Available documentation – taking and retaining title Commodity futures, options and derivatives

Hedging – a critical process in commodity finance Role and function of the exchanges Main risks in the commodity trade (market, fraudulent practices, legal issues, recent legal

cases) Case study: A large scale commodity deal and how it can be funded at an acceptable

level of risk

Countertrade Overview – when to use

Pitfalls and complications Possible structures and Time management

Syndications

When to syndicate Lead or participant role The completion from capital markets – high yield bonds

Selling down exposure Impact of quasi-governmental agencies

Risk/reward analysis Case Study: A syndicated deal.

Course Conclusion and Review / Feedback

http://redcliffetraining.com [email protected]

+44 (0)20 7387 4484

Day One

Despite increasing movement to unstructured open account trading there is still a place for Trade Finance particularly for small and medium sized enterprises.

Day one will provide a firm foundation to participants new to the concepts of trade finance, as well as reinforcing and consolidating the knowledge of those participants who already have

experience. In learning how to identify customer needs participants will be better placed to recommend appropriate product solutions.

In addition, the course will help participants to identify and assess various risks to both bank and customer in international trade transactions, as well as being able to explain and identify

ways of mitigating the underlying risks associated with trade finance transactions.

Included in the course are practical sections covering documentation, core products, documentary collections, documentary letters of credit and contract guarantees, as well as the importance of the various International Chamber of Commerce (ICC) rules and practices and a

high-level oversight into Anti-Money Laundering (AML), Countering the Financing of Terrorism (CFT) and Sanctions considerations.

Days Two and Three Trade Finance has been “re-discovered” yet remains a little mysterious. It is a product that has

always generated strong revenues- often non funds based – and traditionally has exceptionally low credit losses (on a portfolio basis). Most global banks are able to apply very low probability

of default ratios and usually lose as much to fraud as to actual credit losses. The major general challenge to trade finance in recent times has been the impact of Financial

Crime Compliance and Sanctions. Whilst credit losses and hence credit risk is low, FCC risk is very high because of the increasing tendency for global trade to pass through more than one

country, use different modes of transport, use different currencies and transit through some regions where money laundering controls are not as strong as in others. This makes the audit trail very challenging. This is not a course about FCC but as trade finance is reckoned to be the

main driver for money laundering, it needs to be understood.

To compound matters, many global banks have reduced their correspondent banking networks by up to two thirds – often based on the Transparency International CPI. This means it is

becoming increasingly likely that more than two banks are involved in a transaction, causing delays in processing and frustration for the client. Sight LC’s can take 10-15 working days to be processed when there are two to three advising banks. Of course this has created opportunities

for confirmation activities – provided FCC clearance is obtained.

Another challenge of trade finance is the tendency for banks to re-invent the wheel by using impressive sounding and not always easy to define marketing names to describe “new” products which are not actually new. “Buyer centric supply chain solution” actually is the sexier name for

reverse factoring.

This practical two day advanced level course will concentrate on what is happening in the market right now leaving delegates with a clear and working knowledge of how trade finance is undertaken in the real world, what actually happens and what are the implications for all parties

concerned.

A good working knowledge and familiarity with International Trade finance is required to derive the maximum benefit from this course.

Course Summary

http://redcliffetraining.com [email protected]

+44 (0)20 7387 4484

09:30-17:00

London

Standard Price: £1,595 +VAT Membership Price: 1,276+ VAT

09:00-17:00 London £695 +VAT (£834)

In-House Training

Delivering this course in-house for a number of participants could be very cost effective.

The venue and timing can be agreed to suit the client, as well as the selection of the trainer and the

precise contents of the seminar.

Tailored Learning

All of our training courses can be tailored to suit your company’s exact training needs.

We will work closely with you to help develop a training programme with content that is unique for your organisation.

Please email us on [email protected] for more information

E-Learning This course can also be presented as a bespoke e-learning programme created by you to fit your exact

requirements.