Transcript Slide 1
Role of IFIs in Enhancing Global Trade 16th Private Sector Meeting for OIC Member Countries Sharjah, United Arab Emirates March 19, 2014 Trade Finance at IFC The Global Trade Finance Program (GTFP) program provides confirming banks with partial or full guarantees covering payment risk on banks in the emerging markets. These guarantees are transaction specific and apply to: • Letters of credit • Pre-export financing • Trade-related promissory notes and bills of exchange • Bid and performance bonds • Advance payment guarantees • Supplier credits for the import of capital goods The Trade Advisory Program The Trade Advisory Program is an integral component of the GTFP, and is designed to help local banks build their capacity in the areas of trade finance and international trade operations. IFC provides local financial institutions with training and support in order to: • • • • Upgrade skills in structuring basic and complex trade finance transactions Improve trade finance risk mitigation techniques Upgrade the operational and technical skills of the trade finance backoffices Transfer current international best practices in trade finance to local markets. 1 15 January 2014 Our Products for Global Trade & Supply Chain Solutions Transactional trade Global Trade Finance Program (GTFP) Trade portfolio and systemic solutions Global Trade Liquidity Program (GTLP) Critical Commodities Finance Program (CCFP) Working Capital Systemic Solutions (WCSS) Supply chain finance Structured trade commodity finance Global Warehouse Finance Program (GWFP) Global Trade Supplier Finance (GTSF) Distributor finance 2 15 January 2014 Our Value Proposition Our solutions provide essential working capital to emerging market firms, propelling goods through the economic value chain. MARKET NEEDS Inputs, Harvest OUR SOLUTIONS Pre- and Post-Harvest Financing Storage, Transportation Raw Materials, Labor, Energy Inventory and Working Capital and Warehouse Supply Chain Receipts Financing Financing Export Pre-Export Financing 3 Global Trade Finance Program (GTFP) Launched in 2005, the $5 billion GTFP provides risk mitigation by guaranteeing trade-related payment obligations of more than 275 eligible financial institutions in emerging markets. PROGRAM FEATURES AAA-rated – Basel III benefits Coverage up to 100 percent Cumulative Program Statistics Since 2005 (as of December 31, 2013) Total # / USD of Gtees 17,552 / $28.8B No. of Issuing Banks 282 in 96 countries No. of Confirming Banks 254 in 105 countries (1,100+ with affiliates) TOTAL CLAIMS ZERO FY13 GUARANTEES BY REGION (year-to-date; most active countries listed) Latin America & the Caribbean Middle East & North Africa Umbrella guarantee covers country and commercial risk Same-day issuance 1. Lebanon 2. Pakistan 16% Europe & Central Asia 1. Russia 2. Turkey Three-year maximum tenor Sub-Saharan Africa L/C applicants must be majority private sector 1. Brazil 2. Honduras 24% 16% 22% 23% Asia & Pacific 1. Vietnam 2. Bangladesh 1. Nigeria 2. Ghana 4 Breakdown of GTFP Guarantees USD Volume by Industry, FY13 Oil, Gas & Chemicals, 27% Other, 2% Textiles & Leather, 2% Agricultural Products, Fertilizer & Foodstuff, 24% Plastics & Rubber, 2% Pulp & Paper, 2% Telecoms & IT, 2% Energy Efficiency, 5% Automotive & Parts, 5% Consumer Goods, 10% Iron, Steel & Metals, 12% Industrial Goods & Machinery, 7% 6 Current Issuing Bank Coverage 281 issuing banks in 96 countries Updates at ifc.org/GTFP EUROPE & CENTRAL ASIA 19 countries 63 banks MIDDLE EAST & N. AFRICA 12 countries 39 banks LATIN AMERICA & CARIBBEAN 20 countries 63 banks ASIA & PACIFIC 14 countries 47 banks SUB-SAHARAN AFRICA 31 countries 69 banks 6 Working Capital Systemic Solutions (WCSS) Under our Working Capital Systemic Solutions, we issue shortterm loans to emerging market banks to inject USD liquidity in markets where macro events have led to a USD liquidity squeeze. Benefits to Bank: • Foreign exchange: fills void left by international commercial banks in the FX market due to concerns over regulatory uncertainty and/or sovereign risk • Risk mitigation: IFC’s AAA rating, effective in managing the effects of Basel II & III • Ease of administration: deal only with IFC, as agent Structure: • IFC provides funding as agent with co-financing from program partners • One-year traditional “A” loan with potential to be renewed twice for total of three years • Pricing: 6-month Libor + spread Focus Areas: • Global: low-income countries where macro factors create USD constraints • Sectors: SMEs, including exportoriented enterprises, in need of trade finance and working capital Program partners Program partners co-finance alongside IFC IFC extends loan to one or more local banks Local bank #1 Local bank #2 Local banks extend USD financing to their SME clients to support their working capital needs Emerging market SMEs Emerging market SMEs 7 Structured Trade Commodity Finance Funding for commodity players and risk mitigation for partner banks • Supports large cross-border commodity trade using collateral management to support lending at all stages of the supply chain: exporter/producers, trading companies, importer/processors • Emphasis on strategic commodities, such as energy, soft commodities, and agricultural inputs IMPORT EXPORT Producers Exporter Pre-export financing, inventorybased financing, receivablebased financing Traders Offtakers Borrowing base financing: lending against commodity or off-take agreements • IFC risk-shares by lending in parallel with Bank on underlying assets or by providing credit guarantee • Bank should have solid track record in managing the transaction flow and can act as the security agent • Environment & social requirements to be met by facility Partner bank Financing is secured by pledge of commodities as collateral, assignment of receivables, insurance, cash collection account 8 Global Warehouse Finance Program (GWFP) Risk mitigation for banks’ food/agriculture portfolio • Supports banks when lending to the agricultural sector against warehoused commodities • Banks can support increased use of WR or CMA by trading companies or producers Program partners Bank 2. Warehouse receipts issued by warehouse • Prequalified sub-borrowers • Funded or unfunded: 50-50 risk sharing 4. WHR facility • Facility tenor: one year extendable up to three years • Average transaction tenor: 4-6 months Program partners cofinance with funding or counter-guarantees 3. IFC channels funding or guarantees for up to 50% on portfolio of warehouse receipts Agricultural producers 1. Grain/produce stored in third-party warehouse Storage company 9 Global Trade Supplier Finance (GTSF) Funding and risk mitigation for banks’ supply chain finance clientele • Provides banks with additional credit capacity to support clients’ suppliers from higherrisk countries • Provides funded and unfunded risk-sharing of up to 100% of a client’s accounts receivable Buyer 1. Buyer uploads invoices (automated process) 3. Financier accepts early payment requests • IFC may also provide liquidity and discount A/R itself • A/R is discounted using marketbased pricing • IFC accepts bank proposed discount rate on risk-shared receivables SCF platform 6. Buyer pays full invoice amount on due date (automated transfers established) 2. Supplier views invoices and requests early payment of approved invoices Emerging market suppliers 5. Financier pays discounted invoice amount Bank 4. IFC provides funding or guarantee coverage Mobilization Program partners 10 Leading Confirming Banks For FY14 Q1 By USD VOLUME By NUMBER OF GUARANTEES 1. Deutsche Bank 1. Deutsche Bank 2. J.P.Morgan 2. Citibank 3. Citibank 3. J.P.Morgan 4. BNP Paribas 4. Commerzbank 5. Scotiabank 5. BNP Paribas 6. Banco Pichincha 6. KBC 7. Standard Chartered 7. BTMU 8. Zenith Bank 8. SMBC 9. Commerzbank 9. Banco Pichincha 10. BTMU 10. ABN Amro 11 IFC Guarantees – Trade Instruments • Import Letters of Credit • Standby Letters of Credit • Guarantees IFC covers the obligation of the issuer of the performance bonds, bid bonds, payment/advance payment guarantees • Bills of Exchange/ Promissory Notes for Trade IFC covers the obligation of the issuer for pre-export financing or postimport financing extended by a participating Confirming Bank 12 Global Trade & Supply Chain Solutions Best Trade Finance Program Best Development Finance Institution Critical Commodities Finance Program Global Trade Supplier Finance Program Structured Trade Commodity Finance Typical Transaction: Import L/C L/C in favor of exporter Payment Importer Request L/C issuance Payment Local Bank (Issuing) Payment International Bank (Confirming) Documents Documents Confirm L/C Exporter Documents Goods International Finance Corporation IFC guarantee 14 Import Letter of Credit Grains from Switzerland to Georgia • L/C issued by Bank of Georgia • Confirmed by Switzerlandbased bank • Tenor: 6 months • Value: USD 5 million • IFC covers: 100% Switzerland Georgia 15 Typical Transaction: Pre-Export Financing Goods Pre-export funding Pre-export funding Exporter Request pre-export advance Local Bank SBLC/PN for pre-export funding International Bank Importer Request IFC guarantee for pre-export loan International Finance Corporation IFC guarantee 16 Pre-Export Financing Sugar from Brazil to Japan • Promissory note issued by Brazilian bank • Funded by U.S.-based bank • Tenor: 6 months • Value: USD 3.9 million • IFC covers: 100% Brazil Japan 17 Typical Transaction: Post-Import Financing Goods Post-import funding Post-import funding Exporter International Bank SBLC/PN for post-import funding Local Bank Request post-import funding Importer Request IFC guarantee for post-import loan IFC guarantee International Finance Corporation 18 Post-Import Financing Cotton from China to Vietnam L/C issued by Techcombank Funded by Singapore-based bank Tenor: 6 months Value: USD 500K IFC covers: 100% Vietnam China 19