a March 18, 2009 Who's Still Lending?


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  • a March 18, 2009 Who's Still Lending?

    1. 1. a March 18, 2009
    2. 2. Who’s Still Lending? Non-Commercial Sources of Financing for Exports and Foreign Investment
    3. 3. Outline <ul><li>Exports and foreign investment </li></ul><ul><li>“Non-commercial” </li></ul><ul><li>Why is this topic important? </li></ul><ul><li>Non-commercial sources of financing </li></ul>
    4. 4. Exports and foreign investment <ul><li>Exports: Well…no need to explain </li></ul><ul><li>Foreign investment: FDI, not portfolio </li></ul><ul><li>Focus, therefore, on private-sector activity </li></ul><ul><ul><li>U.S. exporters </li></ul></ul><ul><ul><li>U.S. firms making foreign direct investments </li></ul></ul>
    5. 5. “Non-commercial” <ul><li>On the one hand, commercial banks </li></ul><ul><ul><li>First American, Fifth Third, Chase, RBS, Wells Fargo/HSBC, Bank of Montreal, National City, etc. </li></ul></ul><ul><li>On the other hand, government-owned financial institutions: “non-commercial” </li></ul><ul><ul><li>Export credit agencies, multilaterals, regional development banks, etc. </li></ul></ul><ul><ul><ul><li>Most are able to support private-sector trade and investment </li></ul></ul></ul><ul><li>Key issue: Relative appetites for risk </li></ul>
    6. 6. Why is this topic important? <ul><li>Exporters like to get paid (!) </li></ul><ul><li>Many foreign investors leverage their equity investments with debt financing </li></ul><ul><li>Some foreign investors want equity partners </li></ul><ul><li>Today’s global commercial banking system is severely stressed out </li></ul><ul><ul><li>Commercial lenders seem a bit shy these days </li></ul></ul>
    7. 8. Institutions <ul><li>Export-Import Bank of the United States (Ex-Im Bank) </li></ul><ul><li>Overseas Private Investment Corporation (OPIC) </li></ul><ul><li>International Finance Corporation (IFC) of the World Bank </li></ul>
    8. 9. Institutions <ul><li>Inter-American Development Bank (IDB) </li></ul><ul><li>Asian Development Bank (ADB) </li></ul><ul><li>African Development Bank (AfDB) </li></ul><ul><li>European Bank for Reconstruction and Development (EBRD) </li></ul>
    9. 10. Institutions <ul><li>Yes, there are others, for example </li></ul><ul><ul><li>Corporación Andina de Fomento (CAF) </li></ul></ul><ul><ul><ul><li>Mixed public/private ownership </li></ul></ul></ul><ul><ul><li>Banco Centroamericano de Integración Económica (BCIE) </li></ul></ul>
    10. 11. These institutions <ul><li>Provide much-needed liquidity to the global system of trade and investment </li></ul><ul><li>Benefit for U.S. exporters </li></ul><ul><ul><li>Facilitation of trade finance in difficult markets </li></ul></ul><ul><ul><li>Support of large capital projects </li></ul></ul>
    11. 12. These institutions <ul><li>Benefit for FDI </li></ul><ul><ul><li>Some invest directly in private-sector ventures </li></ul></ul><ul><ul><li>Some invest (or lend to) private equity funds </li></ul></ul><ul><li>All are focused on emerging markets/developing countries </li></ul>
    12. 15. Ex-Im Bank <ul><li>[Separate presentation by Michael Howard, Midwest Regional Director of Ex-Im Bank] </li></ul>
    13. 17. Overseas Private Investment Corporation (OPIC) <ul><li>Based in Washington, D.C. </li></ul><ul><li>U.S. Government agency </li></ul><ul><li>Supports U.S. private investment (FDI) in developing countries </li></ul><ul><ul><li>Loans and loan guarantees for U.S.-invested ventures </li></ul></ul><ul><ul><li>Loans to regional equity funds </li></ul></ul>
    14. 18. OPIC <ul><li>In 2007: </li></ul><ul><ul><li>Supported 139 projects </li></ul></ul><ul><ul><li>Direct-loan portfolio at year end: $ 641 million </li></ul></ul><ul><li>No trade finance program per se </li></ul>
    15. 20. International Finance Corporation (IFC) <ul><li>Based in Washington, D.C. </li></ul><ul><li>Part of the World Bank Group </li></ul><ul><ul><li>World Bank owned by 185 member countries </li></ul></ul><ul><li>Focused on private-sector in developing countries </li></ul><ul><ul><li>Direct loans </li></ul></ul><ul><ul><li>Equity investment, including funds </li></ul></ul>
    16. 21. IFC <ul><li>Total 2008 loan/investment commitments: $16 billion </li></ul><ul><ul><li>$11 billion directly </li></ul></ul><ul><ul><li>Mobilized an additional $5 billion </li></ul></ul><ul><li>Global Trade Finance Program </li></ul><ul><ul><li>IFC guarantees importers’ L/Cs and other instruments to facilitate trade </li></ul></ul>
    17. 22. IFC: Global Trade Finance Program
    18. 23. IFC: Global Trade Finance Program <ul><li>Countries with L/C issuing banks in the program </li></ul><ul><ul><li>Argentina </li></ul></ul><ul><ul><li>Egypt </li></ul></ul><ul><ul><li>Pakistan </li></ul></ul><ul><ul><li>Russia </li></ul></ul><ul><ul><li>South Africa </li></ul></ul><ul><ul><li>Ukraine </li></ul></ul><ul><ul><li>Vietnam </li></ul></ul><ul><ul><li>Many others </li></ul></ul>
    19. 24. IFC: Global Trade Finance Program <ul><li>U.S. L/C confirming banks in the program </li></ul><ul><ul><li>ABN AMRO </li></ul></ul><ul><ul><li>Bank of America </li></ul></ul><ul><ul><li>Harris/Bank of Montreal </li></ul></ul><ul><ul><li>Citibank </li></ul></ul><ul><ul><li>Chase </li></ul></ul><ul><ul><li>Standard Chartered Bank </li></ul></ul><ul><ul><li>Wells Fargo HSBC Trade Bank </li></ul></ul><ul><ul><li>Many others </li></ul></ul>
    20. 26. Inter-American Development Bank (IDB) <ul><li>Regional development bank </li></ul><ul><li>Based in Washington, D.C. </li></ul><ul><li>Owned by 48 member countries </li></ul><ul><ul><li>Including U.S. and others outside region </li></ul></ul><ul><li>Loans and loan guarantees for both public and private sectors </li></ul><ul><li>Equity investment, including funds </li></ul>
    21. 27. IDB <ul><li>Total 2007 loan and guarantee approvals: $8.8 billion </li></ul><ul><li>Private sector </li></ul><ul><ul><li>$2 billion in loans/guarantees </li></ul></ul><ul><ul><li>Mobilized an additional $2 billion </li></ul></ul><ul><ul><li>$227 million under Trade Finance Facilitation Program – TFFP </li></ul></ul><ul><ul><ul><li>Lines of credit to trade banks for guarantees of L/Cs and other instruments </li></ul></ul></ul>
    22. 28. IDB: Trade Finance Facilitation Program <ul><li>TFFP examples </li></ul><ul><ul><li>Panama: $10 million loan to Multibank, Inc. </li></ul></ul><ul><ul><li>Paraguay: $5 million loan to Sudameris Bank </li></ul></ul><ul><ul><li>El Salvador: $20 million loan to Banco Agricola </li></ul></ul><ul><ul><li>Jamaica: $7 million loan to First Caribbean International Bank </li></ul></ul><ul><ul><li>Guatemala: $40 million loan to Banco Industrial </li></ul></ul>
    23. 30. Asian Development Bank <ul><li>Regional development bank </li></ul><ul><li>Based in Manila, Philippines </li></ul><ul><li>Owned by 67 member countries </li></ul><ul><ul><li>Including U.S. and others outside region </li></ul></ul><ul><ul><li>U.S. and Japan are largest shareholders </li></ul></ul><ul><li>Loans and loan guarantees for both public and private sectors </li></ul><ul><li>Equity investment, including funds </li></ul>
    24. 31. ADB <ul><li>Total 2007 loan approvals: $8.2 billion </li></ul><ul><ul><li>Plus $1.9 billion from Asian Development Fund </li></ul></ul><ul><li>Private sector </li></ul><ul><ul><li>$865 in loans approved for non-sovereign borrowers </li></ul></ul><ul><ul><li>$80 million in equity investments </li></ul></ul>
    25. 32. ADB <ul><li>Trade Finance Facilitation Program – TFFP </li></ul><ul><ul><ul><li>Guarantees to L/C confirming banks </li></ul></ul></ul><ul><ul><ul><li>Revolving credit for regional exporters and importers </li></ul></ul></ul><ul><li>TFFP Issuing banks in </li></ul><ul><ul><li>Azerbaijan </li></ul></ul><ul><ul><li>Bangladesh </li></ul></ul><ul><ul><li>Cambodia </li></ul></ul><ul><ul><li>Nepal </li></ul></ul><ul><ul><li>Sri Lanka </li></ul></ul><ul><ul><li>Vietnam and others </li></ul></ul>
    26. 33. ADB <ul><li>U.S. confirming banks in TFFP </li></ul><ul><ul><li>American Express Bank </li></ul></ul><ul><ul><li>Bank of America </li></ul></ul><ul><ul><li>Bank SinoPac </li></ul></ul><ul><ul><li>Chang Hwa Commercial Bank </li></ul></ul><ul><ul><li>Wachovia </li></ul></ul><ul><ul><li>Several others </li></ul></ul>
    27. 35. African Development Bank (AfDB) <ul><li>Regional development bank </li></ul><ul><li>Based in Tunis, Tunisia </li></ul><ul><li>Owned by 77 member countries </li></ul><ul><ul><li>Including U.S. and others outside region </li></ul></ul><ul><li>Loans and loan guarantees for both public and private sectors </li></ul><ul><li>Equity investment, including funds </li></ul>
    28. 36. AfDB <ul><li>Total 2007 loan approvals: $1.4 billion </li></ul><ul><li>Private sector </li></ul><ul><ul><li>$630 million in loans approved </li></ul></ul><ul><ul><li>$117 million in equity investments </li></ul></ul><ul><li>New Trade Finance Initiative: $1 billion </li></ul><ul><ul><li>Announced March 12, 2009 </li></ul></ul>
    29. 38. European Bank for Reconstruction and Development (EBRD) <ul><li>Regional development bank </li></ul><ul><ul><li>Central and Eastern Europe, Russia, and “the ‘Stans” </li></ul></ul><ul><li>Based in London </li></ul><ul><li>Owned by 61 countries and 2 intergovernmental institutions </li></ul><ul><ul><li>Including U.S. and others outside region </li></ul></ul><ul><ul><li>U.S. is largest shareholder </li></ul></ul>
    30. 39. EBRD <ul><li>Loans to both public and private sectors </li></ul><ul><li>Equity investment, including funds </li></ul><ul><li>Total 2007 commitments: €5.6 billion </li></ul><ul><ul><li>86% of “business volume” in private sector </li></ul></ul><ul><ul><li>Investment in equity funds: €400 million </li></ul></ul><ul><ul><li>Profit of €1.9 billion in 2007 </li></ul></ul>
    31. 40. EBRD <ul><li>Trade Facilitation Programme </li></ul><ul><ul><li>Guarantees of trade transactions </li></ul></ul><ul><ul><ul><li>115 issuing banks in region </li></ul></ul></ul><ul><ul><ul><li>640 confirming banks world wide </li></ul></ul></ul><ul><ul><li>Short-term loans to banks and factors for on-lending to regional exporters and importers </li></ul></ul><ul><ul><li>Financed €777 million in trade transactions in 2007 </li></ul></ul>
    32. 42. Corporación Andina de Fomento (CAF) <ul><li>Sub-regional development bank </li></ul><ul><li>Based in Caracas, Venezuela </li></ul><ul><li>Owned by 16 governments and 15 commercial banks in the region </li></ul><ul><li>2007 investment and loan portfolio: </li></ul><ul><li>$10 billion </li></ul>
    33. 44. Banco Centroamericano de Integración Económica (BCIE) <ul><li>Sub-regional development bank </li></ul><ul><li>Based in Tegucigalpa, Honduras </li></ul><ul><li>Owned by member countries and others </li></ul><ul><li>Largest financial institution in Central America </li></ul><ul><li>Supporting both public and private sectors </li></ul><ul><li>2007 disbursements: $3 billion </li></ul>
    34. 45. Conclusions <ul><li>Financing exports and FDI will be challenging in 2009 </li></ul><ul><li>Financing remains available from several non-commercial sources </li></ul><ul><ul><li>However – they are not insulated from global liquidity situation </li></ul></ul><ul><ul><ul><li>They raise funds in international capital markets </li></ul></ul></ul><ul><ul><li>Lagging indicator in global recession? </li></ul></ul><ul><li>Commercial sources will come back… </li></ul>
    35. 46. Conclusions <ul><li>In the meantime – </li></ul><ul><li>it pays to shop around! </li></ul>
    36. 48. Web Sites <ul><li>Ex-Im Bank: www.exim.gov </li></ul><ul><li>OPIC: www.opic.gov </li></ul><ul><li>IFC: www.ifc.org </li></ul><ul><li>IDB: www.iadb.org </li></ul><ul><li>AfDB: www.afdb.org </li></ul><ul><li>ADB: www.adb.org </li></ul><ul><li>EBRD: www.ebrd.com </li></ul><ul><li>CAF: www.caf.com </li></ul><ul><li>BCIE: www.bcie.org </li></ul>
    37. 49. Who’s Still Lending? <ul><li>Non-Commercial Sources of Financing for Exports and Foreign Investment </li></ul><ul><li>CONTACT INFO: </li></ul><ul><li>Dean Ennes </li></ul><ul><li>Ennes International </li></ul><ul><li>(708) 445-0053 </li></ul><ul><li>[email_address] </li></ul>
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