Treasury Based Solutions for Trade Finance

1. Partho H. Chakraborty, SAP India Pvt. Ltd.
Solution Architect
Treasury Solutions for Trade Finance
February 2008

2. Introduction February 2008
 There are a number of regulatory changes happening in Europe and in the US, requiring
faster and more real-time payment processing
 The banking payments market is going through stormy times
 Competition is increasing, and is coming up with innovative payment offerings and new
business models, while clients are asking for reduced costs and strict SLA compliance.
 These trends are forcing specialization by means of global transaction banks and
consolidation of execution by using out-sourcing, in-sourcing, and white labeling.
 The need for single payment architecture arose from the fact that in many banks payments
were always perceived as a necessary extension of a primarily lender-oriented client
relationship.
 Today, this has changed and many corporate clients are measuring their banks performance
on its transaction capabilities.
 Offering clients real-time and scheduled payments execution with advanced cash and
liquidity management capabilities will be an important differentiator.

3. Risks February 2008
 Transport-related risks (damage, loss, theft)
 Credit risk or non-payment risk
 Quality of goods risk
 Exchange rate risk
 Unforeseen events
 Legal risks
 Country risk/Political risk
 Fraud risk
 The risk of misunderstanding

4. Evolving to Cash Flow Efficiencies February 2008
Liquidity
 Pooling
 Netting
 Sweep
 Reverse Sweep
The idea is to maintain a zero balance account or to keep a minimum balance as required
Challenges are when working with cross-border economies

5. Evolving to Cash Flow Efficiencies February 2008
Cash Concentration
Multi-Currency Receivables
FX Outsourcing
BENEFITS
CONSIDERATIONS
 Financial Planning
 Regulations
 Reduced Bank Charges
 Legal Structure
 Internal Cost Savings
 Internal Sell
 Ease of Management
 Increased Interest Income
 Scalability
 Time to Market

6. Product Delivery - Innovative Solutions February 2008
Commodity Loans
 Bank Pays Cash and Customer Pays Back in Kind
Structured Trade Finance
 Mix and Match various products
Novel Structures
 Credit Derivatives
Islamic Trade Finance
 Al-Wakalah : Agency
 Al-Murabaha : Deferred Sale
 Al-Musharakah : Profit Sharing

7. Integrating Cash, Trade, Supply Chain and Treasury February 2008

8. Declining Emerging Market Risks February 2008
 South Asia continues dramatic economic rise
 Raw materials drive the market
 On the frontline of South-South trade
 Emerging markets are growing at more than double the rate of the developed countries of the
U.S., Japan, Western Europe, Australia, and New Zealand as they now generate more than
half the world’s economic growth, and the proportion is rising fast.
 Not only are emerging countries economic growth surging ahead, they are also becoming
increasingly sophisticated and integrated into global markets.
 The role of Asian markets in the global economy has grown significantly in recent years, and
we expect this trend to continue in the future. While Asian companies have recorded
significant price appreciation, corporate earnings have also increased, making valuations still
attractive.

9. Corporates on SWIFT (via SCORE) February 2008
# Registered corporates Use: Treasury Management
• Monitor accounts and obtain global visibility on cash
268 • Manage liquidity and pool cash company-wide
• Do financial risk management
• Invest surplus cash
181 Use: Cash Management
• ACH payments, disbursement files, check files, lock box receipts,
ACH data receipts
• Payments and collection factory: Receive account statements and
108 advices, pay suppliers, debit customers, salaries, …)
55
Type of customers
22 • Large corporates with payment factory and ERP
integration
• Large corporates with central & regional treasury centers
Mid-sized corporates with 3+ cash management banks
2003 2004 2005 2006 Oct-07 •
Corporate Connectivity - 220108

10. Establish a Business Process Platform with SAP February 2008
Maximize Innovation, Minimize Disruption
Fast-paced
innovation
Stable core

11. About SAP February 2008
SAP Worldwide SAP India a snapshot
Incorporated in 1996 in Bangalore, with branches
at Mumbai, Delhi, Kolkata & Chennai, Srilanka &
34 Years Proven Track Record in Providing Business
Solutions Bangladesh
 SAP AG founded in 1972 and focus only on collaborative Accelerated momentum - growth story continues
business solutions Record 498 new names – 25% of APJ
 Market Leader in Inter-Enterprise Software Solution
 2005 Revenue over EUR 8 billion (13% increase) with Operation
Announced 1000th customer in Q2, now 1400+,
Income EUR 2.03 billion No.1 in APJ in SME
Proven Experience With Strong Support Training - phenomenal growth - 45% YOY
Successfully launched 22 e-learning centres,
 More than 33,200 customers worldwide growing to 35 centres by end 2007
> Banking: 550 customers Accelerated momentum in consulting -
 15,000,000+ users in 120+ countries running SAP in their breakthrough wins in BFSI & Utilities
business
 36,600+ SAP employees SAP ACE - becomes a brand on debut
Customer Satisfaction continues to grow - TRIM
Customer Oriented Company with Strong R&D
Investment index 95+
 Invested more than EUR 1 billion per annum in R&D (19% of total IDC-Datatquest CSA 2007 ranks SAP No.1 in
revenue) Enterprise Application
 10,600 + Employees in R&D

12. SAP in Banking: A strong and growing customer base February 2008
 33 of the top 50 European
banks run SAP
 ERP: 550+ banks in 60
countries
 Transaction Banking:
100+ banks in 28
countries
 Analytical Banking: 100+
banks in 22 countries

13. SAP Footprint in Banking February 2008
Current
SAP
offering
Partial/
Planned/
Partner offer
No SAP
offering

14. February 2008
Thank you
Partho H. Chakraborty
A - 305, DSR Spring Beauty Apts., 124/1, ITPL Main Road, Brookefields,
Kundalahalli, Bangalore - 560 037, India
Tel: +91 80 420 50293, Cell: +91 99863 22504
email: parthohc@airtelmail.in parthohc@rediffmail.com
Skype: parthohc01