EBRD Trade Facilitation Programme (TFP)

EBRDTrade Facilitation Programme (TFP)

www.ebrd.com/tfpRogers LeBaron

Toronto 20 October 2004

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TFP TFP –– The Concept (1) The Concept (1) -- 27 Countries27 CountriesAlbania Armenia Azerbaijan Belarus Bosnia and Herzegovina Bulgaria Croatia Czech Republic Estonia Serbia & Montenegro FYR Macedonia Georgia Hungary Kazakhstan Kyrgyz RepublicLatvia Lithuania Moldova Poland Romania Russian Federation

Slovak Republic Slovenia Tajikistan Turkmenistan Ukraine Uzbekistan

Resident Offices

Regional Offices

Headquarters

TFP TFP -- The Concept (2)The Concept (2)

EBRD supports trade by providing

guarantees that cover risks arising from these trade finance transactions

short-term advances/financing to banks in the Countries of Operation for trade finance purposes

trade finance training and advisory service to banks

TFP TFP –– Guarantee TransactionGuarantee Transaction

Always involves a local bank (“Issuing Bank”) which issues a trade finance instrument (e.g. a letter of credit) and a foreign bank which confirms it to the exporter (“Confirming Bank”)

The trade finance instrument (e.g. L/C) ensures that the exporter receives payment upon or after delivery

EBRD Guarantee covers payment risks of the Issuing Bank to the Confirming Bank

Case Study: Export of Canadian Equipment to Case Study: Export of Canadian Equipment to RussiaRussia

An Canadian exporter sells agricultural equipment to Russia

A Russian Issuing Bank under the TFP opens a confirmed Letter of Credit to an Canadian Confirming Bank, payable in several instalments before, at and after delivery

EBRD guarantees payment of amounts or tenors which are not covered by Export Credit Agencies

EBRD guarantees up to 100% of the political and commercial payment risk

Standby L/C (under UCP 500)

Payable on first written demand

Payable 15 days after receipt of demand

Different from Export Credit Insurance

TFP TFP -- GuaranteesGuarantees

TFP TFP -- The Concept (3)The Concept (3)

TFP work through commercial banks

Provides up to 100% guarantee on the transaction amount

Covers both import and export transactions

Covers both political and commercial payment risk

Applicable for post-shipment and pre-exportfinancing

Additionality Additionality -- TransitionTransition

EBRD covers transactions which are not covered by other financial institutions or ECAs

Issuing Banks come from low & intermediate transition countries

Banks in advanced countries act as Confirming Banks (e.g. Poland, Hungary, Czech Republic)

Graduation process: from Issuing to Confirming

TFP is a tool for the market - used when needed

EBRD creates markets in low transition countries

IntraIntra--regional Dealsregional Deals

Combine Harvesters - Russia to Kazakhstan

Electricity - Russia to Georgia

Construction - Macedonia to Bosnia

Medical Equipment - Bulgaria to Macedonia

Wheat - Kazakhstan to Russia

Oil and jet fuel - Russia to Kazakhstan

Cattle - Hungary to Croatia

TFP TFP -- The Concept (4)The Concept (4)

Issuing Banks - 85 banks in 20 countries– Selected banks in EBRD countries of operation which

meet the following criteria:Engaged in or developing trade finance operations

Sound financial position and adequate operational procedures

Preferably privately owned with strong shareholders

Confirming banks - 507 confirming banks and subsidiaries in 66 countries

Parties to the TFP (2004)

All types of goods, commodities and equipment, except for EBRD’s general exclusion list and environmental exclusion listFacilitated by:

– L/C, Stand- by L/C and payment guarantees – trade- related promissory notes and bills of exchange– bid, performance bonds, contract guarantees– construction guarantees, leasing guarantees– credit card and other payment guarantees

Types of Goods and Trade Finance InstrumentsTypes of Goods and Trade Finance Instruments

Set on a deal by deal basis within established limits

Depends on country, bank, tenor, import/export

Russia 2.0 % - 3.0 % p.a.

Ukraine 2.0 % - 4.0 % p.a.

Central Asia 2.5 % - 4.0 % p.a.

Balkans 2.5 % - 4.0 % p.a.

Romania/Bulgaria 1.0 % - 3.0 % p.a.

Advanced countries 0.5 % p.a.

PricingPricing

Total number of guarantees issued: 2,900– Cover L/C’s issued by 77 banks in 20 countries of

EBRD’s Operation

– and confirmed by 170 banks in 45 countries

Total amount of trade transactions financed:EUR 1.6 billion

Amount of total trade supported:EUR 2 billion

– Confirming Banks shared app. 24 % of the portfolio risk

Achievements to Date (1999 Achievements to Date (1999 -- 2004)2004)

Transaction size from EUR 10,000 to EUR 30 million

Average deal size: EUR 0.6 million

More than 50% of transactions are below EUR 100,000

Average guarantee tenor: 10 months

… and no claims or losses

Achievements to Date (1999 Achievements to Date (1999 -- 2004)2004)

TFP Transactions p.a. 1999 TFP Transactions p.a. 1999 –– December 2003December 2003

0

100

200

300

400

500

600

700

800

900

1000

1999

2000

2001

2002

2003

Volume, € mlnNumber of Transactions

Transactions by Country of Importer (1999 Transactions by Country of Importer (1999 -- 2004)2004)

0.6%8.3Kyrgyz Republic

100%1,393Total0.24%3.3Other0.24%3.4Croatia0.49%6.8Bulgaria

1.72%23.9Serbia & Montenegro2.36%32.9Bosnia-Herzegovina2.63%36.6Romania2.92%40.7Georgia3.19%44.5Moldova3.25%45.3Belarus3.46%48.2Azerbaijan4.02%56Macedonia9.25%128.8Ukraine

10.88%151.6Uzbekistan17.44%242.9Kazakhstan37.32%519.9Russia

%By CountryTotal turnover (€mln)Country

Transactions by Country of Exporter (1999 Transactions by Country of Exporter (1999 -- 2004)2004)

Germany 348 transactions - EUR 135 mln

Italy 281 transactions - EUR 45 mln

Turkey 241 transactions - EUR 18 mln

Switzerland 190 transactions - EUR 142 mln

Austria 143 transactions - EUR 47 mln

France 117 transactions - EUR 33 mln

CanadaCanada 16 transactions EUR 26 mln16 transactions EUR 26 mln

TFP TFP –– Canadian Beneficiaries Canadian Beneficiaries -- Examples Examples Bombardier Aircraft

Emery International Developments, Inc.

SR Telecom Inc.

International Grain Trade

Hamtrade International Inc

Greenvalley Equipment, Inc

GN Plastics Company

Transactions covered for Canadian ExportersTransactions covered for Canadian Exporters

ExamplesAircraft to RussiaTelecommunication equipment to MacedoniaAgricultural equipment to RussiaIndustrial production equipment to RussiaShipbuilding equipment to UkraineSteel production equipment to UkraineMeat and grain to MacedoniaVegetables to Romania

TFP TFP -- Supporting SMEs (1999 Supporting SMEs (1999 –– 2003)2003)

54% of all transactions are below EUR 100,000

1203

779

19530

0

200

400

600

800

1000

1200

1400

Number of Transactions

<100,000 100,000to 1 mln

1 - 5 mln > 5 mln

Amount in EURs

Confirming BanksConfirming Banks

Confirming Banks in CanadaConfirming Banks in Canada

• Bank of Montreal

• Canadian Imperial Bank of Commerce

• HSBC Bank Canada

• National Bank of Canada

• Scotiabank

• Societe Generale Canada

• TD Bank Financial Group

Confirming Banks in Canada by No. of TransactionsConfirming Banks in Canada by No. of Transactions

Canadian Imperial Bank of Commerce - 7

TD Bank Financial Group - 2

Societe Generale Canada - 2

Others – 5

31%

56%

0% 0%

13%

0%

10%

20%

30%

40%

50%

60%

5 4 3 2 1

TFP Users TFP Users -- Client Satisfaction with EBRDClient Satisfaction with EBRD

Average – 4.2

Q. Using a 5- point scale from 1 'poor' to 5 'excellent', how would you rate your overall satisfaction with the products and services delivered by EBRD?

Achievements Achievements –– Client SatisfactionClient Satisfaction

Readers of Trade Finance magazine have voted the EBRD the Best Development Bank in Trade in 2003 and 2004

EBRD invites other development banks, commercial financial institutions and Export Credit Agencies to co-finance or co- operate with EBRD

TFP TFP -- CoCo--Financing with Confirming BanksFinancing with Confirming Banks

0

5

10

15

20

25

30

35

40

1999 2000 2001 2002 2003 2004

% from total turnover

Rish sharing withConfirming Banks

Risk Risk Sharing (December 2003)Sharing (December 2003)

On average 36%, but varies widely from 0% to 65%

Direct Participation by Confirming Bank (EBRD Guarantee covers less than 100% of the risk)

Direct Participation by Confirming Bank under EBRD Umbrella (A/B Guarantees)

Participation by a third party bank (portfolio sales)

Donor Risk Sharing Guarantee Funds (Balkans and other countries)

TFP TFP –– Donor & TC FundsDonor & TC FundsDonors support the TFP through contributions to

Donor Risk Sharing Funds, sharing EBRD’s risk in South East Europe and Central Asia (including funds of Switzerland, Germany, Netherlands, Norway and Austria)

Training of trade finance staff of banks in EBRD’s Countries of Operation (funds provided so far by Ireland, UK, France and Austria for training of 300 bankers from 65 banks in 15 countries)

Trade Finance Advisory Services for banks in Russia, Ukraine, Central Asia and Caucasus (funds provided so far by Canada,the Netherlands, Austria and Ireland)

Instruction for Exporters & ImportersInstruction for Exporters & Importers

Check under www.ebrd.com/tfp, for which Issuing Banks and which tenors EBRD may guarantee the payment;

Ask your buyers/suppliers to check if an Issuing Bank under the TFP would be ready to issue the required trade finance instrument;

Ask a Confirming Bank of your choice to confirm the payment instrument under the guarantee of EBRD

ContactsContacts

European Bank for Reconstruction and DevelopmentOne Exchange SquareLondon EC2A 2JNUnited KingdomTel: +44 207 338 6813 (Yelena Tonna)

+44 207 338 6476 (Rebecca Suknenko)Fax: +44 207 338 6119/7029e-mail: [email protected]

[email protected]

www.ebrd.com/tfp

Financial Institutions - Trade Facilitation Programme (TFP)

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

Annual Meeting & Business Forum 2005Annual Meeting & Business Forum 2005

22- 23 May 2005 in BelgradeParallel forum of debate and discussion on the investment climate in the region

Good opportunity to:find out more about the EBRD and its countries of operationsnetwork with bankers, business people and government officials

TFP TFP -- Indicative Tenor List (1)Indicative Tenor List (1)

180Azerigasbank

90BVB2 yearsPriorbank

Belarus

180-360Bank of Baku180-360UniBank (former Mbank)180Azerdemiryolbank2 yearsIBA

Azerbaijan180Agricultural Cooperative Bank of Armenia180Armeconombank180Armimpex Bank180Anelik Bank LLC

Armenia180Banca Italo Albanese180ABA

AlbaniaTenor, daysBankCountry

TFP TFP -- Indicative Tenor List (2)Indicative Tenor List (2)

Kazakhstan2 yearsBank Turan Alem2 yearsHalyk Savings Bank360ATFBank2 yearsKazcommerzbank360Temirbank2 yearsBank Center Credit

Bulgaria3 yearsUBB360Union Commercial Bank

Georgia2 yearsTBC2 yearsBank of Georgia180Tbiluniversal180United Georgian Bank

Bosnia3 yearsRaiffeisen Bank d.d. BiH360UPI Banka d.d.180-360Zagrebacka Banka180Universal Banka

Tenor, daysBankCountry

TFP TFP -- Indicative Tenor List (3)Indicative Tenor List (3)

360Tutunska Banka

Moldova180Victoria Bank180Agroindbank180-360Moldindconbank180-360Mobias Bank

Romania360Banca Comerciala Robank SA

Latvia360Rietumu Banka

Lithuania360AGBank

Macedonia360Komercijalna banka360Stopanska

180Export & Credit Bank

Kyrgyz Rep.180Demir Kyrgyz International Bank180Inexim Bank360Kyrgyz Investment and Credit Bank180JS Commercial Bank Kyrgyzstan

360Banc Post360Banca Transilvania

Tenor, daysBankCountry

TFP TFP -- Indicative Tenor List (4)Indicative Tenor List (4)

360Eksimbanka180Euromarket Banka

360Raiffeisenbank JugoslavijaSerbia & Mont.

360TransCapitalBank

360HVB Jugoslavija

360Absolut Bank2 yearsUralsib Bank2 yearsProbusinessbank360Asia-Invest Bank (Russia)360Uraltransbank2 yearsCenter-Invest Bank360Petrocommerce Bank2 yearsChelindbank360KMB-Bank (Small Business Credit Bank)3 yearsIMB360West LB Vostok5 yearsSberbank3 yearsVTB

RussiaTenor, daysBankCountry

TFP TFP -- Indicative Tenor List (5)Indicative Tenor List (5)

Uzbekistan360NBU360UzDaewoo360Asaka

360Ukrsotsbank360ProCredit Bank360Raiffeisen Bank Ukraine360JSC Kredyt Bank3 yearsHVB Ukraine360ING Ukraine180Nadra Bank2 yearsAVAL Bank360Forum Bank360FUIB

Ukraine180Tajprombank

TajikistanTenor, daysBankCountry