Trade Facilitation Programme Development of Trade Finance in - PowerPoint PPT Presentation

Trade Facilitation Programme Development of Trade Finance in Tunisia Kamola Makhmudova, Senior Banker, TFP 31 July 2018

Where we are 31 July, 2018 2

What is the EBRD? Established in 1991. The EBRD is owned by 66 countries 9% from five continents, as well as the European Union and the European 9% Investment Bank. These 64% 10% shareholders have each made a 8% capital contribution, which forms our core funding. Capital base of € 30 billion EU27 countries EBRD region The EBRD has a triple-A rating from Includes European Community and Excluding EU, all three main rating agencies (S&P, European Investment Bank (EIB) Russia at 4% each at 3%. Among other EU Moody’s and Fitch) countries: France, Germany, Italy, and the UK each holds 8.6% USA Japan Other As at January 2018 31 July, 2018 3

TFP – Strategy Strong focus on: Small- and medium-sized private e banks in the CIS and south-east Europe Early Transition on Countries es Souther ern and easter ern Mediter erranea ean (Greece, Cyprus, Egypt, Jordan, Morocco and Tunisia). New: Lebanon and the West Bank and Gaza Intra-reg egion onal trade e (= trade between the EBRD’s countries of operations) SMEs Co-financing with commercial banks Co 31 July, 2018 4

EBRD Trade Facilitation Programme Annual Busines ess Volumes es 1999 – 2017 31 July, 2018 5

TFP: 1, 905 Transactions in 2017 Ranking No of Transactions by Count ry 1. Greece 13. Romania 14. Kyrgyz Republic 2. Serbia 15. Bulgaria 3. Ukraine 16. Jordan 4. Cyprus 17. Moldova 5. Belarus 18. Croatia 6. Armenia 19. Tajikistan 7. Georgia 20. Azerbaijan 8. Morocco 21. Kosovo 9. Turkey 22. Montenegro 10. Egypt 23. Bosnia and Herzegovina 11. Mongolia 24. Tunisia 12. FYR Macedonia 25. Turkmenistan 31 July, 2018 6

TFP: Achievements 1999-2017 • More than 21,600 foreign trade transactions • Total business volume EUR 15 billion • 95 Issuing Banks in 27 countries • Over 800 Confirming Banks worldwide 31 July, 2018 7

800 Confirming Banks in 77 Countries 8

EBRD TFP: Top 10 Confirming Banks Ranke ked by number of transa sact ctions s in 2017 1. Commerzbank 6. BANCA POPOLARE DI SONDRIO 2. ING Bank 7. KBC Bank 3. UNICREDIT BANK AUSTRIA 8. ODDO BHF Aktiengesellschaft 4. Citibank Europe 9. UBS AG 5. Deutsche Bank 10. INTESA SANPAOLO SPA 31 July, 2018 9

TFP Application Area Facilitates financing of all stages of the trade chain 10

EBRD TFP Facilities Two main components Trade Facili litation Pro rogra ramme (EUR 1.5 bln framework) Trade e Finance e Trade Finance Cash Facility - Guarantee Revolving Cred edit Facility Agree eement (RCA) (fully operational (launched in 2000) since 1999) 11

TFP – How does it work TFP supports trading by providing:  Guarantees es that cover risks arising from trade finance transactions  Short-ter erm advances es/financing to banks in the Countries of Operation for trade finance purposes  Donor funded trade e finance e training and advisor ory ser ervices es to local banks

TFP: Guarantee Structure and Application EBRD issues es a Stand-By Letter er of Cred edit cov overing the risks of Issuing Bank towards the e Con onfirming bank Issuing Bank, Confirming Bank, Countr try of Worldwide Oper erati tion ons L/C Issuance with request to confi firm (L/G G Issuance with counter-guarantee, , L/C Confirmation on Application for L/C opening other banki king trade finance instruments) Buyer er Seller er 13

TFP: Guarantee Transaction (1)  Always involves a local bank (“ Issuing Bank ”) which issues a trade finance instrument (e.g. letter of credit) and a foreign bank which confirms it to the beneficiary (“ Confirming Bank ”) ;  Issued only to Confirming Bank, not to exporters or importers;  The trade finance instrument (e.g. a letter of credit) en ensures es that the beneficiary receives payment upon or after delivery.

TFP: Guarantee Transaction (2) Covers s all type pes of trade de finance ce inst struments:  documentary letters of credit (LCs), including deferred payment/post- financing;  bank payment guarantees;  trade related standby LCs from issuing banks;  bid and performance bonds;  advanced payment guarantees;  trade-related promissory notes or bills of exchange. EBRD Guarantee (a SBLC under UCP 600) is usually issued within 24 hours from application

TFP: Guarantee Transaction (3)  Cover of exports, imports and distribution of imported goods in the EBRD’s countries of operations, irrespective of the country of origin ( no origin rule)  Tenor: 3 years maximum  Amount: no minimum amount  EBRD pays on the claim within 15 15 days  EBRD Guarantee covers up to 100% of the face value of the underlying trade finance instruments, covering payment, political and currency risks

EBRD TFP Guarantees: Case Study Import of olive oil processing equipment to Tunisia BANQU QUE TUNISO SO-KOWEITIENNE IMPORT OF OLIVE OIL PROCESSING EQUIPMENT FROM TURKEY TO TUNISIA BTK issued a Letter of Credit in favour of Turk Ekonomi Bankasi A.S., Istanbul, Turkey, also a partner bank, and participant of EBRD’s Trade Facilitation Programme EBRD issued a guarantee in favour of Turk Ekonomi Bankasi A.S., Istanbul, Turkey 17

EBRD TFP Guarantees: Case Study Import of Samsung equipment to Tunisia AMEN BANK IMPORT OF SAMSUNG EQUIPMENT FROM MOROCCO TO TUN UNISIA Amen Bank issued a Letter of Credit in favour of Banque Centrale Populaire (BCP), Casablanca, Morocco, also a partner bank, and participant of EBRD’s Trade Facilitation Programme in the SEMED (MENA) Region EBRD issued a guarantee in favour of BCP 18

TFP Benefits (1) For Issuing Banks and Customers • Issuing Banks develop a track record with Confirming Banks (strong evidence that Confirming Banks follow EBRD’s lead in establishing unsecured trade exposure limits to Issuing Banks) • No cash collateral required from Issuing Banks, hence cheaper financing terms for exporters/importers – Clients: more competitive exports and imports – Issuing Banks: enhance competitiveness vis-à-vis other banks – EBRD: reduce costs of transactions – Additional opportunity of flexible financing through RCA for pre-export and post-import financing • Assistance to Issuing Banks in structuring trade transactions through institutional building in the form of technical assistance 19

TFP Benefits (2) For Confirming Banks & Exporters Additional export business to EBRD • countries of operation in Central & Eastern Europe CIS and SEMED countries with mitigated risks • Business development • Possibility to offer favourable credit terms to the customers, including longer tenors and larger amounts 20

Trade Finance Cash Facility Local Company Loan disbursement Loan repayment Local Bank (EBRD’s borrower) • Takes local company risk • Borrows from EBRD • On-lends to the local company Repayment to EBRD EBRD’s disbursement EBRD • Takes local bank risk and lends to the local bank against sub-borrower base 31 July, 2018 21

TFP Factoring Case Study 31 July, 2018 22

TFP: Our partner banks in Tunisia ISSU SUIN ING BAN ANKS 1. BTK 2. Amen Bank 3. UIB 4. UBCI 5. Banque de Tunisie 23

EBRD – Capacity Building Projects Face-to-face learning Online Self-paced collaborative learning learning

EBRD Trade Finance e-Learning Programme To date > 3,000 trade pro rofessionals fro rom 240 240 institutions s in 36 countri ries s enroll lled 31 July, 2018 25

EBRD TFP e-Learning Programme List of Cou ourses es Target et Audien ence • Introduction to Trade Finance • Trade finance team • Introduction to Factoring Relationship managers • • Collections • Risk managers • Mentor 600 • Legal team • DC Master Operations team • • ISP Master • Other professionals interested in factoring products • URDG Master • Incoterms 2010 Environmental and Social Issues in • Trade 26

EBRD TFP e-Learning Programme in Tunisia  250 students registered  67 67 graduated Best students awarded prizes and sponsored trainings in leading European confirming banks and training companies: 27

NEW TRAINING FRAMEWORK 2018 EBRD compliance training for trade finance I. E-Learning Course II. ICA certification and ICA membership III. Individual advisory services for EBRD partner banks – “ Correspondent banking technical assistance “ Kill your client? Know your client? OR

NEW TRAINING FRAMEWORK 2018 EBRD compliance training for trade finance 1/4 E-learning : Since 2010 EBRD offers wide range of Trade Finance E-learning programmes to partner banks. The programme was developed with the co- operation of International Chambers of Commerce (ICC). NEW: Trade Based ed Financial Crime Compliance training mod odule cov over ering GBP GBP 795 795.00 00 1. Financial Crime Regulation 2. The Compliance Programme 3. Exercising Due Diligence 4. Indicators of Trade Based Financial Crimes 5. Combating Financial Crime 31 July, 2018 29