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Export Trade Finance & Insurance SeminarTrade ConnectGlobal Trade Cycle Solutions“Financing the Global Supply Chain”1Prese...
Objective Market Dynamics Overview of Global Trade Cycle Tools & Methods of Payment Closing Comments
Market DynamicsU.S. Exports and Imports – Increase in 2012In 2012, U.S. exports and imports of goods were thehighest on re...
Global: Trade Statistics - CaliforniaCalifornia – Exports IncreaseExports from California experienced an increase (2%) in2...
Market DynamicsCompany Global Trends Primary Goals• To optimize working capital• To mitigate key risks• To reduce costs•...
Market DynamicsCompetition: How We Differentiate Ourselves [cont.] Leading Letter of Credit Provider within U.S. Comerica...
Overview –The Global Trade Cycle
Global Trade Cycle Solutions
9IMPORTER (BUYER) BENEFITS EXPORTER (SUPPLIER) BENEFITS Optimize working capital Improve cash flow forecasts Take advan...
Tools & Methods of Payments
Tools & Methods of Payment11There are four primary methods of payment for global transactions, withthe level of risk varyi...
Overview – Global Trade Cycle12Types of RiskThe evaluation of risk in global commerce plays a major role indetermining the...
Tools & Methods of Payment13Global Trade Cycle SolutionsLetters of Credit:Commercial Letters of CreditStandby Letters of...
Tools & Methods of Payment14Letters of CreditSOLUTION DESCRIPTIONCommercial Letters of Credit • Irrevocable undertaking b...
Tools & Methods of Payment15Documentary CollectionsSOLUTION DESCRIPTIONDocumentary Collections • Buyer: Bank receives doc...
Tools & Methods of Payment16SOLUTION DESCRIPTIONEx-Im Bank WorkingCapital GuaranteeProgram (WCGP)• Working capital loans ...
17Thank YouCaroline BrownFirst Vice PresidentTrade Finance OfficerLong Beach, CA562-590-2525CVBrown@Comerica.com
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Trade Connect Finance

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Transcript of "Trade Connect Finance"

  1. 1. Export Trade Finance & Insurance SeminarTrade ConnectGlobal Trade Cycle Solutions“Financing the Global Supply Chain”1Presented by:Caroline Brown, First Vice PresidentInternational Trade Finance, Western MarketMay 8 2013
  2. 2. Objective Market Dynamics Overview of Global Trade Cycle Tools & Methods of Payment Closing Comments
  3. 3. Market DynamicsU.S. Exports and Imports – Increase in 2012In 2012, U.S. exports and imports of goods were thehighest on record -- U.S. exports increased 4% andU.S. imports increased 3%.Source: International Trade AdministrationNote: Import data is not available by stateSource: International Trade Administration, TradeStats ExpressGlobal: Trade Statistics - U.S.Comerica’s Footprint -- 37% of Total ExportsIn 2012, Comerica’s footprint represented 37% of totalU.S. exports. TX is the #1 export market, followed byCA, #2 (11% of total exports); FL, #6; MI, #8 and AZ,#25.#2#25#1#8#6
  4. 4. Global: Trade Statistics - CaliforniaCalifornia – Exports IncreaseExports from California experienced an increase (2%) in2012, going from $159 billion in 2011 to $162 billion in2012.Michigan Exports2000-2009Value in thousands ($USD)05,000,00010,000,00015,000,00020,000,00025,000,00030,000,00035,000,00040,000,00045,000,00050,000,0002000 2001 2002 2003 2004 2005 2006 2007 2008 2009ExportsSource: International Trade Administration, TradeStats ExpressNote: Import data is not available by stateSource: International Trade Administration, TradeStats ExpressNote: Import data is not available by stateExports – Top Trading PartnersThe top 10 trading partners for California are:(2012 figures in thousands, $USD) Mexico 26,319,672 Canada 17,295,931 China 13,977,175 Japan 13,059,903 South Korea 8,238,081 Hong Kong 7,827,087 Taiwan 6,334,103 Germany 4,985,576 Netherlands 4,551,259 United Kingdom 4,343,909Market Dynamics
  5. 5. Market DynamicsCompany Global Trends Primary Goals• To optimize working capital• To mitigate key risks• To reduce costs• To simplify the trade process
  6. 6. Market DynamicsCompetition: How We Differentiate Ourselves [cont.] Leading Letter of Credit Provider within U.S. Comerica ranks #7among the top U.S. commercial banks, in letter of credit outstandings.1 Leading Lender for Ex-Im Bank Working Capital Guarantee Program.Comerica ranks #4 among the top lenders nationwide.2 We hold the“Super” Delegated Authority Lender and “Fast Track” Lender designations. Strong Credit Ratings. Comerica has strong credit ratings -- required forthe acceptance of a Standby Letter of Credit. Present Ratings -- “A2” byMoody’s Investors Service, “A” by Standard & Poor’s and “A” by FitchRatings. Foreign Correspondent Bank Network. Comerica has coveragethroughout Asia, Europe, Latin America, the Middle East and Africa.1 Source: Documentary Credit World (FDIC Statistics on Banking), 3rd Quarter 20122 Source: Ex-Im Bank, FY 2012
  7. 7. Overview –The Global Trade Cycle
  8. 8. Global Trade Cycle Solutions
  9. 9. 9IMPORTER (BUYER) BENEFITS EXPORTER (SUPPLIER) BENEFITS Optimize working capital Improve cash flow forecasts Take advantage of supplier discount terms Improve supplier relations Increase Days Payables Outstanding (DPO) Optimize use of credit capacity Reduce costs Interest rate and capital arbitrage Reduce working capital needs by using betterinventory control and cash flow management Improve sales forecasts Lower financing rates on required working capital Reduce Days Sales Outstanding (DSO) Manage buyer credit risk more effectively Reduce costs Interest rate and capital arbitrageBenefitsEffective management of the global trade cycle providesnumerous benefits:
  10. 10. Tools & Methods of Payments
  11. 11. Tools & Methods of Payment11There are four primary methods of payment for global transactions, withthe level of risk varying for each.
  12. 12. Overview – Global Trade Cycle12Types of RiskThe evaluation of risk in global commerce plays a major role indetermining the method of payment to be used for settlementbetween buyer and supplier.RISK5 EXAMPLESCountry / Political Risk  Economic instability, government restrictions on payment, war, embargoCommercial Risk  Insolvency, unscrupulous buyers, fraudCurrency Risk  Convertibility of currency, exchange controlsTransportation Risk  Timeliness of delivery, piracy, pilferage, unions, loss of productDocumentary Risk  Wrong documents, improperly prepared documents, incompletedocumentsForeign Bank Risk  Insolvency, creditworthinessProduct Risk  Quality, quantity
  13. 13. Tools & Methods of Payment13Global Trade Cycle SolutionsLetters of Credit:Commercial Letters of CreditStandby Letters of CreditDocumentary CollectionsFinancing:Direct Bank FinancingBankers’ Acceptances (BA)Trade AcceptancesEx-Im Bank Working Capital Guarantee Program(WCGP)Private InsurancePrivate Export Funding Corporation (PEFCO)Online Solutions:Comerica GlobalTRADE WebComerica TM Connect WebComerica eFX
  14. 14. Tools & Methods of Payment14Letters of CreditSOLUTION DESCRIPTIONCommercial Letters of Credit • Irrevocable undertaking by a bank on behalf of its customer in favor of a designatedbeneficiary, under which payment is effected only if the beneficiary presentsdocuments in accordance with the letter of credit terms and conditions.• Often referred to as Import Letters of Credit and Export Letters of Credit or TradeLetters of Credit.• Confirmed Export Letters of Credit provide additional protection to exporters.(Note: Bank deals only with documents, not goods.)Standby Letters of Credit • Performance Standby Letter of Credit: Irrevocable undertaking by a bank to makepayment to a designated beneficiary in the event that its customer fails to perform anon-financial contractual obligation (e.g., cover performance ofcontractors/suppliers, in lieu of a bid or performance bond).• Financial Standby Letter of Credit: Irrevocable undertaking by a bank to makepayment to a designated beneficiary in the event that its customer fails to fulfill afinancial contractual obligation (e.g., support advance payment/payment guarantee,in lieu of cash or security deposit, support IRB/EDC).
  15. 15. Tools & Methods of Payment15Documentary CollectionsSOLUTION DESCRIPTIONDocumentary Collections • Buyer: Bank receives documents conveying title to goods from foreign bank anddelivers documents to its customer in exchange for payment or promise to pay ata future date.• Supplier: Bank delivers documents conveying title to goods to foreign buyer’sbank for delivery to its customer in exchange for payment or promise to pay at afuture date.
  16. 16. Tools & Methods of Payment16SOLUTION DESCRIPTIONEx-Im Bank WorkingCapital GuaranteeProgram (WCGP)• Working capital loans backed by Ex-Im Bank guarantee (90% of loan amount, includingprincipal and interest). Enables U.S. exporters -- large and small -- to facilitate the exportof goods and services.• Comerica holds:• “Super” Delegated Authority lender designation (allowing us to commit credit facilitiesup to $10 million per borrower, without pre-approval from Ex-Im Bank); and• “Fast Track” designation (allowing us to commit credit facilities greater than $10 millionand up to $25 million per borrower, with expedited Ex-Im Bank approval).SBA Export WorkingCapital Program (EWCP)• Working capital loans for small businesses backed by SBA guarantee (guaranteesrepayment of up to $1.5 million or 90% of loan amount, whichever is less). Similar to theEx-Im Bank WCGP, however, no U.S. content or military/defense product and servicerestrictions.Financing
  17. 17. 17Thank YouCaroline BrownFirst Vice PresidentTrade Finance OfficerLong Beach, CA562-590-2525CVBrown@Comerica.com
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