Introduction to the
Trade Facilitation Programme
Cairo, 23rd April 2012
TFP application areas
Facilitates financing of all stages of the trade chain
Export
Production
Transport
Storage &
distribution
Receivables
TFP – How does it work?
EBRD supports the development of trade finance in
partner banks by

Basic and Advanced Trade Finance training courses and advisory
services

Guarantees that cover risks arising from trade finance transactions in
favour of Confirming Banks
–
TFP guarantee agreements are signed with local issuing banks (IBA)
plus agreement with confirming banks (CBA) all over the world
–
Currently: 100 Issuing banks and over 800 Confirming banks

Short-term advances/financing to banks in the Countries of Operation
for trade finance purposes
–
TFP Revolving Credit Agreements are signed with local banks (RCA)
–
Currently 56 RCAs
TFP Facilities - Two Main Components
Trade Facilitation Programme
(EUR 1.5 bln. million framework)
Trade Finance
Guarantee
Facility
(fully operational
since 1999)
Trade Finance Cash
Facility Revolving Credit
Agreement (RCA)
(launched in 2000)
TFP – Guarantee Transaction

Always involves a local bank (“Issuing Bank”) which
issues a trade finance instrument (e.g. a letter of
credit) and a foreign bank which confirms it to the
exporter (“Confirming Bank”)

The trade finance instrument (e.g. L/C) ensures that
the exporter receives payment upon or after
delivery

EBRD Guarantee covers payment risks of the
Issuing Bank to the Confirming Bank
TFP - Guarantees
Different from/complementary to export credit insurance:

Stand-by letters of credit (L/C) (under UCP 600)

usually issued within 24 hours

Cover all types of trade finance instruments issued by EBRD client banks:
letters of credit, including deferred payment/post-financing; bank payment
guarantees; bid bonds, performance bonds; advanced payment guarantees;
stand-by L/Cs, etc.

Issued only to Confirming Banks, not to exporters or importers

Payable 15 days after receipt of first written demand

Cover up to 100% of the commercial and political risk which cannot be
covered by commercial banks, commercial credit insurance or ECAs

Cover exports, imports and distribution of imported goods in EBRD countries
of operation, irrespective of the country of origin (no origin rules)

Tenor: max. 3 years

Amounts: no minimum amount
TFP: Structure and Application
EBRD issues a Stand-By
Letter of Credit covering
the risks of Issuing Bank
towards the Confirming bank
Issuing Bank,
Country of
Operations
Confirming Bank,
Worldwide
L/C Confirmation
Seller
L/C Issuance with request to confirm
(L/G Issuance with counter-guarantee,
other banking trade finance instruments)
SALES-PURCHASE
AGREEMENT
Application for L/C opening
Buyer
Example – Import of foodstuff from Europe
to Egypt

An Egyptian
supermarket chain
buys foodstuff from
Italy

An Egyptian bank
issues a letter of credit,
confirmed by an Italian
bank

EBRD guarantees up
to 100% of the
political and
commercial payment
risk
Example – Exports from Egypt to
FYR Macedonia

An Egyptian company
sells air conditioners plus
spare parts to an importer in
FYR Macedonia

A Macedonian bank issues
a letter of credit, confirmed
by an Egyptian bank

EBRD guarantees up to
100% of the political and
commercial payment risk
Example – Exports from Egypt to
Russian Federation

An Egyptian exporter
sells fruits to an importer
in Novorossiysk, Russia
Federation

A Russian bank issues a
letter of credit, confirmed
by an Egyptian bank

EBRD guarantees up to
100% of the political and
commercial payment risk
Types of Goods and
Trade Finance Instruments


All types of goods, commodities and equipment, except for EBRD’s
general exclusion list and environmental exclusion list
Facilitated by:
–
L/C, SBLC, payment guarantees and counter-guarantees
–
trade-related promissory notes and bills of exchange
–
bid, performance bonds, contract guarantees
–
construction guarantees, leasing guarantees
–
credit card and other payment guarantees
How Egyptian banks can join the
EBRD TFP
Issuing
Bank
or/and
Confirming
Bank
100 Issuing Banks (IB) in 18 Countries
Country
IB #
Country
IB #
Armenia
9
FYR Macedonia
5
Azerbaijan
7
Moldova
4
Belarus
9
Mongolia
2
Bosnia & Herzegovina
2
Romania
2
Georgia
6
Russia
26
Kazakhstan
5
Serbia
7
Kyrgyz Republic
2
Tajikistan
4
Lithuania
1
Turkmenistan
1
Latvia
1
Ukraine
7
TFP – Issuing Banks Selection Criteria

Readiness to develop trade finance business with local
importers and exporters

Acceptable credit standing

Diversified loan portfolio; limited lending to related parties

Transparent ownership structure

Integrity of owners and management

Corporate governance

Money laundering procedures

Environmental due diligence
800 Confirming Banks in 77
Countries
TFP – Confirming Banks Selection Criteria
•
Readiness and interest to develop and conduct trade
finance business with EBRD countries of operation
•
Advanced and experienced trade finance procedures
and operations
•
Standardised confirming bank agreement (signed by
800 banks)
Trade Finance Cash Facility
Local Company
loan repayment
loan disbursement
Local Bank (EBRD’s borrower)
•Takes local company risk
•Borrows from EBRD
•On-lends to the local company
Repayment to EBRD
EBRD’s disbursement
EBRD
Takes local bank risk and lends to the
local bank against sub-borrower base
Case study – Import of insulators into Kazakhstan

Saint-Gobain Isover (Finland) sells heat
insulator to an importer in Kazakhstan

Bank in Kazakhstan request a cash
disbursement from the TFP of the EBRD

EBRD disburses EUR 0.5 million for 1
year to cover the post-import financing
Case study: Export of wine from Moldova

A Moldovan wine producer
requires pre-export finance
for purchase of agrochemicals and equipment
and export of wine to
Russia

EBRD grants a loan to a
Moldovan bank which the
bank can use to fund a loan
to the Moldovan exporter
(amount USD 170,000, tenor
8 months)
Financing of distribution of imported goods:
EBRD provides liquidity in form of cash advances in
local or foreign currency to client banks
EBRD
1.THROUGH DEFERRED PAYMENT L/C
TFP guarantee facility
in EUR
Peugeot
France
Car dealer
in Russia
Sales Contract in EUR
Bank in
Russia
Guarantee
facility in EUR
Opens L/C in favour of Peugeot France with payment 3 - 6 months after delivery
EBRD
2. THROUGH CASH ADVANCES
Peugeot
France
Sales contract
in EUR
Peugeot
Russia
TFP cash advances
in RUB
Sales
contract
in RUB
Car dealer
in Russia
Loan facility
in RUB
Bank in
Russia
tenor 3 – 6 months After delivery
EBRD TFP - Factoring Facilities

EBRD grants loan facilities to local banks and factoring
companies to fund their portfolio of domestic and export
factoring transactions.

Tenors: max. 6 months, revolving; typically 90 days.

Closely matching asset conversion cycle with monthly updates on list of invoices which have been financed.

First factoring facilities were approved in 2007 for
Promsvyazbank Russia and Ukreximbank in Ukraine and
Credit Bank of Moscow in 2008.
Achievements to Date (1999 - December 2011)
• Total number of transactions: 12,000
• transactions issued by 142 banks in 22 countries
of EBRD’s Operation
• confirmed by 356 banks in 56 countries
• Total amount of trade supported:
EUR 7.83 billion
• Amount of EBRD guarantees and cash advances:
EUR 7.1 billion
EBRD TFP
Business Volumes p.a. 1999 - 2011
1,200
Volume, € mln
1,000
800
600
400
200
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
TFP – 1,616 Trade Finance Transactions in 2011
1.
Belarus (381)
9.
FYR Macedonia (63)
2.
Russia (300)
10.
Bosnia & Herzegovina(14)
3.
Georgia (277)
11.
Serbia (13)
4.
Ukraine (144)
12.
Tajikistan (9)
5.
Armenia (141)
13.
Croatia (5)
6.
Kazakhstan (117)
14.
Turkmenistan (4)
7.
Azerbaijan (80)
15.
Kyrgyz Republic (2)
8.
Moldova (64)
16.
Mongolia (2)
EBRD TFP – Exports from Egypt to
Eastern Europe & CIS countries
-
Cosmetic products to Armenia
-
Rice to Bosnia and Herzegovina
-
Air conditioners to Croatia
-
Charter flights to Georgia
-
Marble and granite to Macedonia
-
Oranges and fruits to Russia
-
Medicine to Tajikistan
-
Machinery to Ukraine
TFP in Egypt
4 Confirming Banks:
-
Commercial International Bank
-
Egyptian Gulf Bank
-
National Bank of Egypt
-
Suez Canal Bank
Issuing Banks: Q3 onwards
TFP – Technical Cooperation Projects
EUR 6.5 million have
been used for TFP TC
consultancy services and
trainings of over 1,000
trade finance professionals
from 210 banks in 17 of
EBRD’s countries of
operation
TFP Trade Finance Training &
Advisory Projects 2010 & 2011
Topics:
 Trade Finance Practices
 Advanced and Structured Trade
Finance
 Factoring
 UCP 600
 Fraud Prevention
 Correspondent Banking
 Restructuring Trade Finance
Deals
 Legal Proceedings in connection
with defaulted trade finance
transactions
 e-learning
Projects were generously sponsored
by Taipei China, Switzerland, Italy, the
Netherlands,
New
Norway
Cooperation Fund, Western Balkans
Fund, Early Transition Country Fund,
Special Share-holder Fund of EBRD.
EBRD E-Learning Programme



The ICC’s technology partner Coastline Solutions has
assisted EBRD to develop an online training programme,
incorporating ICC content on rules and operations in trade
finance;
Project funded by the EBRD’s special shareholder’s fund
and offered free of charge to Issuing Banks in EBRD’s
countries of operations.
To date over 300 trade professionals from over 80 banks
in 21 countries have enrolled.
EBRD Trade Finance e-Learning Programme
2012 Graduation Ceremony – 7 Feb in Moscow
In partnership with

5th Annual Russia &
Eurasia Trade & Export
Finance Conference

Best students received
further scholarships and
sponsored training
programmes in leading
European confirming
banks and training
companies
EBRD TFP - Co-Financing Partners

ACE Global Markets (AGM) & Lloyd´s of
London

Confirming Banks

Donor Risk Sharing Funds

Export Credit Agencies

FMO Netherlands

OPEC Fund for International Development

Private Investment Funds
EBRD – Best Development Bank in Trade

Readers of Global Trade Review
(GTR),Trade & Forfaiting Review
(TFR) and Trade Finance
Magazine have voted the EBRD
“Worldwide Best Development
Bank in Trade in 2008, 2009,
2010 and 2011”

EBRD invites other development
banks, commercial financial
institutions, export credit agencies
and donors to co-finance or cofinance with the EBRD
EBRD TFP – Advantages for
Issuing Banks and Confirming Banks in Egypt



Banks in Egypt can join the programme as Issuing Banks and/or
Confirming Banks and benefit from EBRD’s network of more than 800
Issuing Banks and Confirming Banks worldwide
Benefit from EBRD’s high level trade finance training programmes and
advisory services (offered free of charge to Issuing Banks in Egypt)
Benefit from EBRD’s additional risk taking capacity when foreign
commercial banks cannot provide sufficient risk cover or liquidity;
sometimes also longer tenors (maximum 3 years) and/or higher
transaction amounts than commercial banks can provide

Fees and interest charged only in case of utilisation and in line with the
pricing charged by foreign commercial banks

Fast decisions and processing, usually within 24 hours

EBRD invites commercial banks, insurance underwriters and
development agencies to co-finance with the EBRD
EBRD TFP – Conditions for joining
the TFP as Issuing Bank

Meet all covenants and conditions of the
EBRD Issuing Bank agreement

Regular reporting to the EBRD (financial
reports, reports on underlying trade finance
transactions for which TFP facilities have
been used, statistics, etc.)
www.ebrd.com/tfp
Contacts
Financial Institutions – Trade
Facilitation Programme TFP)
European Bank for Reconstruction
and Development
One Exchange Square
London EC2A 2JN
United Kingdom
Tel:
+44 20 7338 7614
Fax:
+44 20 7338 6119/7029
e-mail: nindlm@ebrd.com
www.ebrd.com/tfp