Forfaiting Agreement Sample RZB‘s Trade Finance business by wsg73779


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									RZB‘s Trade Finance business
 with a focus on CEE and CIS
           March 2008
 The Structure
                                                                 Raiffeisen Banking Group

                                              566 Raiffeisen banks, operating 2,300 branches in Austria

                                                                   8 Raiffeisen Landesbanks


      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


                       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 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
                                                                                    - 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

                                   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


       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

                   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

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


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

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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 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
                                                                                        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
                                                                                                        5. Repay-ment
              4. Payment to the
                  collection account
                                                                      Pledge of collection account to                   Loan agreement
                                                              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
                   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
                             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

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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


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

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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 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

                                                            Finance credit cover

                         Exporter      *       OeKB                                  COFACE                *            Exporter
                          Austria              Austria                                France                             France

                                             Euler Hermes
                         Germany                                                                                   * Manufacturing risk
                                           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


 OPEC-Fund Trade Finance Workshop                                   Seite 31
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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‚


               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

             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 attracting
                                                    Trade Finance investors
                                                   Many small investors getting
                                                    limits for trade related risks
                                                    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 (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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