Get documents about "Forfaiting Agreement Sample RZB‘s Trade Finance business
Description
Forfaiting Agreement Sample document sample
Document Sample
RZB‘s Trade Finance business
activities
with a focus on CEE and CIS
March 2008
The Structure
Raiffeisen Banking Group
566 Raiffeisen banks, operating 2,300 branches in Austria
100%
8 Raiffeisen Landesbanks
87.7%*
RZB
TOTAL ASSETS: EUR 205,361mn Tier 1: 7.4%
PROFIT BEFORE TAX: EUR 1,697mn RZB Group Regulatory Own Funds: 10.1%
Interests in Austrian Central and Eastern Foreign Branches, Offices
Specialist Companies
Financial Institutions European Network Banks and Equity Participations
Raiffeisen International
OPEC-Fund Trade Finance Workshop Slide 2
Long term regional experience and well positioned in CEE
and CIS markets
Asia
Beijing Ho Chi Minh City Hong Kong Mumbai Seoul Singapore Zhuhai Teheran
North America
Chicago Houston New York Los Angeles
Banks
Representative Offices
Branches
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 Austrian
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 countries
- Profitable wholesale banking franchise in CEE
Stable funding base
- Solidarity among Raiffeisen banks underpinned by a
comprehensive protection scheme
N/A - Strong market position and well diversified operations in Central & Eastern Europe
A+ A-1
(stable) - Sound financial and risk profile of RZB
(stable)
- Sound financial profile and defensible domestic franchise
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 07/06
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 overview
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
Mission
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 flow
Close control of the payment flow
OPEC-Fund Trade Finance Workshop Slide 8
Commodity & Structured Trade Finance
Customers
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
Products/Commodities
Crude oil & oil products (accounting for ~ 60% of results)
Ferrous & non ferrous metals
Fertilizers
Others (e.g. chemicals, agricultural products)
OPEC-Fund Trade Finance Workshop Slide 10
Commodity & Structured Trade Finance
Countries
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 contract, RZB‘s customer Supply contract
assignment to RZB
1. Export L/C in favour 2. Import L/C in favour Supplier‘s
Offtaker‘s of supplier
of trader RZB bank
bank
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. Delivery of
of crude oil Supplier
Final Offtaker crude oil Trader
Supply contract,
RZB‘s customer
Sales contract,
assignment to RZB assignment to RZB
1. Disbursement
6. Release of cash
cover
5. Repay-ment
RZB
4. Payment to the
collection account
Pledge of collection account to Loan agreement
RZB
Collection
account Value of loan to the Supplier =
of the Trader max. 80% of the value of crude oil
with RZB 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-taker
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
customer
Notice of assignment, acknowledgement of assignment
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 supplier
Purchase confirmation, documentary L/Cs
Invoice of supplier to RZB’s customer
Invoice of RZB’s customer to the off-taker
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/Exporter quantity and quality risk
Trader handling risk
(Buyer/Seller) transportation risk
Final Buyer market risk
price and FX risks
OPEC-Fund Trade Finance Workshop 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 register!)
Careful selection of and close co-operation with
Freight forwarders
Insurance companies
Inspection and surveillance companies
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
Trends
‚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
Mission
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 associate
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-sourcing transaction Raiffeisen Bank Aval Local cost financing
Self retention
with ECA Loan agreement
L/C opening bank
‚Commercial Loan‛
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
Vienna
Guarantee
Finance credit cover
Exporter * OeKB COFACE * Exporter
Austria Austria France France
Sub-supplier
Euler Hermes
Germany * Manufacturing risk
cover
Re-insurance Parallel insurance
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, Vienna
has an outstanding Export Credit Portfolio totalling approx. EUR 6
billion 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 Promotion Scheme
Export finance
ECA-Multisourcing Center of Competence for
International ECAs with the exception of US-Exim
which is handled directly by RZB Finance LLC, New York, USA.
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
RISK SHARING EXPERIENCE/SYNDICATIONS
RISK SHARING EXPERIENCE / SYNDICATIONS
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 RZB
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 Participations‚
Advantages:
Reduction of exposure to particular names, sectors or countries
presents new reciprocity opportunities
Increase in capacity to lend to particular entities/countries
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 the investor base
OPEC-Fund Trade Finance Workshop Slide 37
Syndicated Trade Finance Volumes in CEE-CIS
(2003-2007)
35.000,00 250
31.575,79
30.000,00
181 200
207
25.000,00
150
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
50
5.000,00
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 attracting
Trade Finance investors
EUROPE
Many small investors getting
limits for trade related risks
to invest
Borrowers keen to diversify
lending group
ASIA
GCC
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 (liquidity);
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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