Reduced credit rate of 4.5% if your products meet State program support for industrial exports and subsidies from the Russian Export Center (REC)
Reduced loan rate if there is insurance coverage of the Russian Export Credit and Investment Insurance Agency (EXIAR)
Send money to production, and we will find a solution for financing it. If your contract with a foreign partner provides for a deferred payment, and the money is needed immediately, we will finance the deal at a discount.
Get special conditions if you work with export agencies:
A reduced loan rate of 4.5% if your products comply with the State Industrial Export Support Program and there are subsidies from the Russian Export Center (REC)
Reduced loan rate if there is insurance coverage of the Russian Export Credit and Investment Insurance Agency (EXIAR)
Promsvyazbank provides a wide range of services for arranging financing of export-import transactions for clients of partner banks:
Financing is provided both on a short-term and long-term basis. Operations are carried out in freely convertible currencies, as well as in other currencies.
Thanks to net credit lines from major international banks, Promsvyazbank offers the most profitable terms on servicing foreign economic contracts of clients of counterparty banks.
Organization international funding is one of the key areas offered to banks in Russia and CIS countries. Among the main partners of Promsvyazbank are largest banks Republics of Belarus, Uzbekistan, Armenia and Tajikistan.
Promsvyazbank's market share in export letters of credit for Q3 2014 was 13.54%.
Promsvyazbank advises clients on foreign economic activity and international settlements, optimizes settlement schemes for foreign trade contracts, minimizes the client's costs and risks, and assists in drawing up contracts.
Trade finance is provided based on established limits for counterparty banks.
If the limit is not set, the transaction is possible on a covered basis.
| Name of service | Service cost |
|---|---|
| 1. Export letters of credit | |
| 1.1. Export letters of credit issued by applicants registered in the territories of the following countries: Azerbaijan, Armenia, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Latvia, Lithuania, Moldova, Russia, Tajikistan, Turkmenistan, Uzbekistan, Ukraine, Estonia | |
| 50 USD | |
| 1.1.2. Letter of credit advice | |
| - PSB is the executing bank | 100 USD |
| - PSB is not an executing bank | 500USD |
| 100 USD | |
| By agreement with the bank | |
| By agreement with the bank | |
| 300USD | |
| 100 USD per set | |
| 100 USD per set | |
| By agreement with the bank | |
| 50 USD each | |
| 100 USD each | |
| 50 USD each | |
| 50 USD | |
| 1.2.4. Confirmation of a letter of credit, prolongation of the term of a letter of credit or increase in the amount of a letter of credit (except for clause 1.2.5.) | |
| - If there is 100% cash coverage under the letter of credit | |
| - In the absence of 100% cash coverage under the letter of credit | By agreement with the bank |
| 1.2.5. Confirmation of a letter of credit, prolongation of the term of a letter of credit or increase in the amount of a letter of credit issued by applicants or issued in favor of beneficiaries registered in offshore zones (list of zones in Appendix 1) | |
| - If there is 100% cash coverage under the letter of credit | |
| - In the absence of 100% cash coverage under the letter of credit | By agreement with the bank |
| 1.2.6. Closing a letter of credit before its expiration | 50 USD |
| 1.2.7. Acceptance and verification of documents stipulated by the terms of the letter of credit | |
| 1.2.8. Fee for discrepancies in documents | 100 USD per set |
| 1.2.9. Letter of credit payment | |
| 1.2.10. Repeated acceptance and verification of documents stipulated by the terms of the letter of credit | 100 USD per set |
| 1.2.11. Issuance of a reimbursement undertaking | By agreement with the bank |
| 1.2.12. Issuing a reimbursement claim | 50 USD each |
| 1.2.13. Reimbursement payment | 100 USD each |
| 1.2.14. Execution of documents in the format of SWIFT messages at the request of the client | 10 USD for each |
| 1.2.15. Transfer of a letter of credit to another beneficiary (transfer) | 0.15% of the amount of the letter of credit, but not less than 300 USD and not more than 3,000 USD |
| 2. Import letters of credit | |
| 2.1.1. Opening, increasing the amount and / or prolonging the validity of a letter of credit (except for clause 2.1.2) | |
| 2.1.2. Opening, increasing the amount and / or prolonging the validity of a letter of credit opened on behalf of or in favor of a resident registered in offshore zones (list of zones in Appendix 1) | 3% of the amount of the letter of credit or the amount of the increase, but not less than 500 USD for each quarter or part thereof |
| 2.1.3. Prolongation of the term of the letter of credit within the period for which the commission under paragraphs. 2.1.1.-2.1.2. already accrued | 100 USD for each change |
| 2.1.4. Changing the terms of the letter of credit (except for increasing the amount and prolonging the term of the letter of credit) | 50 USD per change |
| 2.1.5. Closing a letter of credit before its expiration | 50 USD |
| 2.1.6. Acceptance and verification of documents stipulated by the terms of the letter of credit | 0.15% of the amount, but not less than 200 USD and not more than 2000 USD per set |
| 2.1.7. Fee for discrepancies in documents | 100 USD per set |
| 2.1.8. Acceptance and processing of documents received from the executing bank | 100 USD per set |
| 2.1.9. Execution of documents in the format of SWIFT messages at the request of the client | 10 USD for each |
| 2.2.1. Opening, increase in the amount and / or prolongation of the term of the letter of credit (except for clause 2.2.2) | 0.15% of the amount of the letter of credit or the amount of the increase, but not less than 300 USD and not more than 3,000 USD for each quarter or part thereof |
| 2.2.2. Opening, increasing the amount and / or prolonging the validity of a letter of credit opened on behalf of or in favor of a resident registered in offshore zones (list of zones in Appendix 1) | 3% of the amount of the letter of credit or the amount of the increase, but not less than 500 USD for each quarter or part thereof |
| 2.2.3. Prolongation of the term of the letter of credit within the period for which the commission under paragraphs. 2.2.1.-2.2.2. already paid | 100 USD for each change |
| 2.2.4. Changing the terms of the letter of credit (except for increasing the amount and prolonging the term of the letter of credit) | 50 USD per change |
| 2.2.5. Closing a letter of credit before its expiration | 50 USD |
| 2.2.6. Preliminary advising of a letter of credit | 50 USD each |
| 2.2.7. Advising a letter of credit, or increasing the amount of a letter of credit, or prolonging the term of a letter of credit | 0.1% of the amount of the letter of credit or the amount of the increase, but not less than 150 USD and not more than 500 USD |
| 2.2.8. Advising changes to a letter of credit, except for advising an increase in the amount of a letter of credit and prolongation of the term of a letter of credit | 50 USD each |
| 2.2.9. Acceptance and verification of documents stipulated by the terms of the letter of credit | 0.15% of the amount, but not less than 200 USD and not more than 2000 USD per set |
| 2.2.10. Fee for discrepancies in documents | 100 USD for each set |
| 2.2.11. Letter of credit payment | 0.1% of the payment amount, but not less than 150 USD and not more than 500 USD for each payment |
| 2.2.12. Repeated acceptance and verification of documents stipulated by the terms of the letter of credit | 100 USD per set |
| 2.2.13. Transfer of a letter of credit to another beneficiary (transfer) | |
| 2.2.14. Changing the conditions for transferring a letter of credit to another beneficiary (transfer) | 50 USD each |
| 2.2.15. Execution of documents in the format of SWIFT messages at the request of the client | 10 USD for each |
Notes:
Attachment 1
To the tariffs of Promsvyazbank OJSC for
operations with letters of credit subject to
unified rules and customs for
Documentary letters of credit
List of offshore zones to which paragraphs. 1.2.5., 2.1.2., 2.2.2.:
Antigua and Barbuda
- Commonwealth of the Bahamas
- Barbados
- State of Bahrain
- Belize
- Brunei - Darussalam
- Territories dependent on the United Kingdom of Great Britain and Northern Ireland:
Anguilla, Bermuda, British Virgin Islands, Montserrat, Gibraltar, Turks and Caicos, Cayman Islands
- Grenada
- Republic of Djibouti
- Commonwealth of Dominica
- People's Republic of China (Macau (Aomen))
- Republic of Costa Rica
- Lebanese Republic
- Republic of Mauritius
- Malaysia (Labuan Island)
- Republic of Maldives
- Principality of Monaco
- Netherlands Antilles
- New Zealand: Cook Islands, Niue
- United United Arab Emirates(Dubai)
- Portuguese Republic (Madeira Island)
- Independent State of Western Samoa
- Republic of Seychelles
- Saint Kitts and Nevis
- Saint Lucia
- Saint Vincent and the Grenadines
- USA: US Virgin Islands, Commonwealth of Puerto Rico, Wyoming, Delaware
- Kingdom of Tonga
- Democratic Socialist Republic of Sri Lanka
- Republic of Palau
- Principality of Andorra
- Islamic Federal Republic of Comoros: Anjouan Islands
- Aruba
- Republic of Vanuatu
- Republic of Liberia
- Principality of Liechtenstein
- Republic of the Marshall Islands
- Republic of Nauru
Tariffs of Promsvyazbank OJSC
on operations with letters of credit subject to unified rules and customs
for documentary letters of credit , , , ,
Tariffs come into effect from 04.04.2011.
| Name of service | Service cost |
| 1.Export letters of credit | |
| 1.1. Export letters of credit issued by applicants registered in the territories of the following countries: Azerbaijan, Armenia, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Latvia, Lithuania, Moldova, Russia, Tajikistan, Turkmenistan, Uzbekistan, Ukraine, Estonia | |
| 1.1.1. Preliminary advising of a letter of credit | 50 USD |
| 1.1.2. Letter of credit advice - PSB is the executing bank - PSB is not an executing bank |
100 USD 500 USD |
| 1.1.3. Advising changes to the letter of credit and/or request for cancellation of the letter of credit | 100 USD |
| 1.1.4. Letter of credit confirmation: | |
| - If there is 100% cash coverage under the letter of credit | By agreement with the bank |
| - In the absence of 100% cash coverage under the letter of credit | By agreement with the bank |
| 1.1.5. Increasing the amount of the letter of credit | 1.2% of the increase amount, but not less than 300 USD and not more than 3,000 USD |
| 1.1.6. Closing a letter of credit before its expiration | 300USD |
| 1.1.7. Acceptance, verification of documents stipulated by the terms of the letter of credit, and payment under the letter of credit | 0.15% of the amount, but not less than 100 USD and not more than 3,000 USD per set |
| 1.1.8. Fee for discrepancies in documents | 100 USD per set |
| 1.1.9. Repeated acceptance and verification of documents stipulated by the terms of the letter of credit | 100 USD per set |
| 1.1.10. Issuance of a reimbursement undertaking | By agreement with the bank |
| 1.1.11. Issuing a reimbursement claim | 50 USD each |
| 1.1.12. Reimbursement payment | 100 USD each |
| 1.1.13. Transfer of a letter of credit to another beneficiary (transfer) | 0.15% of the amount of the letter of credit, but not less than 300 USD and not more than 3,000 USD |
| 1.2. Export letters of credit (other than those specified in paragraph 1.1) | |
| 1.2.1. Preliminary advising of a letter of credit | 50 USD each |
| 1.2.2. Advising a letter of credit, or increasing the amount of a letter of credit, or prolonging the term of a letter of credit | 0.1% of the amount of the letter of credit or the amount of the increase, but not less than 150 USD and not more than 500 USD |
| 1.2.3. Advising changes to a letter of credit, except for increasing the amount of a letter of credit or prolonging the term of a letter of credit, and advising a request for cancellation of a letter of credit | 50 USD |
| 1.2.4. Confirmation of a letter of credit, prolongation of the term of a letter of credit or increase in the amount of a letter of credit | |
| - If there is 100% cash coverage under the letter of credit | 0.3% of the amount of the letter of credit or the amount of the increase, but not less than 150 USD and not more than 3000 USD for each quarter or part thereof |
| - In the absence of 100% cash coverage under the letter of credit | By agreement with the bank |
| 1.2.5. Closing a letter of credit before its expiration | 50 USD |
| 1.2.6. Acceptance and verification of documents stipulated by the terms of the letter of credit | 0.15% of the amount, but not less than 200 USD and not more than 2000 USD per set |
| 1.2.7. Fee for discrepancies in documents | 100 USD per set |
| 1.2.8. Letter of credit payment | 0.1% of the payment amount, but not less than 150 USD and not more than 500 USD for each payment |
| 1.2.9. Repeated acceptance and verification of documents stipulated by the terms of the letter of credit | 100 USD per set |
| 1.2.10. Issuance of a reimbursement undertaking | By agreement with the bank |
| 1.2.11. Making a Reimbursement Claim | 50 USD each |
| 1.2.12. Reimbursement payment | 100 USD each |
| 1.2.13. Execution of documents in the format of SWIFT messages at the request of the client | 10 USD for each |
| 1.2.14. Transfer of a letter of credit to another beneficiary (transfer) | 0.15% of the amount of the letter of credit, but not less than 300 USD and not more than 3,000 USD |
| 2. Import letters of credit | |
| 2.1. For which the bank is not executing: | |
| 2.1.1. Opening, increasing the amount and / or prolonging the term of the letter of credit | 0.15% of the amount of the letter of credit or the amount of the increase, but not less than 300 USD and not more than 3,000 USD for each quarter or part thereof |
| 2.1.2. Prolongation of the term of the letter of credit within the period for which the commission under clause 2.1.1 has already been accrued | 100 USD for each change |
| 2.1.3. Changing the terms of the letter of credit (except for increasing the amount and prolonging the term of the letter of credit) | 50 USD per change |
| 2.1.4. Closing a letter of credit before its expiration | 50 USD |
| 2.1.5. Acceptance and verification of documents stipulated by the terms of the letter of credit | 0.15% of the amount, but not less than 200 USD and not more than 2000 USD per set |
| 2.1.6. Fee for discrepancies in documents | 100 USD per set |
| 2.1.7. Acceptance and processing of documents received from the executing bank | 100 USD per set |
| 2.1.8. Execution of documents in the format of SWIFT messages at the request of the client | 10 USD for each |
| 2.2. For which the bank is executing: | |
| 2.2.1. Opening, increasing the amount and / or prolonging the term of the letter of credit | 0.15% of the amount of the letter of credit or the amount of the increase, but not less than 300 USD and not more than 3,000 USD for each quarter or part thereof |
| 2.2.2. Prolongation of the term of the letter of credit within the period for which the commission under clause 2.2.1 has already been paid | 100 USD for each change |
| 2.2.3. Changing the terms of the letter of credit (except for increasing the amount and prolonging the term of the letter of credit) | 50 USD per change |
| 2.2.4. Closing a letter of credit before its expiration | 50 USD |
| 2.2.5. Preliminary advising of a letter of credit | 50 USD each |
| 2.2.6. Advising a letter of credit, or increasing the amount of a letter of credit, or prolonging the term of a letter of credit | 0.1% of the amount of the letter of credit or the amount of the increase, but not less than 150 USD and not more than 500 USD |
| 2.2.7. Advising changes to a letter of credit, except for advising an increase in the amount of a letter of credit and prolongation of the term of a letter of credit | 50 USD each |
| 2.2.8. Acceptance and verification of documents stipulated by the terms of the letter of credit | 0.15% of the amount, but not less than 200 USD and not more than 2000 USD per set |
| 2.2.9. Fee for discrepancies in documents | 100 USD for each set |
| 2.2.10. Letter of credit payment | 0.1% of the payment amount, but not less than 150 USD and not more than 500 USD for each payment |
| 2.2.11. Repeated acceptance and verification of documents stipulated by the terms of the letter of credit | 100 USD per set |
| 2.2.12. Transfer of a letter of credit to another beneficiary (transfer) | 0.15% of the amount of the letter of credit or the amount of the increase, but not less than 300 USD and not more than 3,000 USD for each quarter or part thereof |
| 2.2.13. Changing the conditions for transferring a letter of credit to another beneficiary (transfer) | 50 USD each |
| 2.2.14. Execution of documents in the format of SWIFT messages at the request of the client | 10 USD for each |
Notes:
What is trade finance?
"Trade financing" is a set of methods, tools and mechanisms for financing foreign trade operations of clients by attracting credit resources from international credit and financial markets by domestic banks. Banks play a central role in providing these resources. However, funds for financing can also be provided through a third party, for example, through an export agency, international trading companies, specialized non-bank financial institutions.
Financing of international trade operations is carried out using various mechanisms and tools. However, the main forms of trade finance are:
Export commercial credit (supplier credit), when the creditor is an exporting company that supplies goods for export with a deferred payment;
Export financial loan(credit to the buyer), in this case, the loan is provided in cash, as a rule, by a bank or a national export credit agency of the exporting country to the buyer - importer for the purchase of goods produced by the exporter.
The export commercial credit scheme (exporter-supplier credit) is as follows:
The scheme of the export financial credit (loan to the buyer-importer) looks like this:
At the first stage, the exporter and importer conclude a foreign trade contract for the supply of goods, services or works on a deferred payment basis. Such a contract involves compulsory insurance risk of non-payment, foreign trade, political, country, sovereign, commercial, currency and other risks of the exporter by the national insurance export (credit) agency.
Therefore, the exporter applies to the national export insurance (credit) agency and concludes an export commercial credit insurance agreement.
Then the exporter delivers the goods to the importer on the terms of a commercial loan (with a deferred payment, i.e. credits it in a marketable form).
After the expiration of the loan, the importer pays for the goods, services, work.
In the event of force majeure, i.e. non-payment of goods by the importer within the period specified in the contract, after a certain period (the period of the so-called "insurance" waiting), the national insurance export (credit) agency pays the exporter insurance compensation.
The scheme of the export financial credit (loan to the buyer-importer) looks like this:
In this case, the exporter and importer also conclude a foreign trade contract.
Then the exporter, the importer and the bank of the exporting country agree on the terms of providing a financial loan to the importer for the purchase of goods from the exporting country.
At the next stage, the bank of the exporting country provides the importer-buyer (through a bank in the importing country) with a loan to finance the foreign trade contract.
The bank of the exporter's country concludes with the national insurance export (credit) agency (in its country) an insurance contract for the risk of non-repayment by the importer (or his bank) of the loan provided.
The exporter delivers the goods. The importer pays for the goods supplied by the exporter.
After the expiration of the loan agreement, the importer (through a bank in the importer's country) repays the bank in the exporter's country and pays interest for using it.
In the event that the importer fails to repay the loan and interest on it within the prescribed period and the expiration of the "insurance" waiting period, the National Insurance Export (Credit) Agency pays insurance compensation to the bank of the exporter's country.
Thus, the meaning of a loan to a buyer of domestic export goods can be characterized as follows: "If the German car industry aims to increase the export of its products, it is in its interests to lend to buyers of German cars abroad."
Trade finance is a non-standard form of bank loan. And it must be said that the classic bank loan, being the basis banking business, is increasingly giving way to alternative forms of financial support for enterprises engaged in foreign economic activity, and in particular trade finance.
Attracting financing from international markets under the guarantees of national insurance export (credit) agencies allows enterprises to receive funds for a sufficiently long period (from 5 years or more), while reducing the financial burden on debt service. National export credit agencies exist in every economic developed country, they can be created as state specialized structures, or their role can be played by banks and Insurance companies. The main goal of their activity is to support national exporters in the process of production and sale of their products in foreign markets.
National Export Credit Agencies insure financing bank risks as well as country and political risks. As a rule, exclusively targeted or "tied" financing is insured, that is, domestic goods that will be produced and exported with the support of the agency are clearly indicated.
Now let's dwell on the conditions that must be met in order to receive this banking service.
Firstly, advance payment must be at least 15% of the contract amount. Only after that, the export agency provides insurance or guarantee coverage in the amount of 85% of the contract amount. For the services of an export agency, it is necessary to pay him remuneration in the form of insurance payments, the amount of which will depend on the level and risk group to which the country of the transaction belongs.
As a rule, repayment of the loan is carried out twice a year (that is, once every six months). The lender can set "holidays" for the payment of the principal amount for 6-12 months.
It should also be taken into account that there is a ban on lending and financing products of the military-industrial complex. And the risks are insured and financed by large, vital projects and programs for the state, which are of priority importance for the country.
It is also possible to finance the purchase of used products that have been remanufactured in the exporting country. It is possible to receive direct credit support for small and medium businesses, but in an amount not exceeding 10% of the agency's own capital.
Let us also dwell on the financing of transactions of Belarusian importers at the expense of foreign banks with the obligatory condition of insurance in the export credit agencies of the exporting country.
In this case, the lender is foreign bank in the exporting country. A loan agreement is between Belarusian bank and foreign. The form of credit security is the insurance of the export credit agency of the exporting country.
Essential conditions such transactions are:
- the loan amount is equal to 85% of the contract amount;
- the term for making a decision on granting a loan - 3 months;
- credit term - from 2 to 5 years and more;
- insurance premium to the export credit agency of the exporting country is included in the cost of the contract, or paid at the expense of the bank's client's own funds.
Benefits of Trade Finance
Thus, the clear advantage of trade finance, compared to bank lending, is its competitive cost for the borrower (importer). Credit resources in countries Western Europe and America are much cheaper than loans from domestic banks (which is especially important during a period of crisis market changes). Even taking into account the commission costs for conducting documentary operations (for converting and transferring funds, for confirming a letter of credit, a commission for an obligation, a commission for organizing a transaction, a margin of a foreign bank, and others), the final cost of resources, which usually consists of the LIBOR interest rate ( EURIBOR)+(2-3)% per annum, will be lower than the market rate for the same terms in the domestic money market.
It should be noted that the LIBOR (EURIBOR) rate is floating, therefore, the cost of financing varies depending on the cost of resources by international market. However, in some cases it can be fixed and tied to the transaction currency.
The second advantage for the subjects of foreign economic activity is the relatively “long” terms of trade financing, as well as the possibility of obtaining the maximum possible deferment of payment for the goods - for the importer, or credit reimbursement - for the exporter. For the buyer banking product”, trade finance offers advantages over bank loan, since this is funding for long terms(until the complete completion of the project, or the last delivery). AT individual cases- up to 10 years plus a few more years, in particular, with financing involving guarantees from export agencies.
Also, trade finance minimizes the risks associated with non-fulfillment of contractual obligations by partners. For import transactions, execution documentary letter of credit(which is a guarantee of payment) in favor of the seller-exporter is carried out by the bank only after documentary confirmation of the delivery (shipment to the address of the buyer-importer) of the goods. The risk of non-payment for goods (or non-delivery) can also be minimized through the use of another documentary instrument - a bank guarantee. Thus, with pre-export financing, the exporter has the opportunity not only to finance the production or purchase of goods, but also to receive a guarantee to reduce the risk of non-payment on the part of the buyer from foreign export agencies and banks.
In addition, trade finance helps to diversify the sources of business financing. The bank's clients using trade financing schemes for projects and programs use an additional source of their long-term lending. This provides flexibility in managing future funding needs of enterprises.
Moreover, trade finance is additional features work on international financial markets, strengthening relationships with international banking institutions and expanding access to international credit markets and export agency markets.
However, in the context of the global financial and economic crisis, the global trade finance market is undergoing serious and significant shocks and trials. One of the problems of banks is the difficulty of attracting long-term resources from abroad to the economy.
Where to begin?
So, the first step of a bank client wishing to use this type of financial support should be to apply to the bank with a proposal to conclude a trade finance deal with the mandatory approval of a draft export contract with an insurance company. Commercial Bank evaluates the solvency and creditworthiness of the future borrower, assesses the type and sufficiency of its security. If a positive decision is made, the bank finances its client either within the framework of open credit lines of foreign banks (opens a letter of credit), or provides him with an export financial loan for the purchase by a foreign buyer of domestic goods produced by a Belarusian exporter.
For their part, when choosing a credit institution (bank) for trade finance operations, clients should focus on a bank that has:
- international rating,
- wide correspondent network,
- sufficient volumes of credit lines opened by foreign banks, as well as cooperation agreements with international financial institutions, insurance and export agencies.
And you should also be aware that banks put forward certain requirements for clients who are accepted for service under trade finance. These requirements are:
- sufficient and highly liquid collateral, which can be presented in the form of the subject of the trading operation itself,
- stable financial condition,
- full transparency of the transaction.
It should be noted that in modern conditions, potential borrowers who apply to the bank for a standard bank loan are increasingly receiving offers to use schemes credit support in trade finance.
The Republic of Belarus began to integrate into world economy relatively recently. The growth of foreign trade turnover and the persistence of high country, political, commercial, credit, sovereign risks, a low country rating, with a simultaneous shortage of working and fixed capital, stimulates the development of this type of financing.
Therefore, a loan to the buyer of domestic goods (export financial lending) seems to be especially relevant in the transition period, especially in small open economies (which is the economy of the Republic of Belarus). This is a very effective way to promote Belarusian goods to foreign markets.
Definitions
Trade finance - a set of methods, tools and mechanisms for financing foreign trade operations of clients by attracting credit resources from international credit and financial markets by domestic banks.
Export Credit is an international loan (provided by an export credit agency or a bank) directly to the bank of the importing country, or through the bank of the exporting country to the bank of the importing country for lending to investment and commodity projects and secured by a mandatory export insurance.
National Export Credit Agency - an official organization that provides lending, financing and insurance of export transactions or specializes exclusively in the provision of guarantees and insurance of export credits.
Documentary letter of credit - a form of international settlements, an agreement under which the bank, on the basis of the instructions of its importing client, undertakes to make payment in the agreed currency and within the specified period to the exporter against and subject to the mandatory provision of the documents specified in the letter of credit.
LIBOR
- London Interbank Offered Rate, weighted average interest rate on interbank loans provided by banks operating on the London interbank market offering funds in 10 leading currencies and for different terms from 1 day to 12 months.
EURIBOR - European Interbank Offered Rate, the weighted average interest rate at which one first-class bank provides interbank term loans (from 1 week to 12 months) in EUR to another first-class bank.
Many trade finance instruments have been in use for hundreds or even thousands of years. Of course, modern technologies will change this market as well, but the potential for trade finance using traditional instruments is still very high.
LILY FIALKO, MAXIM RIZHSKY
Thousand years of experience
Approximately 4 thousand years ago, the first prototypes of the trading banks of the Ancient World appeared in Assyria and Babylon. They loaned grain to farmers and merchants. In the Middle Ages, the Italians continued the business of merchant banks. Jewish settlers were attracted to trade, who brought ancient practices from the East. Techniques designed to finance long trade trips were applied to lending to grain production and trade.
Letter of credit, more precisely, similar to it financial instrument as early as the 11th century, the Templars offered. The merchant could deposit funds and receive a receipt from one of the branches of the wide "branch network" of the Templars. The receipt provided food and lodging during the trip and made it possible to receive funds in local currency at the end point of the path. In the 17th century in France there was a similar product - a letter of credit. The merchant received from his banker a letter to the banker from the city where he was going, with a request to pay a certain amount. The merchant's bank refunded the amount to the paying bank on a preliminary or subsequent basis.
Among the prototypes of the bill, one can note syngraphs and chirographs that arose in Ancient Greece and borrowed from the Roman Empire. In V??? century in China, bill-like feiqian securities arose. Among the Arab prototypes of the bill are the hawala and suftaj debt documents. Most likely, it was they who influenced the emergence in the X???-X?V centuries in Italy of the first forms of the bill itself.
Initially, the holder of the bill was forbidden to transfer rights to other persons. However, by the beginning of the 17th century, restrictions had become a deterrent to trade, and they were gradually abolished. Promissory notes began to be transferred by affixing a special order of the holder - endorsement (Italian in dosso - back, spine, reverse side; the inscription was made, as a rule, on the reverse side of the bill).
The Russian word "veksel" comes from the German Wechsel, which means "exchange", "transition". In Russia, the bill appeared at the beginning of the 18th century due to the development of international trade - at that time mainly with the German principalities.
trillion market
"The volume of world trade in 2013 amounted to $18.8 trillion, and the first quarter of 2014 showed an increase of about 4% year-on-year. Approximately 15-16% of this volume was settled using documentary letters of credit and collection, so the potential of the trade finance market is huge" , - says the head of the documentary operations and trade finance department of Raiffeisenbank Tatyana Shalashnikova.
The head of the trade finance department at Rietumu Bank (Latvia) Natalia Perkhova gives slightly different figures. According to her, in last years the volume of trade finance in the world was declining: in 2013 it amounted to $124.1 billion, 32% less than a year earlier. "This year has been very volatile for the markets, and, in all likelihood, following its results, we will see a continuation of the downtrend," she predicts.
According to Alexander Biryuchinsky, Deputy Head of the Department of Documentary Operations and Trade Finance at Gazprombank, "the main factors influencing the development of the global trade finance market are the level and volume of global trade, changes in regulatory approaches (in particular, the introduction of Basel III standards), and the widespread tightening of client verification procedures. , the fight against the legalization of illegally obtained income, as well as the requirements to comply with sanctions restrictions."
The predominance of certain instruments in the trade finance market also depends on the situation in the global economy in general and in international financial markets in particular. “During periods of economic recovery in conditions of excess liquidity, instruments that allow one to simultaneously attract significant amounts of financing for long periods (issue of bonds, pre-export financing, etc.) become very popular on the markets. In times of crisis, in conditions of compressed liquidity and growing distrust markets, the role of development institutions, export credit agencies, and other state institutions that act as creditors or insure the risks of other creditors is increasing. Transactions with the participation of these institutions make it possible to attract long-term money on attractive terms even during periods of crisis, "explains Biryuchinsky.
"In the context of global instability, many financial institutions limit or even completely curtail the direction of trade finance. Although, on the contrary, we see certain prospects and opening niches in this direction. Over the past five years, Rietumu has been purposefully developing trade finance, which allows us to work successfully in this segment not even in the most simple periods", - says Perkhova and adds that "at present, Rietumu is practically the only bank in the Baltic region specializing in this area."
Crisis crisis, but in modern world An industry with a thousand-year history cannot stand still. Perkhova believes that "the world is striving to simplify and speed up settlements in international trade," and lists the main trends.
First of all, "in world practice there is a tendency to reduce settlements through letters of credit, transactions are carried out on a simpler, faster and more trusting basis." “Speed is important, original documents are being replaced by electronic ones, email is used instead of standard mail,” says Perkhova. “In this situation, banks, which are conservative in nature and burdened with many regulatory procedures, should also follow this trend and be flexible, respond quickly and make decisions ".
In addition, "many private investment funds ready to finance international trade." "It's no secret," explains Perkhova, "that the value of deposit rates is very low and private investors are exploring other options for placing money at a more attractive interest rate. Such funds can afford the more flexible approaches (including to various risks) demanded by international trading companies, and become prominent players in the trade finance market."
Compliance has become much more important than before - the compliance of the activities of trading companies, as well as the banks and financial institutions that finance them, with legislative acts and international sanctions. “Everyone is hearing a very recent story with the leader of trade finance, BNP Paribas, which was fined by the US government for financing trade transactions with countries under sanctions,” Perkhova recalls. “As a result, the bank that occupied a leading position significantly reduced trade finance activities."
Experts agree that the role of factoring operations is growing in world trade. According to Shalashnikova, "international factoring received a new impetus in development: in 2013, the growth in the turnover of the factoring market in the world amounted to about 8%."
Over the past five years, according to Shalashnikova, several new trade finance instruments have appeared on the market, "among which one can single out BPOs (bank payment obligations)." However, experts believe that cardinal changes in the set of trade finance instruments should not be expected yet.
According to Perkhova, the new tools will be of interest primarily to small and medium-sized companies. "Large corporations certainly have access to financial resources, things are worse with the availability of financing for smaller companies. Perhaps new tools should solve this very issue," she says.
Russian question
In the post-Soviet space, despite the fact that the provision on a promissory note and a bill of exchange known in narrow circles was approved in the USSR in the 1930s, trade finance has been actively developed only in the last 20 years. However, even now in Russia it is not much different from the world.
"If we talk about the features of the trade finance market in the post-Soviet space, then, probably, it should be noted that they primarily depend on the specifics of the legislation and, accordingly, on the regulation of foreign economic activity in a particular country. But in general, I would not talk about which some global differences,” notes Shalashnikova. "In most post-Soviet countries, almost all the main instruments of trade finance are implemented. However, there are restrictions on products related to the peculiarities of local legislation (including currency)," Biryuchinsky believes. "For historical reasons, the trade finance market in the CIS countries is still relatively young. Domestic banks do not always use all the tools available in the arsenal of traditional trade finance banks with Western roots. Certain restrictions are imposed by the existing currency regulation and the imperfection of customs procedures," says Perkhova .
According to her, "Russia now accounts for about 9% of the global trade finance market, according to the results of 2013, the volume of the Russian market is estimated at $11.8 billion." Shalashnikova notes that the Russian portfolio of trade finance transactions showed steady growth in 2013 and in the first half of 2014, even though the foreign trade turnover in the Russian Federation in January-June of this year decreased by 2% (to $ 396 billion, exports remained at the same level, imports decreased by 5.4%. Here Perkhova is more pessimistic. "Following the results of 2014, we can expect a noticeable decrease in market volumes," she says. And Biryuchinsky adds that geopolitical factors, including sanctions imposed on a number of Russian banks, companies and certain types of products, have a significant impact on the Russian trade finance market.
In general, Russia is an attractive market with growth potential, Perkhova is sure. "Classic trade finance is most often used in the trading of raw materials and commodities, which these territories are rich in. Another thing is that this potential can be realized if there are favorable political, economic and legislative prerequisites," she says. Although in the short term "the issue of maintaining the achieved level of volumes is more urgent."
Trade finance(trade finance) important element foreign trade activities and trade operations in the country. It includes a number of instruments for financing and supporting sales, import and export transactions.
Trade finance instruments are divided into four areas: financing of trade operations in the country, financing of import deliveries, financing export deliveries, carrying out settlements on international transactions.
For trade finance in the country instruments such as forfeiting, bills of exchange, bank guarantees and letters of credit are intended.
For import financing you can use a loan guaranteed by the buyer's (importer's) bank, a loan from a foreign bank under the insurance coverage of an export credit agency, a loan from a supplier (exporter) under the insurance coverage of an export credit agency, a loan from a foreign bank to the buyer (importer).
For export financing you can apply forfeiting, international factoring, a bank loan under the insurance coverage of EXIAR (Russian Agency for Export Credit and Investment Insurance), a loan from Roseximbank (a subsidiary of VEB), pre-export financing under a supply contract.
For international settlements you can use covered and uncovered bank letters of credit, collection. Here, a letter of credit is used to reduce the commercial risks of delivery (non-delivery of goods, non-delivery of payment, etc.).
Letter of credit- the bank's obligation, accepted at the request of the client (payer/buyer), to pay a certain amount to a third party (beneficiary/seller) upon presentation of documents that meet all the requirements of the letter of credit. The tool is convenient when the parties to the transaction are not ready to work on an advance payment or prepayment. The buyer can be sure that the bank will transfer funds in favor of the seller of the goods only upon receipt of documents proving that the seller has fulfilled contractual obligations. The seller receives a guarantee that the bank will make payment for the delivered goods.
bill of exchange- a written commitment prescribed form, which gives one person (the holder of the bill) the right to receive from the debtor on the bill of the amount determined by the document within the specified time. In the case of a promissory note, the debtor is the drawer, in the case of a bill of exchange (draft) - another person (drawee) indicated in the bill, which is the debtor in relation to the drawer.
bank guarantee- a guarantee for the fulfillment by the client of monetary or other obligations issued by the guarantor bank. In case of non-fulfillment of these obligations, the bank that issued the guarantee shall be liable for the debts of the borrower within the limits specified in the guarantee.
Forfaiting— purchase by a bank or a specialized non-banking forfeit company of the rights to claim accounts receivable client (debts of enterprises to the client, expressed in current securities). The bank/company assumes the obligation not to require anything from the client in the future if it is impossible to receive payment from his debtor and thereby assumes the risk of the latter's insolvency.
Factoring- complex financial services which bank or factoring company provides to manufacturers and suppliers in exchange for the assignment of rights to a customer's receivables. Allows companies operating on a deferred payment basis to receive funds under already concluded contracts before the buyer pays for goods and services. Three persons usually participate in the factoring operation: the factor (factoring company or bank) - the buyer of the claim, the supplier of the goods (creditor) and the buyer of the goods (debtor).
Pre-export financing- provision of funds credit institution to the exporting seller secured by confirmed orders from foreign buyers. Usually, the exporter enters into an agreement with the buyer for the latter to make payments directly to the credit institution.
Collection- a method of settlement between two parties, in which the exporter instructs his bank to receive payment or acceptance (confirmation that this amount will be paid) directly from the buyer (importer) or through another bank.
International financial relations trade transactions are more complex than internally national ones and differ in terms of the means and documents used.
When an exporter sells goods to a foreign partner who has been granted a commercial credit, that is, a deferred payment, he may be short of cash. This is due to the fact that the exporter has spent its own funds on the manufacture and delivery of goods, but has not yet received anything in return.
Export financing is the various ways in which an exporter obtains financial resources from various financial institutions before receiving payment from the importer.
In the case of export financing, all forms of credit are used, as in domestic trade, as well as other sources that are related to the terms of payment provided to the importer. Thus, the forms of export financing include:
o loan financing, which includes a cash loan (short-term and long-term) and the opening of a credit line (guarantees, acceptance credit)
o transfer of claims (forfaiting and factoring). Export financing can be:
♦ short-term (working capital financing);
♦ mid-term;
♦ long-term.
Financing can be obtained by conventional (traditional) methods of bank financing or non-traditional.
For short-term export financing, the traditional methods are:
o unsecured overdraft in national or foreign currency. Probability of lending in national currency increases if the exporter has an export credit insurance policy to reduce the risk of loss if the importer refuses to pay;
o advances for collection. The bank provides them to the exporter when the latter asks the bank to carry out the collection on his behalf. The amount of the advance payment is determined in each specific case, depending on the amount credit risk. As a rule, it is 80-85% of the amount of the draft
o accounting or purchase of bills (checks) by the bank. Such working capital financing is carried out if the exporter sells his goods on the terms open account, collection or documentary letter of credit with acceptance of drafts. The client immediately receives a loan for his export debts, but must submit a letter of collateral to the bank, in which he forces the bank to take all bills of exchange as security;
o acceptance credit lines. This is an agreement according to which the bank agrees to accept bills of exchange issued by the exporter against security in the form of a trade bill. The term of payment of the commercial bill must be earlier than or coincide with the maturity of the loan bill accepted by the bank. The advantage of acceptance loans is that bills of exchange are discounted at a lower discount rate than the rate for accounting for trade bills. Therefore, acceptance lines of credit are cheap sources of short-term financing. The disadvantage of this method of financing is a significant amount of an acceptance loan - at least $ 1 million, as well as the right of recourse to the exporter from the bank;
o Buyer advances. The importer agrees to pay a portion of the cost of the goods (sometimes 100%) before they are actually delivered. Advance payments, as a rule, are 10-30% of the contract amount.
The advance payment is paid within the appropriate period from the date of signing the contract (for example, 30-90 days). The contract also stipulates how long after the advance payment the delivery of the goods will be carried out. As a rule, the advance is realized through bank transfer(other instruments such as checks may be used).
The advance payment is repaid by offset upon delivery of the goods and is fixed in the contract. For the importer, such a method of repaying the advance is beneficial, which minimizes the actual period of advance payment by him to the exporter, and for the exporter - in which the advance is repaid when paying for the last shipment of goods, so this tool ensures a longer use of the advance and fully insures against possible losses in case of refusal importer from the following consignments of goods.
For receiving an advance, interest may be charged in favor of the importer to transfer the advance before the date of actual delivery of the goods.
If an advance payment is used, then the importer, as a rule, requires the issuance of a guarantee by the exporter's bank: a guarantee of the return of the advance or a guarantee of the necessary performance of the contract. Instead of a guarantee, the contract may be subject to reservations that if the exporter fails to fulfill the terms of the contract, the advance payment is returned to the importer in full.
Advantages of the advance form of financing:
o the exporter is protected from the risk that the foreign buyer will refuse or be able to pay for the goods that have already been shipped to him;
o the exporter receives free funds at his disposal, which he can use to purchase raw materials, pay wages, technical equipment of the enterprise and the like;
o the exporter is relieved of the need to apply to the bank for a loan with the payment of interest and other costs for their use;
o in case of refusal to accept the ordered goods, the exporter has the right to use the received advance payment for damages.
The disadvantages of this form of financing concern more importers:
♦ the risk that the exporter will not deliver the goods or will deliver them late and of a very different quality or specification;
♦ non-compliance with the assortment of the supplied goods, as well as the conditions of packaging, which may lead to the determination of the goods as substandard;
♦ risk of losing the advance;
♦ The importer credits the delivery for the relevant period before he physically receives the goods at his disposal.
Non-traditional methods of short-term financing are export factoring, loans to export intermediaries, financing through commission firms.
In the case of medium-term export financing, the bank loans in national and foreign currencies, loans that are guaranteed by a special government agency. Non-traditional methods of financing include forfeiting, leasing, countertrade, operations of international credit unions (see Chapter 7).
The main types of countertrade are barter, simple and complex offset transactions.
A barter (barter) agreement is one of the types of export-import transactions formalized by a barter agreement or an agreement with a mixed form of payment, in which payment for export (import) deliveries is partially provided in kind, between counterparties, provides for a cost-balanced exchange of goods, works, services in any combination, not mediated by the movement of funds in cash or non-cash form.
The main feature of the barter operation is that without foreign exchange, the exchange of goods is carried out on the basis of the equality of the values of exchanged goods at world prices. When concluding simple compensation agreements, the exporter supplies production equipment on the terms of a commercial loan, and the importer, after its installation and commissioning, repays, compensates for its cost and the cost of the loan with the supply of products manufactured on this equipment, gradually, as with an installment payment.
The supply of compensating products is carried out each time at current prices in accordance with the market situation. The disadvantage of this method is the repeated negotiation of prices and the difficulty in determining the end date for compensation.
Simple compensation transactions are usually arranged for amounts not exceeding $20 million and for a period of not more than 3 years. At the same time, prices for compensating products are fixed and fixed annually.
Compound offset agreements are long-term (5 to 10 years) large-scale offset operations ($100 million or more). A feature of such agreements is that the exporter is not interested in using compensatory products in such large volumes. Most often, he refuses it in favor of a third party, which, as the product is sold, compensates the exporter for the cost of equipment and credit.
Thus, the complex compensation deal is tripartite.
To fulfill such agreements, contracts are concluded for the supply of specific equipment and for the supply of compensatory products to a third party that owns the sales market, and an agreement is concluded between the equipment exporter and the third party on the terms of repayment of the amount of equipment and the cost of the loan as the compensatory products are sold.
The International Credit Union is an association financial companies or banks in different countries who enter into mutual agreements for the provision of financing with partial payments. If a foreign buyer wishes to pay for imported goods in installments, then exporters can apply to a member of the credit union in their country, and he will give an order to provide financing through a member of the credit union in the country of the importer. The exporter will receive immediate payment without recourse to him. The importer will receive financing in installments.
Long-term export financing provides for the issuance of Eurobonds, credit to the buyer, project financing.
Credits to the buyer are carried out by the bank that serves the exporter. It is provided by the bank of the seller's country directly to the buyer or his bank for the amount of the concluded contract. The forms of such a loan are loans under separate contracts for the supply of machinery and equipment; credit lines; loans for the construction of entire facilities with the supply of equipment and the provision of construction and installation services. The contractual relationship between the participants in a transaction based on a loan to the buyer is drawn up in such transactions: a contract between an exporter and an importer; loan agreement between the bank that provides the loan and the borrower (the importer's bank) with a guarantee provided by the insurance institution of the bank that lends. Such a loan is 80-85% of the contract price.
Under project finance understand all types of large long-term loans for the implementation of a large project in the field of construction, extraction of raw materials, development of infrastructure or communications.
An unconventional method of long-term financing is the issuance of shares.
Most of the sales are made using payments to an open account.
Payment to an open account provides for the maintenance by partners of open accounts for each other, on which the amounts of current debt are taken into account.
When using this form, the following actions are performed:
♦ shipment by the exporter of goods for sending documents to the importer;
♦ entry by the exporter of the amount of the value of the cargo to the debit of the account opened for the buyer;
♦ the importer makes a similar entry in the credit of the importer's account;
♦ after paying for the goods, the exporter and importer make compensatory arrangements.
Features of this form of payment:
♦ the form of settlements provides for the conduct by counterparties of a large amount of work on accounting for the sale;
♦ documents of title are delivered to the importer directly, bypassing the bank;
♦ all control over the timeliness of payments rests with the participants in the transaction, primarily the exporter;
♦ the movement of goods is ahead of the movement of foreign exchange;
♦ this form of payment is the cheapest and relatively easy to implement.
For the exporter, paying to an open account is a risky operation because there is no guarantee that the importer will settle his debt within the agreed timeframe. After all rights to the goods have passed to the importer, the exporter can only rely on the solvency and decency of the buyer. To achieve greater reliability of payment, exporters insist on payment guarantees issued in their favor.
This form of payment is beneficial for the importer, since he pays only upon receipt of the goods. Thus, there is no risk of non-delivery of goods.
Open account settlements are used if there is a reliable, stable and long-term business relationship between the buyer and the seller, as well as if trade between countries is relatively free from government restrictions and international regulation.
Payment to an open account occupies a significant place in the trade of many countries of the world. Thus, in Western European countries, up to 60% of all payments are made using this form. This is due to the fact that there is an excess of goods on the world market, and the seller must introduce more preferential terms sales. In addition, in the trade practice of a number of countries (for example, in the UK), settlements in this form are associated with payment by installments (sales on credit).
Import financing is different ways an importer receiving a loan from financial institutions to make a payment to an exporter when he (the buyer) has a cash-strapped problem.
Funding sources for importers are basically the same as those for exporters, and financing options include:
o bank overdraft in national or foreign currency;
o a loan in national or foreign currency;
o trading on an open account;
o financing through a commission firm;
o settlements using an acceptance letter of credit and a letter of credit with installment payment;
o forfaiting;
o financing of a loan to the buyer, guaranteed by a state institution;
o countertrade;
o bank acceptance (similar to loan financing for exporters)
o bank loan for products, which is repaid from cash receipts from the sale of export goods by the importer.
When choosing a specific form of financing trade operations, an international financial manager must comprehensively analyze a number of risks: geographical, currency, inflation and interest, market, payment, political.
To reduce the risks associated with the implementation of export-import operations, as a rule, the following is used:
o letter of credit, which is an undertaking by the bank to pay for goods delivered to the importer. A commercial letter of credit is issued by a bank on behalf of the importer.
The buyer company applies to its bank under a letter of credit, is a conditional monetary obligation of the bank, which it issues on behalf of the buyer in favor of the seller, according to which the bank that opened the account (issuing bank) can make a payment to the seller or authorize another bank to make such payments if the documents provided for in the letter of credit are available (usually these are proofs that the goods correspond to those shipped and are accordingly insured). The bank issues a letter of credit only if, after analysis, it is convinced of the solvency of the buyer. Credit risk transferred to the bank that issued the letter of credit. In fact, the bank replaces the importer's loan with its loan. If the selling firm continues to have doubts because it does not know the creditworthiness of the buying bank, then it must require that the letter of credit be confirmed by its "own" bank. If the letter of credit is confirmed, then the sequence of fulfilling the requirements for payment for the goods will be as follows: the seller firm will turn to "its" bank, which will turn to the "buyer's" bank, and the latter - to the buyer's firm. The letter of credit almost completely eliminates the exporter's risk when selling goods to an unfamiliar importer in another country;
o bank guarantee- the promise of the bank to pay at the first demand of the exporter, if he declares that the maturity of the debt has come, and the importer has not made payment;
o guarantees and guarantees of the government;
o insurance of special insurance institutions;
o foreign exchange forward contracts, options, loans in foreign currency to insure foreign exchange risk, etc.
