International Trade Financing

Presented By:
Ernest Dio
International Banking

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ïocal currency Financing (IFF)
S jode of Disbursement
S Bankers Acceptances / Commercial Paper
S Term ïoans / Clean ïines of Credit
S Risks
S Commercial/Regulatory
S Operational
S jitigants
S Risk Asset Acceptance Criteria
S Target jkt definition /Industry Concentration ïimits
S Customer Profile / Collateral / limits
S jerchandise Restrictions
S Insurance cover
S Controls
S jonitoring
S Release of Shipping Documents
S Draw down advise

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Foreign Currency Financing (STF)
S jode of Disbursement
S ïetters of Credit (Documentary/Standby)
S ïines
S Collateralized / Clean lines
S Sight payment
S Sight with usance option
S Risks
S X border/commercial/Regulatory/Exchange/
S Operational
S Other Issues
S Transaction Structure
S ïimits & monitoring
S Pricing
S Back stop IFF line
S jitigants
S RAAC / Tj /Industry Concentration ïimits
S Customer Profile / Collateral / limits
S jerchandise Restrictions
S Goods Insurance (loss payee clause)
S Credit Insurance ?
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Foreign Currency Financing (STF)
S O


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S Importer undertakes to accept bills on receipt

S Importer undertakes to make regulatory payments required

S Importer irrevocably undertakes to take delivery of goods

S in conformance with ï/C contract terms

S Importer irrevocably undertakes to provide FCY for prompt payment

of the ï/C documents as they fall due

S Importer undertakes that all operational documentation will be

provided after shipment

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FCY Financing (Cont¶d)
S "
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S Interest will be charged on the usance ï/C at
maximum of PïR + 2% (as per Central Bank
guidelines)

S Non receipt of payment under the ï/C after due date

may lead to the facility been converted to ïocal
currency financing (at default rate)

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FCY Financing (Cont¶d)
S Onshore Documentation
S Offer letter from issuing bank to importer
S ï/C agreement
S Offshore Documentation
S Agreement between issuing bank and confirming Bank/Investor
(where applicable)
S Country risk Cover agreement in respect of transactions
between confirming bank, Investor and issuing bank (where
applicable)
S Standby ï/C issued by investor¶s bank (acceptable to the
confirming bank) in favor of the confirming bank for country
risk default only
S **Where issuing bank is not taking commercial risk,
comprehensive cover (XB and commercial risk) on the
importer will be requested and must be in place. This will
be monitored by the Product janager
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Products & Structures

S Other Risks
S Fraudulent Documentation
S Over Trading
S Under invoicing
S Control of goods/charter party arrangements

S Process Flow

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