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 9

Azerbaijan 7

Belarus 9

Bosnia & Herzegovina 2

Georgia 6

Kazakhstan 5

Kyrgyz Republic 2

Lithuania 1

Latvia 1

Country IB #

FYR Macedonia 5

Moldova 4

Mongolia 2

Romania 2

Russia 26

Serbia 7

Tajikistan 4

Turkmenistan 1

Ukraine 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 Square

London EC2A 2JN

United Kingdom

Tel: +44 20 7338 7614

Fax: +44 20 7338 6119/7029

e-mail: nindlm@ebrd.com

www.ebrd.com/tfp