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Workshop: Trade Financing for SMEsWorkshop: Trade Financing for SMEs

Introduction to the EBRD’s Trade Facilitation Programme Introduction to the EBRD’s Trade Facilitation Programme (TFP) and its trade finance training initiatives(TFP) and its trade finance training initiatives(TFP) and its trade finance training initiatives(TFP) and its trade finance training initiatives

Marco NindlMarco NindlUlaanbaatar, 12 October 2011Ulaanbaatar, 12 October 2011

OverviewOverview

Wh t i th EBRD d it TFP d h What is the EBRD and its TFP and how can local companies including SMEs profit from the programme?

New ways of supporting local banks and their clients by considering recent trends in trade finance marketfinance market

What technical assistance initatives exist to support local trade finance

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Shareholders breakdown

Global Shareholder StructureGlobal Shareholder Structure

Triple-A Shareholders Form 60%

Shareholders breakdown

Japan8 6%

EBRD region

EU 27 Countries

(1)62.7%

8.6% region excluding

EU (2)7.3%

USA10.1%

Others11.3%

(1) Includes European Community and European Investment Bank each at 3%; France, Germany, Italy, UK each at 8.6%

(2) Russia at 4%

As at 1 September 2010

What are the EBRD’s objectives?What are the EBRD’s objectives?

To promote transition to market economies by investing mainly in the private sector

To mobilise significant foreign direct investment

To support privatisation, restructuring and better municipal services to improve people’s lives

To encourage environmentally sound and sustainable development

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12 65

Invested over €62.0bn € billion

EBRD’s objectives achieved through financing the EBRD’s objectives achieved through financing the private sectorprivate sector

4

6

8

10

15

25

35

45

55in more than 3,119 projects since 1991

€9.0bn invested in 2010 in 380 projects

Private sector > 79% of EBRD fi a

l b

usi

nes

s vo

lum

e (A

BV

)

Net cu

mu

lative b

usin

e

0

2

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

-5

5

Debt ABV Equity ABV Net Cumulative Business Volume

EBRD finance

Debt 83%, Equity 17% of EBRD finance

An

nu

a ss

volu

me

Reconciled as at 31 December 2010

EBRD Finances diverse range of enterprisesEBRD Finances diverse range of enterprises

Agribusiness, 9%

Equity Funds, Transport, 13%

q y ,4%

Financial

Power and Energy, 9%

Telecoms Informatics &

Media, 4%

Property and Tourism, 3%

Institutions, 34%

Manufacturing and Services,

11%

Municipal & Env Inf, 6%

Natural Resources, 6%

Unaudited as at 31 December 2010

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A network of 36 offices in 29 countries

More than half our bankers based in the region

Where we operate

EBRD in MongoliaEBRD in Mongolia

Resident Office in Ulaanbaatar operational psince 2007

Promote a sound investment climate, good corporate governance and stronger institutions

100% share of private sector projects

Debt/Equity Investments: 77% / 23%

Net business volume EUR 300.9 million

Total project value EUR 877.2 million

*All figures cumulative as of March 2011

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EBRD in Mongolia: PrioritiesEBRD in Mongolia: Priorities

Financing local enterprise growth and development: Debt and equity investments to non-mining companies including smaller t ti t t d d l t i l i ittransactions to nurture and develop entrepreneurial spirit, including dedicated debt facilities focussed on the SME sector with partner banks.

Supporting the consolidation and strengthening of the financial sector:Promoting institutional building and corporate governance of selected banks and NBFIs through equity and debt finance, TFP and local currency funding

The sustainable development of the natural resources sector: Debt and equity investments to mining companies, including smaller projects upstream and downstream oil projects and infrastructureprojects, upstream and downstream oil projects and infrastructure related mining projects

Support for important infrastructure: Although constrained by currentlegislation, EBRD will support municipal infrastructure projects,especially private sector related projects, renewable energyprojects by cooperating with WB, ADB and bilateral donors.

Investment examplesInvestment examples

• Monos (pharmaceutical company) Debt & Equity• Monos (pharmaceutical company), Debt & Equity $9.0mln (2010)

Transition Impact: Transfer of new skills and knowledge associated with construction and operation a new green-field GMP (Good Manufacturing Practice) standard manufacturing facility. Higher product quality assurance for end-consumers stemming from implementation of GMP.

• Ezio Foradori (cashmere producer), $0.4mln (2009)

Transition Impact: Increase competition in the sector, create linkages and improve standards of corporate governance and quality control.

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Trade Facilitation Programme (TFP)Trade Facilitation Programme (TFP)of EBRDof EBRD

Facilitates financing of all stages of the trade chain

Production & Export Transport Storage &

distribution

Receivables Management

TFP TFP -- TargetsTargets

S t d d l t f i t ti l Support and development of international trade finance in EBRD’s countries of operation

Support for regional banks to establish business relationships with foreign banks

Providing liquidity for trade finance

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TFP TFP –– How does it work?How does it work?

EBRD supports trade by providing:EBRD supports trade by providing:

guaranteesguarantees that cover risks arising from trade finance

transactions:

shortshort--term cash advances/financingterm cash advances/financing for pre-export

and post import as well as local trade finance purposes;;

TC funded trade finance training and advisory training and advisory

serviceservice..

Two Main ComponentsTwo Main Components

Trade Facilitation Programmeg(EUR 1.5 billion framework)

Trade Finance Guarantee

Facility

Trade Finance Cash

Facility(fully operational

since 1999)(launched in 2000)

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Different from/complementary to export credit insurance:

Stand-by letters of credit (L/C) (under UCP 600)

TFP TFP -- GuaranteesGuarantees

usually issued within 24 hours

Cover all types of trade finance instruments issued by EBRD client banks: letters of credit, including deferred payment/post-financing; bank payment guarantees; bid bonds, performance bonds; advanced payment guarantees; stand-by L/Cs, etc.

Issued only to Confirming Banks, not to exporters or importers

Payable 15 days after receipt of first written demand

C t 100% f th i l d liti l i k hi h t b Cover up to 100% of the commercial and political risk which cannot be covered by commercial banks, commercial credit insurance or ECAs

Cover exports, imports and distribution of imported goods in EBRD countries of operation, irrespective of the country of origin (no origin rules)

Tenor: max. 3 years

Amounts: no minimum amount

Guarantee Structure and ApplicationGuarantee Structure and Application

EBRD issues a Stand-By

Banking InstrumentBanking Instrument

ApplicationConfirmation

Letter of Credit covering the risks of Issuing Bank

towards the Confirming bankObligation Issuing

Bank,Country of Operation

Obligation Receiving Bank,

World Wide

BuyerSeller UnderlyingTrade Transaction

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Sample: Sample: TFP TFP –– Import of car tyres and Import of car tyres and spare parts to Mongoliaspare parts to Mongolia

A German automobile producer sells car tyres and spare parts to Mongolia, EUR 940,000

A Mongolian bank issues a L/C, confirmed by a bank in Germany y

EBRD guarantees 100% of the political and commercial payment risk

ShortShort--term cash advances/financingterm cash advances/financing

Local Company

Local Bank (EBRD’s borrower)•Takes local company risk

•Borrows from EBRD•On-lends to the local company

Loan repayment Loan disbursement

EBRD

•Takes local bank risk•Lends to the local bank against

sub-loan reports

Repayment to EBRD EBRD’s disbursement

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Sample: Export of wine from MoldovaSample: Export of wine from Moldova

A Moldovan wine A Moldovan wine producer requires pre-export finance for purchase of agro-chemicals and equipment and export of wine to Russia

EBRD grants a loan to EBRD grants a loan to a Moldovan bank which the bank can use to fund a loan to the Moldovan exporter (amount USD 170,000, tenor 8 months)

EBRD TFP EBRD TFP –– 1274 Transactions in 1274 Transactions in 20102010

1. Russia (489)

2. Kazakhstan (118)

3. Georgia (112)

4. Belarus (105)

5. Ukraine (98)

6. Macedonia (74)

7. Azerbaijan (63)

8. Moldova (63)

9. Armenia (61)

10. Uzbekistan (24)

11. Serbia (23)

12. Tajikistan (20)

13. Bosnia (12)

14. Kyrgyz Republic (9)

15. Croatia (2)

16. Turkmenistan (1)

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TFP in MongoliaTFP in Mongolia

Currently 2 Issuing Banks:Currently 2 Issuing Banks:

Sample transactions of imports to Mongolia:

- Import of car tyres and spare parts from Germany- Baby diapers from Taiwan

Advantages for Banks and ClientsAdvantages for Banks and Clients

N h f l l b k iNo cash cover from local banks is necessary, hence a reduction in pricing for exporters and importers

Confirming banks are able to test new business relationship with issuing banks by receiving a 100% risk cover from the EBRD

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EBRD TFP EBRD TFP –– Top 20 Confirming Banks by Top 20 Confirming Banks by Number of Transactions in 2010 Number of Transactions in 2010

1. Commerzbank2 D t h B k

11. Banco de Sabadell 2. Deutsche Bank3. UniCredit Bank4. UBS5. HSBC Bank6. Bank of New York

Mellon7. LBBW

12. KBC Bank

13. JP Morgan Chase Bank

14. BHF Bank

15. Landesbank Berlin

16. Fortis Bank

17. Banca delle Marche7. LBBW8. Intesa San Paolo9. RZB10. ING Bank

18. Banca Monte dei Paschi di Siena

19. Bank Hapoalim

20. Yapi ve Kredi Bankasi

TFP TFP –– Example of BeneficiariesExample of Beneficiaries

ABB Aesculap Agco Alcatel AlKo Alstom AtlasCopco Audi Aventis Avtovaz Becher Bosch Braun Beko BMW Bosch Bull Cargill CarlZeissAvtovaz Becher Bosch Braun Beko BMW Bosch Bull Cargill CarlZeiss Case Caterpillar Chemson Cincinnati Claas Classen Clariant Compaq Daewoo DaimlerChrysler Deutz Dow Draeger Duferco Ebewe Electrolux Ericsson Europay FujitsuSiemens GedeonRichter GKN Glencore GM Grundig Hachette Heidelberger Honda Honeywell Hovis Hyundai IBM Iglo JeanLion John Deere Johnson Juki KIA Leman LouisDreyfus Lucent Lukoil Lurgi Makita MaxMara Mazda MettlerToledo Michelin Monsanto Nagema Nestle Nike NisshoIwai Opel Perstorp Pfaff Philips Pirelli MinskTractor Possehl Renault RhonePoulanc Rohde&Schwarz RollsRoyce Samsung Sandvik Schaller Schneider SEAT Severin Shell Siemens Skoda Stihl Sucden Sulzer Sumitomo Tate&Lyle Tatra ThyssenKrupp Toshiba Totalfinaelf Tractel Trafigura US-Steel Visa VoestAlpine Volvo Westfalia WalterMatter YvesRocher Zeppelin ZF-Friedrichshafen

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TFP support for SMEsTFP support for SMEs

1,274 transactions in 2010

87% of all transactions are under EUR 1 million87% of all transactions are under EUR 1 million

462

651

300

400

500

600

700

Number of Transactions

136

250

100

200

<100,000 0.1 - 1mln

1 - 5 mln > 5 mln

Amount in EURs

TFP Business Volume p.a. TFP Business Volume p.a. 1999 1999 -- 20102010

900

300

400

500

600

700

800Volume, € mln

0

100

200

300

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

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New Trends in the Trade and Supply New Trends in the Trade and Supply Chain in Eastern Europe and CISChain in Eastern Europe and CIS

payment terms change from L/C to open account

Foreign suppliers establish subsidiaries in Eastern European and CIS countries, resulting in increased demand for financing of local distribution of imported goods

growing demand for receivables financing, credit risk insurance and financing in Russian Roubles

EBRD TFP EBRD TFP –– New StructuresNew Structures

Fi i l l di t ib ti f i t Financing local distribution of imports

Development of Factoring

Financing in Russian Roubles and other local currencies

Co-financing with insurance underwriters

Promotion of new trade finance solutions by means ofTC projects

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TFP Guarantees TFP Guarantees –– Exports from France to Exports from France to RussiaRussia

Automobiles Peugeot Automobiles PeugeotMoscow sells new vehicles to an importer in Rostov na Donu, Russia

Center Invest Bank in Rostov/Russia issues a payment guarantee, confirmed by BNP-Paribas P i MParis or Moscow

EBRD guarantees to BNP-Paribas up to 100% of the payment risk

Financing of distribution of imported goods:Financing of distribution of imported goods:EBRD provides liquidity in form of cash advances in local or foreign currency EBRD provides liquidity in form of cash advances in local or foreign currency

to client banksto client banks

1.THROUGH DEFERRED PAYMENT L/CEBRD

Peugeot France Car Dealer

in Russia Bank in Russia

Sales Contract in EUR Guarantee facility in EUR

TFP guarantee facility in EUR

EBRD

Opens L/C in favour of Peugeot France with payment 3 -6 months after delivery

2 THROUGH CASH ADVANCES2. THROUGH CASH ADVANCES

Bank in RussiaPeugeot France Peugeot

RussiaSales

contractin EUR

Salescontractin RUB

Car dealerin Russia

Loan facility in RUB

tenor 3 -6 monthsafter delivery

TFP cash advances in RUB

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Liquidity Crisis Liquidity Crisis –– EBRD’s ResponseEBRD’s Response

Increase the TFP Programme limit from currently EUR 800 Increase the TFP Programme limit from currently EUR 800 mln. to EUR 1.5 bln.

Increase existing TFP facilities

Increase number of Issuing Banks

Guarantee also deferred payment L/Cs, L/Cs with post-financing and advanced payment guarantees

Provide liquidity also in form of cash facilities to Issuing Banks for trade finance transactions which cannot be funded byBanks for trade finance transactions which cannot be funded by foreign commercial banks or export credit agencies (e.g. post-financing for import of capital goods, local distribution of imported goods, pre-export finance, trade between EBRD countries of operation, factoring)

EBRD TFP EBRD TFP -- CoCo--Financing PartnersFinancing Partners

ACE Global Markets (AGM) & Lloyd´s of London

Confirming Banks

Donor Risk Sharing Funds

Export Credit Agencies

FMO Netherlands

OPEC Fund for International Development

Private Investment Funds

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TFP TFP –– Technical Cooperation ProjectsTechnical Cooperation Projects

EUR 4.2 million have been used for TFP TC consultancy services training of over 800 trade finance staff of 200 banks in 17 of EBRD’s Countries of Operation

TFP TFP -- Trade Finance Training in Trade Finance Training in MongoliaMongolia

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TFP Trade Finance Training & Advisory ProjectsTFP Trade Finance Training & Advisory Projects

2009 & 20102009 & 2010

Topics: trade finance practices, advanced and structured trade finance, factoring, UCP 600, fraud prevention, correspondent banking, restructuring trade finance deals, legal proceedings in connection with defaulted trade finance transactions, e-learning, etc.

Projects were generously sponsoredProjects were generously sponsoredby Taipei China, Switzerland, Italy, theNetherlands, New Norway CooperationFund, Western Balkans Fund, EarlyTransition Country Fund, SpecialShare-holder Fund of EBRD.

EBRD EEBRD E--Learning ProgrammeLearning Programme

The ICC’s technology partner Coastline Solutions has assisted EBRD to develop an online training programme incorporating ICCEBRD to develop an online training programme, incorporating ICC content on rules and operations in trade finance;

Project funded by the EBRD’s special shareholder’s fund and offered free of charge to Issuing Banks in EBRD’s countries of operations.

To date 230 trade professionals from 70 banks in 15 countries enrolled.

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EBRD EEBRD E--LEARNING CERTIFICATION LEARNING CERTIFICATION PROGRAMMEPROGRAMME

This programme will improve basic/ advanced skills d t h i f i t b k t d fi b iand techniques for inter-bank trade finance business

which operates under ICC set rules;

The admitted participants enrolled for the online training and upon completion of the course the candidates are to be awarded with the ICC certificate subject to exams outcome;certificate, subject to exams outcome;

This training programme is available for the staff of most active Issuing Banks and permits the candidates to study during “off-work hours”.

EBRD EEBRD E--LEARNING CERTIFICATION LEARNING CERTIFICATION PROGRAMMEPROGRAMME

The e-learning program was launched in May 2010 and offers 7

d lmodules:

Collections: Comprehensive training in Collections and URC 522

Mentor 600: Comprehensive training in Letters of Credit and UCP 600

DC Master: Advanced training in Letters of Credit

ISP Master: Advanced training in Standby Letters of Credits, Guarantees and ISP98Guarantees and ISP98

Demand Guarantees URDG

Incoterms2000®

Environmental Issues in Trade

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EBRD EEBRD E--LEARNING CERTIFICATION LEARNING CERTIFICATION PROGRAMMEPROGRAMME

2012 Graduation Ceremony – 7 Feb in Moscow In partnership with

5th Annual Russia & Eurasia Trade & Investment Forum

Best students to receive furtherreceive further scholarships and sponsored training programmes in leading European confirming banks

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EBRD EBRD –– Best Development Bank in Best Development Bank in Trade Trade

Readers of Global Trade Review (GTR),Trade & Forfaiting Review (TFR) and Trade Finance Magazine have voted the EBRD in 2010 “Worldwide Best Development Bank in Trade”

EBRD invites other development banks commercial financialbanks, commercial financial institutions, export credit agencies and donors to co-finance or co-finance with the EBRD

www.ebrd.com/tfpwww.ebrd.com/tfp

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ContactsContacts

Financial Institutions - Trade Facilitation Programme (TFP)European Bank for Reconstruction and DevelopmentOne Exchange SquareOne Exchange SquareLondon EC2A 2JNUnited KingdomTel: +44 20 7338 7614Fax: +44 20 7338 6119/7029e-mail: nindlm@ebrd.comwww.ebrd.com/tfp

THANK YOU!THANK YOU!THANK YOU!THANK YOU!

Marco NindlMarco NindlEBRDEBRD

Trade Facilitation Programme Trade Facilitation Programme +44 20 7338 7614+44 20 7338 7614+44 20 7338 7614 +44 20 7338 7614 nindlm@ebrd.comnindlm@ebrd.com