Andy young natwest presentation to ukti 5th march 2015

natwest.com

5th March 2015

Trade Finance

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Today’s Presentation

1. Introduction to Natwest South West Trade Team

2. Trade Finance at Natwest

3. Overview of Trade Finance Products Mitigating Risks

4. Product Overviews (what they are and how they work):

Documentary Collections

Documentary Letters of Credit

Bonds and Guarantees

Standby Letters of Credit

Pre-Export Finance

Post-Export Finance

5. UK Export Finance

Natwest working with UK Export Finance

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Natwest South West Trade and International Team

3

Clare Hill

Trade and International Regional Sales Director,

South West

[email protected]

Andy Young

Trade and International Director

[email protected]

Joseph Cottee

International Cash Director

[email protected]

mailto:[email protected]



Natwest Core Capabilities

4

What our customers say about us…

What sets Natwest apart?

We can deliver a wide range of trade & supply chain finance solutions to help support your trading needs

Our dedicated trade teams and qualified trade advisors can

share their specialist knowledge, which could add value to your

business

Our relationship managers and trade teams are supported by a

dedicated Product Management team and a customer focused

Operations team, that help to ensure efficient processes

Connectivity across our network to ensure the best outcome for

you

Products to suit your business needs and working capital cycle

Our online trade platform, enables you to issue, view, amend

and track your trade transactions, 24 hours a day

“We have a well-established

relationship with NatWest and we

have consistently benefited from the

bank’s commercial acumen and

export expertise.”

Chris Crowther, Managing

Director at Kirton Engineering

“The RBS solution

has helped us

manage costs and

increase control,

supporting our growth,

and as we continue to

expand, the bank’s

capabilities in all

jurisdictions are a

great benefit”

Kevin Deery,

Kingspan Group

Treasurer

“We wanted a financial

solution that was simple and

flexible – and that is exactly

what NatWest gave us.”

Suki Dulai, Flying Trade’s

Managing Director “Not only did they provide

BTA with excellent

guidance, but the

teamwork between

NatWest and Lombard

was exemplary.”

Mike Shaw, Financial

Controller at Brixham

Trawler Agents (BTA)

“If RBS hadn’t helped us secure a

guarantee under the UKEF Bond

Support Scheme, we could not

have accepted the order. It’s as

simple as that…The team’s

professionalism was exemplary.”

John Roth, Chairman of Jorin

Ltd.


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For importers and exporters, the level of risk involved in a transaction

fluctuates depending on what payment method is used

Depending on your situation will determine the most appropriate product to

use to help mitigate your payment and performance risk

There are a wide range of products and services available…

Open A/C

Term Collection

Sight Collection

Unconfirmed L/C

Confirmed L/C

Cash in Advance

High Risk for Exporter

High Risk for Importer Low Risk for Exporter

Low Risk for Importer

Overview of Trade Finance

Trade Finance aids UK businesses in their export, import and domestic trade activities

Letters of Credit

Documentary Collection

Bonds & guarantees

Risk Products

Import Loans

Pre and Post Export Loans

Trade Discounting

Funding Products


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Overview of Trade Finance

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Importing

Products to help at each stage of your import process…

Products to help at each stage of your export process…

Exporting

Import Collections

Import Letters of Credit

Bonds & Guarantees and SBLCs

Import Finance

Supply-Side Receivables Purchase (Supplier Finance)

Receive Order Manufacture for Export Ship Collate & Prepare Export

Documents Receive Payment

Pre-shipment Finance Bonds & Guarantees and

SBLCs

Post-shipment and LC

Finance, Bill Discounting,

Receivables Purchase

Export L/Cs – Sight/Usance

B&Gs and SBLCs

Export & Direct Collections

Document Prep Services

Order Goods Receive Shipping Documents Receive Goods Make Payment

Depending on your situation there are a wide range of products to support your trading activities

Documentary Collections

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5) Documents

Seller/Exporter Buyer/Importer

Exporter’s Bank

(Remitting Bank)

Buyer’s Bank

(Collecting Bank)

1) Contract of Sale

2) Ship goods

3) Sends documents

4) Documents

7) Payment/Acceptance

8) Payment/Acceptance 6) Payment/Acceptance

Documentary Letters of Credit

8

Seller/Exporter Buyer/Importer

Exporter’s Bank

(Advising Bank)

Buyer’s Bank

(Issuing Bank)

1) Contract of Sale

5) Ship Goods

6) Doc Presentation

7) Doc Presentation

3) L/C

4) Advice of L/C


2) L/C Application


11) Docs Provided


Bonds and Guarantees

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Commonly used bonds and guarantees

Performance

Guarantee

In the event of failure to fulfil the contract, we will pay out either a percentage (usually 5-10% of the value of the

contract), or a fixed sum to the beneficiary

Usually required for the duration of a contract, plus a grace period to allow the beneficiary to make a demand in

the event of non-performance of the obligations covered by the guarantee

Tender Guarantee /

Bid Bond

Often called for in support of contract tenders, particularly in international trade situations

Provides the beneficiary with a financial remedy if the applicant fails to fulfil any of the tender conditions. Usually for 5-

10% of the value of the tender

Advance Payment

Guarantee

Used where the applicant calls for the provision of a sum of money at an early stage of the contract

The beneficiary can recover the amount paid in advance, or part thereof, if the applicant fails to fulfil their underlying

contractual obligations.

VAT / Duty Deferment

Guarantee

Provided to HM Revenue & Customs enabling the applicant to import goods from outside the EU without the

immediate payment of duty or tax

Shipping Guarantee Issued to allow an importer to take possession of goods from a shipping company when the goods arrive at port

before the negotiable Bill of Lading is received. It is a written indemnity by the bank to the shipping company.

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2

3

4

5

Standby Letters of Credit (SBLCs)

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Irrevocable undertaking issued by a bank for account of its client (the applicant) in favour of a third party (beneficiary) that provides payment to the beneficiary in the event of default by the applicant

In case of default

Trigger event e.g. non-payment by buyer

Applicant

(Buyer)

Beneficiary

(Seller)

Issuer

(Applicant’s Bank)

1) Contract of Sale

2) Application for SBLC 3) SBLC

4) Documents

5) Payment

7) Documents

6) Debit

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We could provide you with finance to bridge this funding gap

Pre-Export Finance Working capital funding to help source, produce, package and ship your goods sold

Pre-export finance can cover a range of uses, for example, to cover

the cost of raw materials or extra labour you need to fulfil a new

contract.

Repayment is generally made from the sales proceeds; when your

customer pays you, the loan is repaid. So transactions are self-

liquidating

Benefits of Pre-Export Finance… Key Features…

Improve your working capital

Facility may be increased to grow with your business

Attractive source of financing - usually achieves more

competitive financing terms compared with existing

working capital sources

Available for commodities (traded or untraded) and

other goods


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Post-Export Finance Accelerate the receipt of funds once you have shipped the goods to your buyer

This allows you to offer your clients payment flexibility, such as

extended payment terms, that you might not otherwise be able

to fund from existing cash flow

By offering flexible payment terms you may be able to secure

more contracts

Benefits of Post-Export Finance… Key Features…

We could provide you with a loan to bridge this funding gap

Reduces Days Sales Outstanding (DSO), improving

your liquidity and working capital position

Attractive source of financing – lending against trade

documents is typically priced more attractively than a

direct overdraft

Funding can be structured without recourse allowing for

improved balance sheet management


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UK Export Finance Programme Summary

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Snapshot of the programmes offered to UK exporters


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UK Export Finance guarantees export letter of

credit (L/C) obligations in connection with

eligible UK exports

Letter of Credit Guarantee Scheme

Features:

LCs with repayment terms of up to 1 year

Exports must be from the UK

Risk sharing up to 90% of the L/C amount

Exporter’s eligibility will be subject to our normal

transactional due diligence.

Benefits:

Enables banks to confirm L/Cs where we may

not have the full risk appetite

Exporter gets confirmation and/or discounting

funded for L/Cs supporting export contracts

Bond Support Scheme

Helps exporters increase credit limits at their

banks to issue contract bonds, guarantees

(B&Gs) and Standby letters of credit (SBLCs) for

eligible export contracts.

Features:

UKEF guarantees the nominated bank on a pro

rata basis for up to 80% of the value of B&Gs

and SBLCs in the case they are called and the

exporter fails to reimburse the Bank

Each export contract must have a minimum of

20% UK content.

Benefits:

Increases credit capacity for exporters by

enabling the bank to increase limits when there

is limited credit appetite

May free up credit limits for other purposes

Working Capital Scheme

Helps exporters increase credit limits at their

banks to finance working capital, both pre and

post shipment, for eligible export contracts.

Features:

UKEF guarantees the nominated bank on a pro

rata basis for up to 80% of the value of working

capital facilities for export contracts

Each Export contract must have a minimum of

20% UK content

Maximum value of the working capital facility

cannot be greater than 75% of the export

contract’s value

Maximum Term: 2 years – no minimum term.

Benefits:

Increases the bank’s credit capacity for working

capital facilities where we may have limited

appetite

May free up credit limits for other purposes

http://www.ukexportfinance.gov.uk/

Natwest and UK Export Finance

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We have strong relationships with UKEF at all levels that can assist in getting favourable and timely decisions

Our client and origination teams work closely with the UKEF national advisory team and together deliver expertise

that can help

Our credit and middle office teams have a tried and tested operating model with UKEF that delivers smooth and

effective delivery

Background

Capabilities

Market

Position

The RBS Group has played a key development role with UKEF since concept discussions began in 2009

We helped shape the Scheme for initial launch both bilaterally with UKEF and in the British Banker Association

(BBA)

As an early adopter supporting more customers than any other bank, we have driven changes resulting in scheme

improvements

The RBS Group are the first UK bank to close deals under all UK government programmes

The RBS Group is the UK market leader supporting more customers than any other bank with over 40% market

share*

Supporting UK businesses and their exporting activity

Source: (*) UKEF Factsheet September 2014 based on value of export contracts supported.

http://www.ukexportfinance.gov.uk/

UK Export Finance

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“Natwest’s understanding of the UKEF schemes was fundamental to

unlocking the pre-shipment finance we needed to fund these contracts. They

were equally effective when it came to completing the UKEF application

process. The support provided by RBS has given the company the

confidence to undertake more export contracts in countries that were

previously considered difficult to operate within.”

Angelo Luciano, MD at Expert Tooling & Automation

“NatWest introduced us to the UK Government’s Bond Support

Scheme…They understand UKEF and its schemes inside out. The team has

an equally detailed understanding of our business and wants us to succeed.

With these applications, they were able to assess all the what-if scenarios and

variables to deliver a solution that eliminates the barriers and frustrations

associated with sourcing working capital.”

Terry Clough, MD at FMA Process Engineering

“If RBS hadn’t helped us secure a guarantee

under the UKEF Bond Support Scheme, we

could not have accepted the order. It’s as

simple as that…The team’s professionalism

was exemplary.”

John Roth, Chairman of Jorin Ltd.

“Despite the challenges, the strength of our

relationship with the NatWest team and its

capabilities won the day. The team moved

heaven and earth to unlock the cash flow we

need to sustain our success.”

Alan Peel, Managing Director at ALTEK

Europe Ltd.

“NatWest understands the export trade cycle and it

understands the Middle East market. Significantly, it also

understands how the UKEF Bond Support Scheme can help

a business like Cambridge Glasshouse to unlock essential

working capital and grow its export revenues.”

Steve Hinch, FD at Cambridge Glasshouse

“You are dealing with

experts who really

understand the subject.

These schemes are first-

class and connecting with

the right people is

essential to accessing

them.”

Tim Robinson, MD at

FlexEJ Ltd.

Why choose Natwest to support your export activity?

“Without NatWest’s detailed understanding of the UK

Government’s export support schemes, we would not have

secured this order. It’s as simple as that. Thanks to the

Bank’s expert guidance, we are now about to sign several

other export contracts that are even bigger than this one.”

Andrew Williams, Group MD at FJ Holdings Ltd.


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Andy young natwest presentation to ukti 5th march 2015

Government & Nonprofit

Transcript of Andy young natwest presentation to ukti 5th march 2015