RZB‘s Trade Finance business activities  with a focus on CEE and CIS March 2008
The Structure  Interests in Austrian Financial Institutions 8 Raiffeisen Landesbanks 566 Raiffeisen banks, operating 2,300...
Long term regional experience and well positioned in CEE and CIS markets North America Asia Banks Representative Offices B...
RZB Group – Key financial data -  Solidarity among Raiffeisen banks underpinned by a  comprehensive protection scheme - St...
RZB Group – Key financial data *  including one-off effects such as the sale of Raiffeisen Bank Ukraine  and 10% of Bank T...
Award winning Service Quality In addition, the following  Network Banks  of the RZB Group have been awarded  " Best B...
RZB‘s Trade Finance products overview <ul><li>Irrevocable letter of credit </li></ul><ul><li>Letter of guarantee </li></ul...
Commodity & Structured Trade Finance <ul><li>Close control of the commodity flow </li></ul><ul><li>Close control of the pa...
Commodity & Structured Trade Finance <ul><li>Commodity producers in emerging markets  (e.g. oil, metal ores,) </li></ul><u...
<ul><li>Crude oil & oil products (accounting for ~ 60% of results) </li></ul><ul><li>Ferrous & non ferrous metals  </li></...
Commodity & Structured Trade Finance <ul><li>Russian Federation </li></ul><ul><li>Ukraine </li></ul><ul><li>Belarus </li><...
Commodity & Structured Trade Finance <ul><li>Pre-export Financing </li></ul><ul><li>Production & Tolling Financing  </li><...
Commodity & Structured Trade Finance Supply contract RZB Final Offtaker Trader RZB‘s customer Supplier Collection  account...
Commodity & Structured Trade Finance Final Offtaker Trader Supplier RZB‘s customer RZB 1. Disbursement Value of loan to th...
<ul><li>Production plan of producer </li></ul><ul><li>Dispatch notice </li></ul><ul><li>Railway bills </li></ul><ul><li>Fo...
<ul><li>Financing not for 100%, mitigation of price risk in case of pre-export financing structure </li></ul><ul><li>Payme...
<ul><li>Product experience </li></ul><ul><li>Market experience </li></ul><ul><li>Track record </li></ul><ul><li>Strategic ...
<ul><li>Payment risk </li></ul><ul><ul><li>Off-takers pre-approved by RZB in case of payment on open account </li></ul></u...
<ul><li>Supply contract </li></ul><ul><li>Sales contract </li></ul><ul><li>Performance undertaking/ Surety of supplier </l...
Commodity & Structured Trade Finance <ul><li>political risk </li></ul><ul><li>payment risk  </li></ul><ul><li>fraud risk <...
<ul><li>Pledge on Goods </li></ul><ul><li>Assignment of supply contract and sales contract </li></ul><ul><li>A certain per...
<ul><li>Pledge on collection accounts </li></ul><ul><li>Mortgage on borrower´s real estate (real estate register!) </li></...
<ul><li>Syndication of the loan  </li></ul><ul><li>Assignment of claims against insurance companies (RZB being named as “l...
Commodity & Structured Trade Finance “ What you always wanted to know about .... Commodity and Structured Trade Finance .....
Export Finance <ul><li>Competence and know-how: </li></ul><ul><li>Competence of top level and decades of experience   </li...
Multi-Sourcing Transaction with ECA Corporate Ukraine Raiffeisen Bank Aval 15% Down payment financing Local cost financing...
<ul><li>Long-term financings for clients of our Romanian  Network bank in cooperation with/based on  guarantees issued by ...
Finalized Transactions  with international ECAs within SID Cooperation with  International ECAs We are currently also in c...
<ul><li>The Global Export Finance Department, Vienna   </li></ul><ul><ul><li>has an  outstanding Export Credit Portfolio  ...
Our Responsibilities <ul><li>Export insurance </li></ul><ul><li>Export finance </li></ul><ul><li>ECA-Multisourcing Center ...
<ul><li>RISK SHARING EXPERIENCE/SYNDICATIONS </li></ul>RISK SHARING EXPERIENCE / SYNDICATIONS OPEC-Fund Trade Finance Work...
Trade Finance Products  Kind of Participations used in RZB   <ul><li>L/Cs, bank guarantees and payment undertakings issued...
Syndication Techniques   <ul><li>Risk Participations </li></ul><ul><li>Searching for Participants in short-mid term trade ...
Participation under L/C Kind of Participations used in RZB   <ul><li>Funded Risk Participations  ( not very common under L...
Participation under  Trade Finance Products  <ul><li>Pre-conditions for risk participations under L/C‘s </li></ul><ul><li>...
Participation under  Trade Finance  <ul><li>Confidentiality of data:   especially with L/C’s </li></ul><ul><li>Written con...
“ Main Drivers for Risk Participations“   <ul><li>Advantages: </li></ul><ul><li>Reduction of exposure to particular names,...
Source: Dealogic Syndicated Trade Finance Volumes in CEE-CIS (2003-2007)
Trade Finance Investors  Geographical Distribution   <ul><li>Russia/CIS-CEE region attracting   Trade Finance investors </...
Trade Finance Market Trends <ul><li>Market Trends: </li></ul><ul><li>Although Trade Finance volumes diminished in 2007, we...
RZB expect s  from potential Partners <ul><li>Regional Expertise </li></ul><ul><li>Risk taking Capacity </li></ul><ul><li>...
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The Structure

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The Structure

  1. 1. RZB‘s Trade Finance business activities with a focus on CEE and CIS March 2008
  2. 2. The Structure Interests in Austrian Financial Institutions 8 Raiffeisen Landesbanks 566 Raiffeisen banks, operating 2,300 branches in Austria RZB Group Raiffeisen Banking Group TOTAL ASSETS: EUR 205,361mn PROFIT BEFORE TAX: EUR 1,697mn Tier 1: 7.4% Regulatory Own Funds: 10.1% Foreign Branches, Offices and Equity Participations Central and Eastern European Network Banks Specialist Companies 100% 87.7% * RZB Raiffeisen International
  3. 3. Long term regional experience and well positioned in CEE and CIS markets North America Asia Banks Representative Offices Branches Beijing Ho Chi Minh City Hong Kong Mumbai Seoul Singapore Zhuhai Teheran Chicago Houston New York Los Angeles
  4. 4. RZB Group – Key financial data - Solidarity among Raiffeisen banks underpinned by a comprehensive protection scheme - Strong market position and well diversified operations in Central & Eastern Europe - Sound financial and risk profile of RZB - Sound financial profile and defensible domestic franchise of the Austrian Raiffeisen banks A-1 (stable) A+ (stable) N/A - Central position within the strongly cohesive Austrian co-operative banking sector - Stable funding base - Stable domestic market position in corporate banking alongside well developed franchise in several CEE countries - Profitable wholesale banking franchise in CEE Stable funding base P-1 (stable) Aa2 (stable) C (stable) Credit Strengths Short-Term Credit Rating Long-Term Credit Rating Bank Financial Strength Agency Rating Data
  5. 5. RZB Group – Key financial data * including one-off effects such as the sale of Raiffeisen Bank Ukraine and 10% of Bank TuranAlem in EURmn 2006 * 2006 H1 2006 H1 2007 Change H1 07/06 Balance-sheet total 115,629 115,629 103,189 126,057 22.2% Profit before tax 1,882 1,286 643 846 46.1% RoE before tax 39.1% 26.7% 24.2% 25.5% 1.3 PP Tier 1 ratio (banking book) 9.0% 9.0% 7.2% 8.1% 0.9 PP Total capital ratio 10.8% 10.8% 9.1% 10.1% 1.0 PP Cost/Income ratio 56.7% 56.7% 53.9% 55.3% 1.4 PP Key figures overview
  6. 6. Award winning Service Quality In addition, the following Network Banks of the RZB Group have been awarded &quot; Best Bank &quot; in their respective countries by international publications: Albania, Bosnia and Herzegovina, Hungary, Kosovo, Serbia, Slovakia and Ukraine Best Treasury and Cash Management Provider – Global Finance Best Bank in Central and Eastern Europe – Euromoney, Global Finance Best Bank / Risk Management in CEE – Treasury Management International Bank of the Year in Austria – The Banker Best Bank in Austria – Global Finance
  7. 7. RZB‘s Trade Finance products overview <ul><li>Irrevocable letter of credit </li></ul><ul><li>Letter of guarantee </li></ul><ul><li>Standby letter of credit </li></ul><ul><li>Pre-export financing </li></ul><ul><li>Post-shipment financing </li></ul><ul><li>Warehouse financing </li></ul><ul><li>Commodity and structured trade finance </li></ul><ul><li>Export finance (ECA) </li></ul><ul><li>Receivables purchase </li></ul><ul><li>Discounting of promissory notes </li></ul><ul><li>Forfaiting </li></ul>
  8. 8. Commodity & Structured Trade Finance <ul><li>Close control of the commodity flow </li></ul><ul><li>Close control of the payment flow </li></ul>Commodity and Structured Trade Finance refers to structured short-term lending to finance the production, the purchase, the storage, the transportation of exchange-traded commodities, where the loan will be repaid from the proceeds of the sale of the commodity to pre-agreed off-takers with a Mission
  9. 9. Commodity & Structured Trade Finance <ul><li>Commodity producers in emerging markets (e.g. oil, metal ores,) </li></ul><ul><li>Processing plants in emerging markets (e.g. refineries, steel plants) </li></ul><ul><li>International trading companies </li></ul>Often, balance sheet lending is not possible, therefore we need to structure our financings!! Customers
  10. 10. <ul><li>Crude oil & oil products (accounting for ~ 60% of results) </li></ul><ul><li>Ferrous & non ferrous metals </li></ul><ul><li>Fertilizers </li></ul><ul><li>Others (e.g. chemicals, agricultural products) </li></ul>Commodity & Structured Trade Finance Products/Commodities
  11. 11. Commodity & Structured Trade Finance <ul><li>Russian Federation </li></ul><ul><li>Ukraine </li></ul><ul><li>Belarus </li></ul><ul><li>Central Asian Republics of FSU (e.g. Kazakhstan, Uzbekistan) </li></ul><ul><li>Romania </li></ul><ul><li>Bulgaria </li></ul><ul><li>Countries of former Yugoslavia </li></ul>Countries
  12. 12. Commodity & Structured Trade Finance <ul><li>Pre-export Financing </li></ul><ul><li>Production & Tolling Financing </li></ul><ul><li>Storage Financing </li></ul><ul><li>Transport Financing </li></ul><ul><li>Post-shipment Financing </li></ul>Transaction Types
  13. 13. Commodity & Structured Trade Finance Supply contract RZB Final Offtaker Trader RZB‘s customer Supplier Collection account of the Trader with RZB Sales contract, assignment to RZB Offtaker‘s bank Pledge of collection account to RZB Supplier‘s bank 2. Import L/C in favour of supplier 3. Delivery 3. Delivery 4. Payment under the Export L/C 4. Payment under the Import L/C L/C facility structure 1. Export L/C in favour of trader
  14. 14. Commodity & Structured Trade Finance Final Offtaker Trader Supplier RZB‘s customer RZB 1. Disbursement Value of loan to the Supplier = max. 80% of the value of crude oil delivery ! Collection account of the Trader with RZB Pledge of collection account to RZB Loan agreement Supply contract, assignment to RZB Sales contract, assignment to RZB Pre-export financing structure 2. Delivery of crude oil 3. Delivery of crude oil 4. Payment to the collection account 5. Repay-ment 6. Release of cash cover
  15. 15. <ul><li>Production plan of producer </li></ul><ul><li>Dispatch notice </li></ul><ul><li>Railway bills </li></ul><ul><li>Forwarder certificate of receipt </li></ul><ul><li>Warehouse receipt </li></ul><ul><li>Bill of Lading </li></ul><ul><li>DAA (documentary acceptance act) in case of crude oil financing (via pipeline) </li></ul>Commodity & Structured Trade Finance Control of product flow, proof of existence of the goods
  16. 16. <ul><li>Financing not for 100%, mitigation of price risk in case of pre-export financing structure </li></ul><ul><li>Payment to be effected by the final off-taker to the collection account with RZB </li></ul><ul><li>Notice of assignment and acknowledgement of assignment from Off-taker </li></ul>Commodity & Structured Trade Finance Control of payment flow
  17. 17. <ul><li>Product experience </li></ul><ul><li>Market experience </li></ul><ul><li>Track record </li></ul><ul><li>Strategic partner of producer </li></ul><ul><li>Any control over the producer </li></ul><ul><li>Strategic partner of the final off-taker </li></ul>Assessing the trader Commodity & Structured Trade Finance
  18. 18. <ul><li>Payment risk </li></ul><ul><ul><li>Off-takers pre-approved by RZB in case of payment on open account </li></ul></ul><ul><ul><li>All other off-takers have to open documentary L/Cs in favour of our customer </li></ul></ul><ul><ul><li>Notice of assignment, acknowledgement of assignment </li></ul></ul><ul><li>Export off-taker vs. domestic off-taker </li></ul><ul><li>Long term relationship vs. spot </li></ul>Commodity & Structured Trade Finance Assessing the Off-taker
  19. 19. <ul><li>Supply contract </li></ul><ul><li>Sales contract </li></ul><ul><li>Performance undertaking/ Surety of supplier </li></ul><ul><li>Purchase confirmation, documentary L/Cs </li></ul><ul><li>Invoice of supplier to RZB’s customer </li></ul><ul><li>Invoice of RZB’s customer to the off-taker </li></ul><ul><li>Transportation documents </li></ul>Commodity & Structured Trade Finance Documents involved
  20. 20. Commodity & Structured Trade Finance <ul><li>political risk </li></ul><ul><li>payment risk </li></ul><ul><li>fraud risk </li></ul><ul><li>contractual risks </li></ul><ul><li>performance risk </li></ul><ul><li>quantity and quality risk </li></ul><ul><li>handling risk </li></ul><ul><li>transportation risk </li></ul><ul><li>market risk </li></ul><ul><li>price and FX risks </li></ul>General risks risks for Producer/Exporter Trader (Buyer/Seller) Final Buyer Risk overview
  21. 21. <ul><li>Pledge on Goods </li></ul><ul><li>Assignment of supply contract and sales contract </li></ul><ul><li>A certain percentage of cash cover (10-30%) </li></ul><ul><li>Payment instruments from off-takers issued by 1st class banks (L/C´s, Standby-L/C´s, Guarantees) </li></ul><ul><li>Payment undertakings or purchase confirmations from first class off-takers </li></ul><ul><li>Assignment of receivables (assignment of proceeds of Letters of Credit, Bank Guarantees, Sales Contracts, Payment Undertakings, Purchase Confirmations) </li></ul>Commodity & Structured Trade Finance Possible securities (combination!)
  22. 22. <ul><li>Pledge on collection accounts </li></ul><ul><li>Mortgage on borrower´s real estate (real estate register!) </li></ul><ul><li>Careful selection of and close co-operation with </li></ul>Commodity & Structured Trade Finance <ul><li>Freight forwarders </li></ul><ul><li>Insurance companies </li></ul><ul><li>Inspection and surveillance companies </li></ul><ul><li>Warehouse keepers </li></ul>Possible securities (combination!)
  23. 23. <ul><li>Syndication of the loan </li></ul><ul><li>Assignment of claims against insurance companies (RZB being named as “loss-payee”) </li></ul><ul><li>Insurance of payment risk of off-takers </li></ul>Commodity & Structured Trade Finance Possible securities (combination!)
  24. 24. Commodity & Structured Trade Finance “ What you always wanted to know about .... Commodity and Structured Trade Finance ... but never dared to ask!” Trends
  25. 25. Export Finance <ul><li>Competence and know-how: </li></ul><ul><li>Competence of top level and decades of experience </li></ul><ul><li>Tailor-made export finance services: </li></ul><ul><li>The key to successful cross-border business is a reliable associate who thinks globally but acts locally </li></ul><ul><li>Comprehensive support: </li></ul><ul><li>Consulting and supporting RZB‘s customers concerning all issues in respect of export insurance and export finance </li></ul>Mission
  26. 26. Multi-Sourcing Transaction with ECA Corporate Ukraine Raiffeisen Bank Aval 15% Down payment financing Local cost financing Self retention L/C opening bank Exporter Austria Sub-supplier Germany Vienna OeKB Austria COFACE France Loan agreement 85% of contract value + up to 100% of ECA costs “ECA Facility” Euler Hermes Guarantee Finance credit cover Re-insurance Parallel insurance Delivery 100% of contract value Delivery 100% of contract value Loan agreement “ Commercial Loan” * Manufacturing risk cover * * Sample multi-sourcing transaction with ECA Exporter France
  27. 27. <ul><li>Long-term financings for clients of our Romanian Network bank in cooperation with/based on guarantees issued by the Norwegian ECA (GIEK) and by the Canadian ECA (EDC) and COFACE (France).* </li></ul><ul><li>EUR 8,4 mio. Renault TK Axis Deal – Leasing Transaction, Russia </li></ul><ul><li>EUR 108 mio. Export Project Financing of a cellulose factory in Estonia. </li></ul><ul><li>_________________ </li></ul><ul><li>*) due to bank secrecy we are not permitted to publish the name of the companies without prior written approval </li></ul>Examples for Successful Export Financing
  28. 28. Finalized Transactions with international ECAs within SID Cooperation with International ECAs We are currently also in contact with Sinosure (China), EKF (Denmark), IFTRIC (Israel), NEXI (Japan), KEIC (Korea), IGA (Serbia), CESCE (Spain) , SERV (Switzerland), ECGD (U.K.) OND EDC HBOR FINNVERA COFACE EULER-HERMES MEHIB SACE KUKE GIEK EXIMBANKA EXIMBANKA SR US EXIM EKN ATRADIUS OEKB EGAP
  29. 29. <ul><li>The Global Export Finance Department, Vienna </li></ul><ul><ul><li>has an outstanding Export Credit Portfolio totalling approx. EUR 6 billion as of December 2007 </li></ul></ul><ul><ul><li>has finalized export financing transactions in the volume of EUR 3 billion in the year 2007 </li></ul></ul><ul><ul><li>with various ECAs </li></ul></ul>Export Finance
  30. 30. Our Responsibilities <ul><li>Export insurance </li></ul><ul><li>Export finance </li></ul><ul><li>ECA-Multisourcing Center of Competence for </li></ul><ul><li>International ECAs with the exception of US-Exim which is handled directly by RZB Finance LLC, New York, USA. Network Banks Export Finance for deliveries and services originating (NWB) from the CEE countries is offered directly by our experts in the respective Network banks (= NWB), e.g. Raiffeisen banks in Poland, Hungary, Czech Republic, Croatia, Romania and Tatra banka in Slovakia. </li></ul>under the Austrian Export Promotion Scheme
  31. 31. <ul><li>RISK SHARING EXPERIENCE/SYNDICATIONS </li></ul>RISK SHARING EXPERIENCE / SYNDICATIONS OPEC-Fund Trade Finance Workshop Seite
  32. 32. Trade Finance Products Kind of Participations used in RZB <ul><li>L/Cs, bank guarantees and payment undertakings issued by banks </li></ul><ul><li>Negotiable instruments guaranteed by a bank as avalised bills of exchange and promissory notes </li></ul><ul><li>Trade related pre- or post-financings to banks </li></ul>
  33. 33. Syndication Techniques <ul><li>Risk Participations </li></ul><ul><li>Searching for Participants in short-mid term trade related primary transactions offered to other institutions on an undisclosed and usually unfunded basis </li></ul><ul><li>Forfaiting </li></ul><ul><li>100% without recourse selling of trade related short and middle term transactions to other institutions or primary markets on a disclosed and funded basis </li></ul>
  34. 34. Participation under L/C Kind of Participations used in RZB <ul><li>Funded Risk Participations ( not very common under L/C‘S ) </li></ul><ul><ul><li>Settlement Limit </li></ul></ul><ul><ul><li>KYC check </li></ul></ul><ul><li>Unfunded Risk Participations </li></ul><ul><ul><li>Settlement limit </li></ul></ul><ul><ul><li>Counter Party Limit </li></ul></ul><ul><ul><li>KYC check </li></ul></ul><ul><li>Agreements used with: </li></ul><ul><li>External Banks: </li></ul><ul><ul><li>Master Risk Participation </li></ul></ul><ul><ul><li>Participation according to Austrian Law </li></ul></ul><ul><ul><li>IFA (International Forfaiting Association) Guide lines </li></ul></ul><ul><ul><li>Frankfurter Agreement </li></ul></ul>
  35. 35. Participation under Trade Finance Products <ul><li>Pre-conditions for risk participations under L/C‘s </li></ul><ul><li>L/C has to be confirmed by RZB </li></ul><ul><li>Following terms and conditions to be met: </li></ul><ul><ul><li>L/C available by sight payment or deferred payment </li></ul></ul><ul><ul><li>with or without post financing </li></ul></ul><ul><ul><li>valid for presentation of documents at the counters of RZB </li></ul></ul><ul><ul><li>payable at the counters of RZB </li></ul></ul><ul><ul><li>include order for confirmation </li></ul></ul><ul><ul><li>acceptable L/C wording </li></ul></ul>
  36. 36. Participation under Trade Finance <ul><li>Confidentiality of data: especially with L/C’s </li></ul><ul><li>Written consent from issuing bank that RZB Vienna is allowed to pass on data to third parties regarding the L/C under the risk participation. (Due to Austrian Banking Law) </li></ul><ul><li>In case it is not possible to get this agreement from issuing bank, FI management has to authorize syndication department to proceed without such letter under full responsibility of FI. </li></ul>
  37. 37. “ Main Drivers for Risk Participations“ <ul><li>Advantages: </li></ul><ul><li>Reduction of exposure to particular names, sectors or countries </li></ul><ul><li>presents new reciprocity opportunities </li></ul><ul><li>Increase in capacity to lend to particular entities/countries </li></ul><ul><li>Diversification of risk and acquisition of target exposures where appropriate </li></ul><ul><li>Additional income generation </li></ul><ul><li>A market oriented capital allocation </li></ul><ul><li>Building up international market expertise </li></ul><ul><li>Optimising equity allocation within the group </li></ul><ul><li>Broadening of the investor base </li></ul>
  38. 38. Source: Dealogic Syndicated Trade Finance Volumes in CEE-CIS (2003-2007)
  39. 39. Trade Finance Investors Geographical Distribution <ul><li>Russia/CIS-CEE region attracting Trade Finance investors </li></ul><ul><li>Many small investors getting limits for trade related risks </li></ul><ul><li>to invest </li></ul><ul><li>Borrowers keen to diversify lending group </li></ul>Trade Finance Investors: EUROPE ASIA GCC
  40. 40. Trade Finance Market Trends <ul><li>Market Trends: </li></ul><ul><li>Although Trade Finance volumes diminished in 2007, we expect volumes to increase in 2008 upwards due to market conditions (liquidity); </li></ul><ul><li>Exporters- Importers will use: </li></ul><ul><ul><li>Less open accounts </li></ul></ul><ul><ul><li>Less Documentary collections </li></ul></ul><ul><ul><li>Less cash payments </li></ul></ul><ul><li>CEE-CIS Banks will use Trade finance products for their own funding needs, </li></ul><ul><li>( Sight L/C‘s with Post Financing ) </li></ul><ul><li>Strong competition among Banks, Insurance companies and ECA‘s </li></ul><ul><li>Due to the complexity of the Structured Trade Finance Products, corporates use d to borrow through projects finance or corporate finance syndicated markets. 2008 and upwards, we expect this trend to be changed. </li></ul>
  41. 41. RZB expect s from potential Partners <ul><li>Regional Expertise </li></ul><ul><li>Risk taking Capacity </li></ul><ul><li>Product knowledge </li></ul><ul><li>Master Risk Participation in place </li></ul><ul><li>Funding </li></ul>
  42. 42. Thank you for your attention!
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