RZB-TF Workshop-OFID by shimeiyan


									RZB‘s Trade Finance business
 with a focus on CEE and CIS
           March 2008
 The Structure
                                                  Raiffeisen Banking
                               566 Raiffeisen banks, operating 2,300 branches in

                                              8 Raiffeisen Landesbanks


       TOTAL ASSETS:        EUR 205,361mn                                 Tier 1:
       PROFIT BEFORE TAX: EUR     1,697mn              RZB     Group      7.4%
                                                                          Regulatory Own Funds:   10.1%

       Interests in Austrian   Central and Eastern Foreign Branches, Offices
                                                                              Specialist Companies
       Financial Institutions European Network Banksand Equity Participations

                                    Raiffeisen International

OPEC-Fund Trade Finance Workshop                                                                          Slide 2
Long term regional experience and
well positioned in CEE and CIS
  Beijing    Ho Chi Minh City      Hong Kong   Mumbai   Seoul   Singapore   Zhuhai   Teheran

     North America

    Chicago Houston New York   Los Angeles

            Representative Offices

OPEC-Fund Trade Finance Workshop                                                               Slide 3
RZB Group – Key financial data
    Rating Data
                     Bank Financial     Long-Term      Short-Term
         Agency                                                                             Credit Strengths
                        Strength      Credit Rating   Credit Rating

                                                                      - Central position within the strongly cohesive
                                                           P-1     co-operative banking sector
                           C              Aa2                    - Stable funding base
                                                       (stable) - Stable domestic market position in corporate banking
                      (stable)         (stable)                    alongside well developed franchise in several CEE
                                                                 - Profitable wholesale banking franchise in CEE
                                                                   Stable funding base
                                                               - Solidarity among Raiffeisen banks underpinned by a
                                                                 comprehensive protection scheme
                                                               - Strong market position and well diversified operations
                          N/A                                  in Central & Eastern Europe
                                          A+            A-1
                                       (stable)       (stable) - Sound financial and risk profile of RZB
                                                               - Sound financial profile and defensible domestic
                                                                 of the Austrian Raiffeisen banks

OPEC-Fund Trade Finance Workshop                                                                                        Slide 4
  RZB Group – Key financial data

        Key figures overview
                                    in EURmn        2006*          2006          H1 2006       H1 2007       Change H1

           Balance-sheet total                      115,629        115,629       103,189       126,057            22.2%
           Profit before tax                            1,882          1,286            643            846        46.1%
           RoE before tax                               39.1%          26.7%        24.2%           25.5%         1.3 PP
           Tier 1 ratio (banking book)                      9.0%          9.0%        7.2%            8.1%        0.9 PP
           Total capital ratio                          10.8%          10.8%          9.1%          10.1%         1.0 PP
           Cost/Income ratio                            56.7%          56.7%        53.9%           55.3%         1.4 PP

                                      * including one-off effects such as the sale of Raiffeisen Bank Ukraine and 10% of
                                    Bank TuranAlem

 OPEC-Fund Trade Finance Workshop                                                                                          Slide 5
Award winning Service Quality

          Best Treasury and Cash Management Provider – Global Finance
          Best Bank in Central and Eastern Europe – Euromoney, Global Finance
          Best Bank / Risk Management in CEE – Treasury Management International
          Bank of the Year in Austria – The Banker
          Best Bank in Austria – Global Finance

    In addition, the following Network Banks of the RZB Group have been awarded "Best
    Bank" in their respective countries by international publications:

      Albania, Bosnia and Herzegovina, Hungary, Kosovo, Serbia, Slovakia and Ukraine

OPEC-Fund Trade Finance Workshop                                                        Slide 6
RZB‘s Trade Finance products
          Irrevocable letter of credit
          Letter of guarantee
          Standby letter of credit
          Pre-export financing
          Post-shipment financing
          Warehouse financing
          Commodity and structured trade finance
          Export finance (ECA)
          Receivables purchase
          Discounting of promissory notes
          Forfaiting

OPEC-Fund Trade Finance Workshop                    Slide 7
Commodity & Structured Trade Finance


     Commodity and Structured Trade Finance refers to structured
     short-term lending to finance the production, the purchase, the
     storage, the transportation of exchange-traded commodities,
     where the loan will be repaid from the proceeds of the sale of
     the commodity to pre-agreed off-takers with a

                                  Close control of the commodity
                                  Close control of the payment

OPEC-Fund Trade Finance Workshop                                    Slide 8
Commodity & Structured Trade Finance

            Commodity producers in emerging markets
             (e.g. oil, metal ores,)

            Processing plants in emerging markets
             (e.g. refineries, steel plants)

            International trading companies

           Often, balance sheet lending is not possible,
          therefore we need to structure our financings!!

OPEC-Fund Trade Finance Workshop                            Slide 9
Commodity & Structured Trade Finance


            Crude oil & oil products (accounting for ~ 60% of
            Ferrous & non ferrous metals
            Fertilizers
            Others (e.g. chemicals, agricultural products)

OPEC-Fund Trade Finance Workshop                                 Slide 10
Commodity & Structured Trade Finance


             Russian Federation
             Ukraine
             Belarus
             Central Asian Republics of FSU
              (e.g. Kazakhstan, Uzbekistan)
             Romania
             Bulgaria
             Countries of former Yugoslavia

OPEC-Fund Trade Finance Workshop               Slide 11
Commodity & Structured Trade Finance

    Transaction Types

            Pre-export Financing
            Production & Tolling Financing
            Storage Financing
            Transport Financing
            Post-shipment Financing

OPEC-Fund Trade Finance Workshop              Slide 12
Commodity & Structured Trade Finance

  L/C facility structure
                             3. Delivery                    3. Delivery
                                               Trader                         Supplier
    Final Offtaker            Sales        RZB‘s customer Supply
                            contract,                      contract
                          assignment to
                          1. Export L/C                     2. Import L/C
     Offtaker‘s                                                               Supplier‘s
                           in favour of                      in favour of
                                                 RZB                              bank
         bank                 trader                           supplier
                                                           4. Payment under
                                                            the Import L/C
                                                            Pledge of collection
           4. Payment under the               Collection  account to RZB
           Export L/C                          account
                                            of the Trader
                                               with RZB

OPEC-Fund Trade Finance Workshop                                                           Slide 13
Commodity & Structured Trade Finance

  Pre-export financing structure
                         3. Delivery                        2.
                                of                               Deliv
 Final Offtaker               crude oil       Trader
                                                                  contract,RZB‘s customer
                         Sales contract,                        crude
                         assignment to RZB                 assignment to RZB
                                                   1. Disbursement
                                                                                     6. Release
                                                                                     of cash
                                                                      5. Repay-      cover
                                               RZB                    ment
         4. Payment to the
                                                   Pledge of                 Loan agreement
                                                   account to RZB
                                             account                     Value of loan to the
                                          of the Trader
                                                                          Supplier = max. 80%
                                             with RZB                       of the value of
                                                                         crude oil delivery !
OPEC-Fund Trade Finance Workshop                                                         Slide 14
Commodity & Structured Trade Finance

    Control of product flow, proof of existence of the goods

                                  Production plan of producer
                                  Dispatch notice
                                  Railway bills
                                  Forwarder certificate of receipt
                                  Warehouse receipt
                                  Bill of Lading
                                  DAA (documentary acceptance act) in case of crude
                                   oil financing (via pipeline)

OPEC-Fund Trade Finance Workshop                                                   Slide 15
Commodity & Structured Trade Finance

    Control of payment flow

            Financing not for 100%, mitigation of price risk
             in case of pre-export financing structure
            Payment to be effected by the final off-taker to
             the collection account with RZB
            Notice of assignment and acknowledgement of
             assignment from Off-taker

OPEC-Fund Trade Finance Workshop                                Slide 16
Commodity & Structured Trade Finance

    Assessing the trader

              Product experience
              Market experience
              Track record
              Strategic partner of producer
              Any control over the producer
             Strategic partner of the final off-

OPEC-Fund Trade Finance Workshop                    Slide 17
Commodity & Structured Trade Finance

    Assessing the Off-taker

             Payment risk
                    Off-takers pre-approved by RZB in case
                     of payment on open account
                    All other off-takers have to open
                     documentary L/Cs in favour of our
                    Notice of assignment, acknowledgement of
             Export off-taker vs. domestic off-taker
             Long term relationship vs. spot

OPEC-Fund Trade Finance Workshop                                Slide 18
Commodity & Structured Trade Finance

    Documents involved

           Supply contract
           Sales contract
           Performance undertaking/ Surety of
           Purchase confirmation, documentary L/Cs
           Invoice of supplier to RZB’s customer
           Invoice of RZB’s customer to the off-
           Transportation documents

OPEC-Fund Trade Finance Workshop                      Slide 19
Commodity & Structured Trade Finance

    Risk overview
                 General risks         political risk
                                       payment risk
                                       fraud risk
                                       contractual risks

                 risks for             performance risk
                 Producer/Exporte      quantity and
                 r                      quality risk
                 Trader                handling risk
                 (Buyer/Seller)        transportation
                 Final Buyer
                                       market risk
OPEC-Fund Trade Finance Workshop       price and FX risks   Slide 20
Commodity & Structured Trade Finance

    Possible securities (combination!)

                Pledge on Goods
                Assignment of supply contract and sales contract
                A certain percentage of cash cover (10-30%)
                Payment instruments from off-takers issued by 1st class
                 banks (L/C´s, Standby-L/C´s, Guarantees)
                Payment undertakings or purchase confirmations from first
                 class off-takers
                Assignment of receivables (assignment of proceeds of
                 Letters of Credit, Bank Guarantees, Sales Contracts,
                 Payment Undertakings, Purchase Confirmations)

OPEC-Fund Trade Finance Workshop                                             Slide 21
Commodity & Structured Trade Finance

    Possible securities (combination!)

                 Pledge on collection accounts
                 Mortgage on borrower´s real estate (real estate
                 Careful selection of and close co-operation with
                    Freight forwarders
                  Insurance companies
                  Inspection and surveillance
                 Warehouse keepers

OPEC-Fund Trade Finance Workshop                                     Slide 22
Commodity & Structured Trade Finance

    Possible securities (combination!)

               Syndication of the loan
               Assignment of claims against insurance companies (RZB
                being named as “loss-payee”)
               Insurance of payment risk of off-takers

OPEC-Fund Trade Finance Workshop                                        Slide 23
Commodity & Structured Trade Finance


               “What you always wanted to know about ....
                Commodity and Structured Trade Finance
                     ... but never dared to ask!”

OPEC-Fund Trade Finance Workshop                            Slide 24
Export Finance


          Competence and know-how:
           Competence of top level and decades of experience
          Tailor-made export finance services:
          The key to successful cross-border business is a reliable
          who thinks globally but acts locally
          Comprehensive support:
          Consulting and supporting RZB‘s customers concerning all issues
       in respect
          of export insurance and export finance

OPEC-Fund Trade Finance Workshop                                       Slide 25
 Multi-Sourcing Transaction with ECA
                                                                 15% Down payment financing
 Sample multi-                           Raiffeisen Bank Aval       Local cost financing
                                                                       Self retention
 sourcing                                           Loan agreement
                                                                      L/C opening bank

 transaction with                                  “Commercial Loan”

 ECA                                       Corporate Ukraine

                                                      Loan agreement
                                                      85% of contract value + up to 100% of
    Delivery                                          ECA costs “ECA Facility”                       Delivery
100% of contract                                                                                 100% of contract
      value                                                                                            value

                                        Finance credit cover

                   Exporter   *       OeKB                     COFACE       *        Exporter
                    Austria          Austria                   France                 France

                                   Euler Hermes
                 Germany                                                        * Manufacturing risk
                                   Re-insurance        Parallel insurance              cover

OPEC-Fund Trade Finance Workshop                                                                             Slide 26
Examples for Successful
Export Financing
  Long-term financings for clients of our
Romanian      Network bank in cooperation
with/based on       guarantees issued by the
Norwegian ECA (GIEK)       and    by the Canadian
ECA (EDC) and COFACE       (France).*

     EUR 8,4 mio. Renault TK Axis Deal – Leasing
      Transaction, Russia

  EUR 108 mio. Export Project Financing of a
cellulose      factory in Estonia.

*) due to bank secrecy we are not permitted to publish the name of
the companies without prior written approval
OPEC-Fund Trade Finance Workshop                                     Slide 27
Cooperation with
International ECAs
Finalized Transactions with international ECAs within

We are currently also in contact with Sinosure (China), EKF
(Denmark), IFTRIC (Israel), NEXI (Japan), KEIC (Korea), IGA
(Serbia), CESCE (Spain) , SERV (Switzerland), ECGD (U.K.)
OPEC-Fund Trade Finance Workshop                              Slide 28
Export Finance

The Global Export Finance Department,
       has an outstanding Export Credit
        Portfolio totalling approx. EUR 6
        as of December 2007

       has finalized export financing
        transactions in the volume of
        EUR 3 billion in the year 2007

       with various ECAs

OPEC-Fund Trade Finance Workshop            Slide 29
Our Responsibilities

       Export insurance
                                   under the Austrian Export
       Export finance             Promotion Scheme

      ECA-Multisourcing Center of Competence for

       International ECAs with the exception of US-Exim
       which is handled directly by    RZB Finance LLC, New York,

       Network Banks Export Finance for deliveries and services
       originating (NWB) from the CEE countries is offered directly by
       our experts in the respective Network banks (= NWB), e.g.
       Raiffeisen banks in Poland, Hungary, Czech Republic, Croatia,
       Romania and Tatra banka in Slovakia.
OPEC-Fund Trade Finance Workshop                                    Slide 30


 OPEC-Fund Trade Finance Workshop           Seite 31
OPEC-Fund Trade Finance Workshop           Slide 31
Trade Finance Products
Kind of Participations used in RZB

   L/Cs, bank guarantees and payment undertakings issued by banks

     Negotiable instruments guaranteed by a bank as avalised bills of
       exchange and promissory notes

     Trade related pre- or post-financings to banks

OPEC-Fund Trade Finance Workshop                                  Slide 32
Syndication Techniques

          Risk Participations

              Searching for Participants in short-mid term trade
           related primary transactions offered to other institutions
           on an undisclosed and usually unfunded basis

          Forfaiting

              100% without recourse selling of trade related short and
           middle term transactions to other institutions or primary
           markets on a disclosed and funded basis

OPEC-Fund Trade Finance Workshop                                   Slide 33
Participation under L/C
Kind of Participations used in RZB
          Funded Risk Participations (not very common under L/C‘S)
                Settlement Limit
                KYC check
          Unfunded Risk Participations
                Settlement limit
                Counter Party Limit
                KYC check

    Agreements used with:
    External Banks:
                Master Risk Participation
                Participation according to Austrian Law
                IFA (International Forfaiting Association) Guide lines
                Frankfurter Agreement
OPEC-Fund Trade Finance Workshop                                          Slide 34
Participation under
Trade Finance Products

    Pre-conditions for risk participations under L/C‘s

          L/C has to be confirmed by RZB
          Following terms and conditions to be met:
             L/C available by sight payment or deferred payment
             with or without post financing
             valid for presentation of documents at the counters of
             payable at the counters of RZB
             include order for confirmation
             acceptable L/C wording

OPEC-Fund Trade Finance Workshop                                   Slide 35
Participation under
Trade Finance

    Confidentiality of data:       especially with L/C’s

          Written consent from issuing bank that RZB Vienna is allowed
           to pass on data to third parties regarding the L/C under the
           risk participation. (Due to Austrian Banking Law)

          In case it is not possible to get this agreement from
           issuing bank, FI management has to authorize syndication
           department to proceed without such letter under full
           responsibility of FI.

OPEC-Fund Trade Finance Workshop                                      Slide 36
“Main Drivers for Risk

          Reduction of exposure to particular names, sectors or
          presents new reciprocity opportunities
          Increase in capacity to lend to particular
          Diversification of risk and acquisition of target exposures
           where appropriate
          Additional income generation
          A market oriented capital allocation
          Building up international market expertise
          Optimising equity allocation within the group
           Broadening of
OPEC-Fund Trade Finance Workshop the investor base
                                                                   Slide 37
Syndicated Trade Finance
Volumes in CEE-CIS (2003-2007)
         35.000,00                                                                250
                                                181                               200

         20.000,00                   123
                                              16.380,54                                 Volume
                                                                                        No of Deals
         15.000,00                                                    12.832,75
                       87                                                         100

         10.000,00   7.653,46      7.827,47                              87

              0,00                                                                0
                       2003          2004       2005        2006        2007

  Source: Dealogic

OPEC-Fund Trade Finance Workshop                                                                 Slide 38
Trade Finance Investors
Geographical Distribution
Trade Finance Investors:
                                                 Russia/CIS-CEE region
                                                   Trade Finance investors

                                                 Many small investors getting
                                                   limits for trade related
                                                   to invest

                                                   Borrowers keen to diversify
                                                     lending group

OPEC-Fund Trade Finance Workshop                                          Slide 39
Trade Finance Market Trends

  Market Trends:

       Although Trade Finance volumes diminished in 2007, we expect
        volumes to increase in 2008 upwards due to market conditions
        Exporters- Importers will use:
            Less open accounts
            Less Documentary collections
            Less cash payments

       CEE-CIS Banks will use Trade finance products for their own
        funding needs,
        (Sight L/C‘s with Post Financing)

       Strong competition among Banks, Insurance companies and ECA‘s

          Due to the complexity of the Structured Trade Finance Products,
           corporates used to borrow through projects finance or corporate
           finance syndicated markets. 2008 and upwards, we expect this
           trend to be changed.
OPEC-Fund Trade Finance Workshop                                           Slide 40
RZB expects from potential Partners

         Regional Expertise
         Risk taking Capacity
         Product knowledge
         Master Risk Participation in place
         Funding

OPEC-Fund Trade Finance Workshop               Slide 41
Thank you for your attention!

OPEC-Fund Trade Finance Workshop   Slide 42

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