SWIFT for Corporates Streamlining cash and trade management

Franck de Praetere Head of Payments and Trade Markets Damien Dugauquier Commercial Manager, Corporates

Agenda

• Setting the scene (20’) + Regional and local context on cash and trade

• Speed-meetings (3 times 10’) + Trade: Bank Payment Obligation + SWIFT for Corporate: using SWIFT from a corporate perspective + SWIFT for Corporate: using SWIFT from a bank perspective

• Panel discussion (25’) + Meg L. San Pedro: Lafarge Group Treasury + Alan K. Wong, Bank of America Merril Lynch

• Wrap-up

2

Year on Year quarterly growth rates

SWIFT as a barometer of the economy GDP and SWIFT Payments show a similar trend

* OECD Europe Q4 2010 is provisional Source: SWIFT, OECD

3

YTD Growth for PH: 10.5%

Philippines : SWIFT trade and payment corridors

4

20%

11% 10% 10% 10%

4% 4% 3% 3% 2%

17%

9%

0%

4%

14%

8% 6%

7% 6%

1%

0%

5%

10%

15%

20%

25%Customer payments Letters of credit

▪ 2/3 % of payments are intra-regional ▪ 1/3 of import from CN/HK

20% of customer payments sent from PH end to a beneficiary in China

Correspondent banks

Account receivable

Treasury management

Document handling • Reporting: Account statements • BPO/TSU, MT798

Correspondent banks

Account payable

Treasury management

Trade Finance • Payment initiation • FX, money markets confirmation • Reporting: Account statements • BPO/TSU, MT798

What is SWIFT for corporate?

5

6

The economic shift accelerates internationalisation of Asian corporates

0

200

400

600

800

1000

1200

1400

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Num

ber o

f cor

pora

te g

roup

s

Per corporate group turnover & banking partners

Corporates by annual turnover (USD)

Corporates by number of banking partners

$1-10Bn 28%

>$10Bn 31%

<$1Bn 41%

>20 banks 13%

10 to 20 banks 21%

5 to 9 banks 29%

<5 banks 37%

>$10Bn 30%

$1-10Bn 34%

<$1Bn 36%

63% of SWIFT-connected corporates deal with 5 banks or more

64% of SWIFT-connected corporates have a turnover >$1Bn

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Corporate group connectivity

Message Type (FIN) / Business Area (FileAct) - Live 2013

Traffic Overview

Top 25 MTs # live MT messages sent & received by

corporates Distribution

940 26,148,950 43% 942 14,715,363 24% 103 4,743,167 8% 101 4,473,263 7% 900 4,391,724 7% 300 2,467,653 4% 199 1,124,713 2% 910 771,371 1% 515 394,879 1% 535 394,168 1% 210 350,217 1% 998 308,478 1% 950 195,469 0% 202 144,973 0% 941 138,229 0% 320 94,998 0% 548 79,836 0% 536 59,075 0% 999 53,121 0% 96 50,446 0%

537 47,216 0% 545 34,948 0% 547 31,482 0% 798 27,287 0% 304 26,632 0%

Top10 FileAct Request Type

Business areas

# live FileAct files sent and received

by corporates Distribution

CAMT 5,622,284 43% PAIN 5,601,592 43% PACS 1,533,870 12% ADMI 148,174 1% XSYS 13,651 0% TSMT 11,027 0% REDA 5,281 0%

eStatements 2,736 0% ACMT 1,947 0% SEMT 1,863 0%

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Reporting to end

customer 68%

Customer Credit

Transfers 8%

Foreign exchange

6%

Others 18%

Focus on Asia

S4C a source of differentiation

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Corporate Banking

Be the Gateway to Philipines

• Capture new business from emerging and OECDs corporate markets • Enable “ the best bank at best at the best place” model through access with

international standards and industry platform • Increase market share

Enabling internationalisation of domestic corporates

• Be the gateway for internationalization of PH corporates (mid-caps and MNCs) • Adopt international standards (MX/MTs) to support Shared Service and Regional Treasury • Deepen your relationship, source of innovation and best practices

RMB

• Link physical to financial flows

• Support increasing demand for RMB as trade settlement currency

Technology & Standards

• Enable simple and

efficient on-boarding process

• ISO Standards • 3SKEY

Bank readiness certification Entry & Advanced comparison

Criteria Advanced certification Entry certification

Participate in SCORE Yes Yes

Receive FIN MT 101 and send MT 940 Yes Yes

Send MT 942 Yes No

Send/Receive files over FileAct* Yes* Yes*

Testing facilities & scripts Yes Yes

Operational documentation Yes Yes

Have SWIFT-knowledge and trained sales staff Yes Yes

Offer Basic commercial documentation Yes Yes

Provide a dedicated SWIFT-page on website Yes Yes

*Bank should comply with FA implementation guide

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Americas 2%

Asia Pacific

83%

Europe, Middle East & Africa 15%

Proportion of Counterparty regions for Export (MT700 value received by Asia)

Intra-Asia accounts for more than 75% of Asia’s overall Trade Finance value Asia’s MT700 counterparty regions in September 2013, based on underlying value

*Domestic flows and central banks excluded

Americas 6%

Asia Pacific

76%

Europe, Middle East

& Africa 18%

Proportion of Counterparty regions for Import (MT700 value sent by Asia)

Source: SWIFT Watch

2012

0120

1202

2012

0320

1204

2012

0520

1206

2012

0720

1208

2012

0920

1210

2012

1120

1212

2013

0120

1302

2013

0320

1304

2013

0520

1306

2013

0720

1308

2013

09

USD

CNY

JPY 90% 79%

5% 18%

Jan. 2012 Sept. 2013

Top 5 Currencies Used for Intra Asia Trade Finance

Others HKD

EUR JPY

CNY USD

Intra-Asia RMB trade settlement up 67% over 2013, and accounts for 18% Intra-Asia trade

RMB and Asia very important

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0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2013Q1 2013Q2 2013Q3 2013Q4 2014Q1

Other

PHP

CNY

JPY

SGD

HKD

EUR

USD

What does it mean for the Philippines?

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▪ Focus on Import LCs from CN and HK: currency

▪ Focus on Import LCs from CN and HK: maturity

0% 20% 40% 60% 80% 100%

China

HongKong

0 -30 days 31 - 60 days 61 - 90 days

91 - 180 days > 180 days

By analyzing the RMB business flows: • RMB now 2nd most used currency in trade finance, overtaking the Euro • RMB Letters of Credit and Collections grew from an activity share of 1.89% in

January 2012 to 8.66% in October 2013

And in trade, RMB growing very rapidly

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Merchandise trade volumes growth forecast ….increasing the demand for SCF .

0102030405060708090

100

OALC

USD 2 trillion

USD 6 trillion

USD 33 trillion

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The Bank Payment Obligation (BPO) A new alternative instrument for trade settlement

A BPO is an irrevocable undertaking given by one bank to another bank that payment will be made on a specified date after a successful electronic matching of data according to an industry-wide set of rules.

New ICC Uniform Rules for BPO (URBPO) Implementation date: July 2013

Designed to complement and not to replace existing solutions

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Industry Standards for BPO

Any channel / any format / any

solution

Trade Matching Application

Any channel / any format / any

solution

Seller Buyer

1 2 3

UR Bank Payment

Obligation

Indu

stry

sta

ndar

ds

Com

mer

cial

so

lutio

ns

• SWIFT's Trade Services Utility (TSU)

• Bank portal • SWIFT's SCORE • Paper

• Bank portal • SWIFT's SCORE • Paper

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Agenda

• Setting the scene (20’) + Regional and local context on cash and trade

• Speed-meetings (3 times 10’) + Trade: Bank Payment Obligation + SWIFT for Corporate: using SWIFT from a corporate perspective + SWIFT for Corporate: using SWIFT from a bank perspective

• Panel discussion (25’) + Meg L. San Pedro: Lafarge Group Treasury + Alan K. Wong, Bank of America Merril Lynch

• Wrap-up

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Chatroom #1 - Trade

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Chatroom #1 - Trade

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Chatroom #2 – Getting ready to support Corporates

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Chatroom #3 – How SWIFT works for Corporates

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Chatroom #3 – How SWIFT works for Corporates

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Agenda

• Setting the scene (20’) + Regional and local context on cash and trade

• Speed-meetings (3 times 10’) + Trade: Bank Payment Obligation + SWIFT for Corporate: using SWIFT from a corporate perspective + SWIFT for Corporate: using SWIFT from a bank perspective

• Panel discussion (25’) + Meg L. San Pedro: Lafarge Group Treasury + Alan K. Wong, Bank of America Merril Lynch

• Wrap-up

23

Thank you

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