Standby Letters of Credit Case Study Centralising trade finance processes to maximize control and efficiency GTR North America Trade & Export Finance Conference 2015 New York Oswaldo Ramirez, Director, Capital Markets & FX, Cameron Glenn Kocher, Director, Head of Trade & Working Capital Americas, Barclays Carlo d’Amore, Head of Financial Institutions and Partners Management, Bolero International
Introducing the Bolero concept Bolero International is a trusted third party platform which securely and legally exchanges data and documentation in support of international trade. Bolero Trade Finance – Bolero ePresentation – The consolidation and visibility of trade The electronic presentation of compliant finance documents and related messages, trade documents from one party to another in including letters of credit, guarantees, standby a supply chain for open account and letter of letters of credit and documentary collections credit settlements, with or without electronic between a corporate and their panel banks Bills of Lading
Expertise from experience The world’s largest community platform of financial institutions engaged in corporate-to-bank trade finance transactions The world’s first electronic Bill of Lading solution The world’s first ePresentation under eUCP rules 5 countries 14 countries 26 countries 45 countries Bolero in 2015 4 global offices 59 trading countries supported Processing over 400k multi-bank 60 trade banking groups trade documents per month 74% growth of entities on Bolero in 2 years Launched first Launch of End-to- Bolero End 1.4m completed payment Presentations Formed as a joint Largest integrated applications to use LC e-Presentation venture between with Bolero corporate/bank/carri solution based on 19,000 monthly presentations SWIFT and the TT network and er trade network eUCP rules Club support 3rd party +$80bn of transaction value per annum systems 1998 2005 2011 2013
Managing multiple banks can be complex, paper intensive & fragmented Head Office ERP Regional Offices Banks
Centralization of issuance of Standby Letters of Credit June 18th 2015
Agenda GTR Americas Conference – Company Overview – SBLC’s Highlights – Centralization Project – Drivers – Value Proposition – Results
Cameron International Company Overview Cameron (NYSE: CAM) is a leading provider of flow equipment products, systems and services to worldwide oil, gas and process industries. Leveraging its global manufacturing, engineering and sales and service network, Cameron works with drilling contractors, oil and gas producers, pipeline operators, refiners and other process owners to control, direct, adjust, process, measure and compress pressures and flows. • 180+ years of continuous business history • $10+ billion in annual revenues at Dec 2014 • 28,000+ employees globally • 300+ locations around the world • Headquartered in Houston, Texas, USA
Cameron International Standby Letters of Credit Highlights • We are a project driven company SBLC’s and Bank Guarantees are very prevalent in our industry. Projects can be large and multi- year and, as our business grows, so does the need for SBLC’s • Approximately $1.1Bn in outstanding Letters of Credit as of 03/31/15 13% APME , 43% Americas and 44% Europe • Approximately 1,000 Outstanding LC’s on behalf of 60 different Cameron and OneSubsea entities Think about amendments, extensions, etc. • Material Cost • Small Improvements make a big difference
Centralization Project Drivers Lack of risk • Multiple individuals, across multiple regions negotiating issuance of management Standby Letters of Credits and Bank Guarantees standards • 63 fractional heads equivalent to 13 FTE’s • Difficult to report contingent liabilities accurately in real time Deficient data • Lots of spreadsheets visibility • Lots of fire drills Lack of centralized • SBLC business spread over too many banks bank relationship • Sub-optimal credit line size management • Dilution of negotiating power \ higher costs • Paper intensive process Resource • Multiple touch points & longer lead times Intensive • Multiple proprietary bank systems
Centralization Project Value Proposition Risk One Platform Improved Centralized Mitigation (Bolero) Efficiency Billing • Centralized • Real time access • Dedicated & • Consolidated issuance of all to outstanding Centralized quarterly invoicing SBLC’s for contingent professional from Banks Cameron liabilities Treasury Trade • Optimization of # worldwide Team • Optimized Bank Bank Accounts • Standard Process • Centralized capacity utilization & improved pricing banking & • Consistency Cameron-specific • Improved Policy across regions, Know-How divisions and Compliance • Simple Request banks • Scalable Process • Control, or at a • Minimal IT • Improved minimum visibility, involvement over all SBLC turnaround times • Fast Deployment T&C’s negotiations
Centralization Project Results – Centralized Treasury Team deployed • 1 FTE in HOU & 3 FTE in Romania – Collaboration with Divisions & Proposals Groups Global – Treasury Trade team handles ALL negotiations with Team banks on wording , SBLC terms and interacts with Beneficiaries as needed. – Bolero Implemented in phases: – GBS metrics aligned to & impact Business Goals – Adapt GBS Process measures to manage • Global Americas (Nov 2011) E2E Processes Platform • Europe, Africa, Russia (Apr 2012) • Asia Pacific & Middle East (Jun 2012) – Evaluate first cut of benchmark results for – All BG\SBLC related requests submitted via internal relevance & comparability tool using standard process & forms – Start Benchmarking remaining X processes – Improved reporting \ Dashboard by Q1 Process – Scalable (TTS, OneSubsea JV) – Handles new requests, amendments, PCG, Comfort Letters, Indicative Pricing, Wording – 100 LCs/month with increasing levels of complexity – Treasury issues SBLC’s only via Bolero and only thru Cameron’s “preferred“ banks Banks – Currently 9 major banks, more on the way. – Improved pricing
Centralization Project Lessons Learned & Next Steps • The best solution is the one that meets 80% of your needs today and is easy/fast to implement • Implementing Bolero in phases paid off and we learned from earlier phases • Management of change was key • Secured approval from CFO, Treasurer, Finance VP’s, and Controllers • Lots of training (web, in person, pre-recorded videos) • Revamped Global Policy • Some folks had difficulty letting go. Still think they can do better\faster and with less requirements • Need for little IT involvement makes a great difference • Exploring centralization of Export LC’s as we speak
Thank You!
Case Study – Centralizing Trade Finance Processes to Maximize Control and Efficiency Barclays, bank guarantees and standby letters of credit Barclays operates dedicated Trade Finance and Working Capital businesses in 25 countries Trade Finance & globally Working Capital at Barclays Dedicated in-country Trade Finance professionals working across the full spectrum of Trade Finance and Working Capital products Active Corporate and Financial Institutions Trade Finance business lines Significant Oil & Gas franchise with coverage in major markets such as Houston, Aberdeen, UAE, and South Africa Bank Guarantees and Standby Letters of Credit are essentially commoditized products Commoditized In any given client relationship Barclays is likely to compete against 10-20 banks as providers of bank Product guarantees and SBLCs Trade Finance banks must find a way to differentiate their offering: 1. Pricing 2. Geographic reach 3. Servicing 1
Case Study – Centralizing Trade Finance Processes to Maximize Control and Efficiency Why Barclays partners with Bolero? Managing multiple bank proprietary systems is onerous and inefficient for clients, and thus detracts from service quality: Drivers • Multiple access/security credentials • Multiple IT set-ups and maintenance • Must learn to operate each system • Fragmented view of global guarantee and L/C book Bank proprietary systems do not address the needs of large global companies, but are rather more relevant for small/mid-market companies with limited bank groups Consistently hear from client treasury teams on the importance of making their day-to-day jobs easier Value Proposition Opportunity to be part of the solution and not exacerbate the problem Higher service quality via: • Straight through processing • Standardization • Process Efficiency 2
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