Business without borders

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1 a b Business without borders UBS will help you create the best foreign trade conditions for your business

2 Your business goal is to achieve long-term, sustainable growth. You can be confident that we understand your needs and can give you comprehensive support for your foreign trade.

3 Getting started Regardless of the size of your business, you can put your foreign trade activities on a consistently sound basis thanks to UBS s expert support Strong international integration The Swiss economy has a strong tradition of international integration. Switzerland is characterized by a relatively small domestic market, few natural resources and a high degree of industrial specialization. These factors have created and supported trade with other nations. The source of Swiss competitiveness Switzerland s prosperity is largely due to the country s strong integration in the global export markets. More than 40 percent 1 of all goods and services produced in Switzerland are sold abroad. Every second job in Switzerland depends on exports. Quite simply: the export of goods and services is the driving force of our economy. Not a question of size The size of your company is not an issue when it comes to success in the international trade arena. Once you take the step of expanding beyond Switzerland s borders, however, it is vital for you to have the assistance and support of an experienced and skilled partner in the areas of finance and risk. A partnership with UBS places your current and future activities on a sound footing, whether your company manufactures in Switzerland and serves export markets abroad, or operates through a foreign subsidiary. Import Export Producer or supplier based abroad Import Entrepreneur CH Subsidiary based abroad Export Trading branch Buyers based abroad Licensing Franchising Cooperation/joint venture Procurement Production Sales 1 Source: Swiss Federal Statistical Office: Statistical Data on Switzerland,

4 Identifying market opportunities The more markets you supply, the higher the risks you face. UBS will give you the expertise and the tools you need for targeted hedging. More opportunities, more risks, higher resource requirements Ongoing globalization is opening up markets and boosting opportunities for smaller Swiss companies. But opportunities are never without risks. Expansion from the domestic to the international market, and every step taken by a company as it expands abroad, increases the need for human and financial resources. At the same time, protection against growing risks becomes an important consideration. Foreign business risks An international business operation generally entails additional and greater risks, including those set out below: Targeted protection Most risks can be hedged and minimized. To do this successfully requires the correct identification and assessment of the risks. Only you can decide how much risk your company can and wishes to bear. We are experienced at finding the right instruments and methods to hedge your risks, and will gladly offer you our advice in this regard. Financing foreign trade activities Your business will need financial resources, to hedge risks and for example, to establish a manufac turing facility abroad. Your company must be able to supply a portion of its capital needs itself. Type of risk Credit risk Currency risk Contingent currency risk Manufacturing risk Performance risk Transport risk Political risk Transfer risk Description of risk Defaults, buyer insolvency Exchange rate fluctuations The risk of having to terminate a forward transaction (following negative exchange rate developments for the exporter) in the event of a claim Delivery is impossible or cannot be reasonably executed, including inopportune unilateral cancellation or amendment of an order The producer is unable to perform its contractual obligations (due to production problems, financial difficulties, transport problems) Damage to or loss of goods in transit Loss, damage or seizure of goods due to political events or war Transfer difficulties, state-imposed payment blocks Not all countries, nor all business plans, are equally creditworthy and financially sound. The costs related to financing and hedging depend to some extent on the instruments used, as well as on the country risk and the parties involved. When it comes to financing short- to medium-term investments abroad, the security of payments and liquidity are key areas of concern. Mediumto long-term investments can take advantage of measures such as insurance facilities for export risks and loans. A traditional range of financing products provided by your bank in Switzerland or a local bank abroad can improve the scope of your foreign trade activities. Your UBS client advisor will be happy to help you select the appropriate financing solution. 4

5 Sound advice Close collaboration with our specialists makes sure they fully understand your requirements and can personally respond to your needs Committed to your success We will support your company through the personal dedication of our people and our effective service delivery. Your advisors will work closely with you to understand your requirements. Drawing on our global resources and the skills of our specialists, your advisor is personally committed to meeting your needs. Your company takes center stage Our products and services are customized to your needs, and our comprehensive approach is built on the foundation of ensuring that we fully understand your company and your business needs. Advice tailored to your needs Do you need fast access and prompt information during business hours? Would you like to do your banking at any time day or night, at your office or from other locations? We can offer you the services of client advisors throughout Switzerland in our branches, and a team of specialists based at our head office and throughout the world. We also have a dedicated UBS Client Management Corporations, and offer the convenience of UBS e-banking. Take advantage of our many services to receive comprehensive information, optimal advice and fast transaction services. Right around the corner, anywhere in the world We are your financial partner, committed to quality, security and integrity. UBS is the largest Swiss bank and a market leader in business banking. We combine traditional Swiss values with interna tional know-how and global skills. You benefit from our extensive market expertise and a wealth of experience built up over 150 years in every area of finance. 5

6 Counting on experience You can depend on UBS s proven expertise and wealth of experience to keep your foreign trade activities on track We can provide everything you need to support your foreign trade operations: Information A prerequisite for any business venture, especially one abroad involving foreign trade, is up-to-date and reliable infor mation. This is indispensable for making the right risk assessments. Your daily contacts in the business world are an important source of information, but you also need to keep track of the latest developments in the economy, tech nology, society, politics and the law. Liquidity and cash flow A sustainable business relationship is built on trust, reliability and the timely payment of accounts. When a business relationship involves more than one currency, and when goods, services and funds are exchanged across national borders, you need the right liquidity in the right currency at the right moment. Even if a transfer involves countries with different practices, you need to know that your payments will be executed on time, despite any unforeseen circumstances. Risk hedging and financing Doing business abroad or with companies abroad always involves risks. This is why sufficient equity capital is essential. You need the right mix of instruments based on your business requirements, whether additional short-term liquidity, longterm financing, or parallel hedging of risks. We can offer you a wide range of instruments to meet your financing and hedging needs. The more you know about your business partners and their country, the better you will be able to assess your risks and decide how much risk to hedge or carry yourself. Our solutions Your needs Hedging currency risks Risk hedging Performance and payment guarantees, short-term, medium- to long-term financing Cash management, payment transactions, currencies Intelligence on countries, currencies and business practices UBS Client Information Liquidity, cash flow Financing for investment and working capital Financing 6

7 Hedging currency risks The hedging approach Comprehensive access to global financial markets Securing performance and payment, financing Documentary collections Letters of credit Bank guarantees Export finance Multi-Source financing Advance payment/assignment credit Discounting bills of exchange Forfaiting Financing for investment and working capital Your business activities abroad are dependent on equity Working capital financing Investment financing Leasing Cash management, payment transactions and foreign currencies Cash management: overview, transactions, investment and system integration Foreign currency account Payment transactions to suit you Payments in the eurozone Credit cards Intelligence on countries, currencies and business practices Know-how and specialization Swiss Desks abroad for corporate clients Current and comprehensive information International network Further information Brochures, factsheets, weblinks Order information

8 Hedging your risks You can also rely on the global presence of our experienced client advisors, traders and analysts to hedge against currency fluctuations Is your business involved in the international trade in goods, services or capital, and would you like to hedge your operations against the risks of currency fluctuations? If you cannot invoice your goods or services in Swiss francs, or if your imports are paid for in foreign currencies, you will be confronted by currency fluctuations. Before you take the step of hedging this risk, you need to analyze the sources of potential currencyrelated losses. The hedging approach 1. Background The nature of the risk to be hedged is crucial. Are you seeking to protect your cash flow, an offer you are making or a balance sheet item? A second important aspect is the evaluation of future foreign exchange fluctuations. 2. Benchmark: forward transactions A forward transaction is a commitment to exchange a specific amount in one currency for another currency on a specific date. The difference between the spot price and the forward rate is the cost of the hedge. 3. Alternatives to a forward transaction Options, unlike forward transactions, give the buyer the right, but not the obligation, to trade a currency pair at a specific rate. A premium is paid for the option, i. e. the option price. This facilitates complete hedging against disadvantageous currency movements. At the same time, you still have the choice not to exercise the option if exchange rates move in your favor. Exotic options are barrier options and, unlike the forementioned conventional ( plain vanilla ) options described above, include additional terms or agreements, such as specific payment and risk structures depending on the individual case. There are many structured products available, which use a combination of money market investments, currency options and option products, etc. The best approach is to ask your client advisor to explain the ways in which exotic options and structured products can be of use to you. A spot transaction (the purchase of foreign currency) also allows you to meet future debts while protecting your business from unfavorable currency movements. However, such transactions preclude any benefits if exchange rates move in your favor. 4. Selecting and implementing the optimal hedge The final step in the overall risk management process is to decide on the hedging product to use. The deliberate acceptance of risks can lead to currency-related losses, but may also result in gains. A clear hedging strategy is more important than hedging individual transactions. Comprehensive access to global financial markets We have seven regional Swiss FX sales points 2, which means that we are always close at hand. Our integrated teams of experienced client advisors, traders and analysts are present in all global time zones, ensuring that we are always on top of market developments. When it comes to your foreign exchange needs, we can offer you a full range of support. Talk to your UBS FX advisor, who will gladly explain the tools and services best suited to your needs, opportunities and resources. Find out more ubs.com/sme-currency-risks Brochure Foreign Currencies 2 FX = Foreign exchange/foreign currencies 8

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10 Getting the right mix Combining financing instruments to match your needs can offer real bene fits. Find your individual financing solution with the help of our UBS Trade & Export Finance team. We have the right solution for all your financing needs, from short-term liquidity to longer-term finance as well as a wide range of options for hedging against risks. Often a mix of various financial instruments leads to the best result. As a solution provider for the Swiss export sector, UBS Trade & Export Finance offers you tailored financing solutions that give you optimal support. Any business engaged in exports from Switzerland to new markets abroad will need to guarantee payments and liquidity in the short to medium term, and to hedge against risks. For the export of capital goods, you will probably require a medium- to long-term financing facility covered by export insurance. Our Trade & Export Finance specialists will work with you to develop the right solutions for your company s trade and export finance transactions, from tendering for an order through to payment. We have eight regional Trade Finance sales advisors and four service centers to ensure that you benefit from profes sional advice and fast and efficient processing of your transactions. Documentary collections With documentary collections, UBS offers you a supportive payment instrument with greater security than selling on open account for cross-border trade in goods and services. Documentary credits Our documentary credit facility offers you an internationally recognized, flexible payment and credit instrument to minimize the risks of cross-border trade in goods and services. A documentary credit can do all this provided the terms of the credit are clear and unambiguous. As a result, the formal requirements are extremely stringent; the bank may only effect payment if the documents are exactly as stipulated in the credit. With a documentary credit, a bank undertakes to pay a specified amount on behalf of the buyer/importer to the seller/ exporter of goods or services on condition that he/she presents the documents stipulated on time. The payment is made immediately (on sight) or can be deferred (forward payment). Bank guarantees Bank guarantees are the UBS solution to providing you with targeted performance and payment guarantees in an increasingly challenging economic environment. Bank guarantees and standby letters of credit are used for hedging international transactions. Trade & Export Finance Payment guarantee Performance guarantee Guarantee for warranty obligations Advance payment guarantee Bid bond Export documentary credit Deferred payment/export financing Tender Contract Advance payment Delivery Payment Performance/payment guarantee for buyer Payment guarantee for seller Financing for buyer 10

11 Export finance SERV 3 offers instruments that make it easier for exporters to do business in countries where political or economic instability could jeopardize receipt of payment. SERV provides insurance cover in respect of the following risks: Transfer risk Credit risk Political risk Contingent currency risk Predelivery risk Hedging for bank guarantees General currency risks Claims for defects Transport risk covered not covered Export finance helps with the medium- to long-term financing of capital goods. Depending on the structure of the export business, the transaction may take another form: Supplier s credit with SERV cover Under a supplier s credit, you as the exporter sell your goods including the financing. As such, the finance arrangements are an integral part of the terms of payment in the delivery contract. You then sell the credit to UBS after the goods have been supplied. If the loan is de faulted, UBS has recourse to the cover provided by SERV. Buyer s credit with SERV cover On the basis of your supplier s contract, UBS grants the buyer a direct credit line, the proceeds of which are paid directly to you as the exporter in settlement of the purchase price. UBS conducts the credit negotiations while you, the exporter, remain in the background. The buyer is responsible for repayment of the credit. 3 SERV = Swiss Export Risk Insurance, formerly Swiss Export Risk Guarantee (ERG) 4 and other financing with or without SERV cover Framework credit with SERV cover UBS has framework credit agreements with a large number of banks in the key export markets, allowing the financing of individual transactions at standard, predetermined terms and conditions. Multi-Source Financing 4 With a global network behind us, we are able to advise and assist suppliers and buyers alike in putting together complex finance packages. Our advisory and financing services cover short-, medium- and long-term credits, with or without export credit insurance. In addition to our trade and export finance products, we have other solutions that preserve your liquidity and hedge against risks. Advance payment/assignment credit If you have made deliveries abroad on open account, but prefer not to wait until your clients make payment, UBS can arrange advance payment via an assignment credit against these receivables. Discounting bills of exchange We offer our corporate clients discounting of drafts and promissory notes without recourse (accounts receivable for goods supplied) provided that the payment request is covered by a first-class bank (aval). The discounted present value will be paid off to the beneficiary after deduction of the discounting fees. In this way, the beneficiary is provided with the net amount in a quick and efficient way. Forfaiting For you as a supplier, forfaiting is a simple and attractive form of export finance. Forfaiting refers to the non-recourse sale of receivables from exports of goods and services on the part of the exporter, with payment to be made at a later date. Find out more ubs.com/tef Brochure Documentary Credits and Collections Brochure Bank Guarantees Brochure Export Finance 11

12 Expanding your horizons Benefit from our individual solutions to help you expand your financial flexibility through financing investment and working capital Expand your financial flexibility to concentrate on your business activities abroad. We develop solutions tailored to your needs, whether for paying suppliers, financing your business s future development, helping you with investment plans or financing your real estate projects. Equity capital as the foundation for your business abroad Launching a business involving trade and export abroad is often a risky endeavor, and generally requires risk capital, i. e. equity capital. Financing with equity capital gives a company the flexibility it needs to overcome setbacks and delays. An equity base of this kind is vital if you are going to do business abroad. You have to assume that local banks will probably not be willing to provide unsecured credit, and your bank in Switzerland will be contrained in its ability to provide credit for cross-border business. That s why it makes sense for UBS to work with a local bank. This way, both financial partners will be able to bring their core strengths to bear: UBS knows your Swiss company, while the foreign bank will be comfortable with local circumstances. Working capital financing Traditional business loans provide your company with financing for working capital as well as reserve liquidity. They therefore also meet your capital needs for your business abroad. They give you more financial flexibility and enable you to find additional liquidity when you need it for inventory purchases/stock holding, debtors and seasonal fluc tuations. You can choose from two different forms of business loan: A current account overdraft facility in Swiss francs or a foreign currency gives you the basis for optimal liquidity management. You are charged only for the portion of the approved credit line you actually use. A short-term fixed advance in Swiss francs or a foreign currency protects you against interest rate rises during the agreed term (generally between one and twelve months). Investment finance Investment finance can be used to finance your capital expenditure, such as the purchase of machinery, vehicles and facilities, and also used to finance the expansion of your business. It can take the form of a fixed advance (suitable for short-term investments) or a fixed-rate loan (more suitable for long-term capital expenditure). Your client advisor will be happy to discuss the details of your investment plans in terms of loan durations and protection against interest rate fluctuations. Leasing Leasing is the ideal way to benefit from capital goods for production, IT and communication facilities without having to provide financial resources in advance. Instead of a direct purchase via a loan and the related interest costs, leasing boosts your liquidity. You remain flexible and in position to take advantage of international market opportunities. Find out more ubs.com/sme-financing Brochure UBS for Companies 12

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15 Keeping payments under control As we re a market leader in international payment transactions, you benefit from our wealth of experience, professionalism and innovation Your business dealings with counterparties abroad depend on the reliable, rapid and straightforward execution of your foreign payments. As a company with international business operations, you have clients and possibly also suppliers based abroad. This is why it is vital to ensure that your incoming and outgoing payments are effected correctly at all times. As a global financial services company and a leading bank in Switzerland, we are also a pioneer in developing payment services in Europe and throughout the world. Our global network is there for your benefit, offering customized services and a wide range of payment options to transfer your money safely, quickly and economically. Talk to your client advisor about our product portfolio and the ways in which we can tailor it to your specific needs and circumstances. Foreign currency account A UBS current account serves as the basis for processing your entire portfolio of business transactions, including payments and investments. You can operate the account in Swiss francs and in any of the major currencies. The account gives you access to a wide range of services offered by UBS for keeping an overview: Cash overview, Cash transactions and Cash investments. Payment transactions to suit you The solution should meet the need, not the other way around particularly for payments. That is why we offer a range of formbased and electronic options for transfer orders. Our electronic systems are distinguished by their high level of reliability, user-friendliness and the inclusion of 500 transactions a month free of charge. Payments in the eurozone International payments are one of our strengths. We offer a range of solutions some exclusive to make processing your eurozone payments as quick, easy and cost-effective as your payments at home: UBS EUR Gateway Account to pool all your euro holdings in one place SEPA (Single Euro Payments Area) solutions, to make transfers in euros as convienient as domestic payments Credit cards Do you want to simplify your expenses management, travel management and procurement processes? We can provide you and your employees with a way to charge all these costs to a single card. It is simple, secure and flexible. We offer a number of tailored card services to meet the various needs of your company. Professional advice Our payment and cash management specialists will be happy to advise you and help put together a package of solutions to suit your needs. Cash Management We offer solutions for your needs based on the UBS current account. As a UBS client, you benefit from the following advantages: Cash-Overview Real-time overview of all balances and movements on UBS accounts An overview of all your accounts with banks worldwide Efficient, paperless, electronic archiving of your banking records by document category Cash transactions Incoming payments from home and abroad credited immediately, hence no loss of value Attractive cut-off times for payment orders, with no express payment surcharge or additional payment delays Direct collection of sales in euros in Switzerland at EU terms and conditions Attractive exchange rates for payments abroad Cash investments Our specialist investment advisors are on hand to advise you on every aspect of investment solutions in the short, medium or long term. System integration We provide you with the services you prefer using a variety of systems. Whether you prefer the UBS e-banking rather use a direct interface between your systems and UBS KeyDirect, the choice is yours. Find out more ubs.com/cashmanagement Factsheets Payments abroad 15

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17 Knowing what to do UBS has offices in all the major world markets. With us, you have a strong partner you can count on for outstanding know-how and expertise. Before you can make sound decisions about your business activities abroad, you need to have all the relevant facts at your disposal. No one can know everything. So it is essential to have a strong partner at your side, who can provide you with comprehensive, accurate and essential intelligence and recommendations. Skills and competence We are represented by branch offices in over 50 countries and all the world s major financial centers. As an integrated firm, we create added value for our clients by drawing on the resources and know-how of all our business units. Our global expertise is based on two core factors. First, we have the capacity, infrastructure and global networks to support our clients throughout the world. Second, we employ highly qualified staff with in-depth knowledge and experience in the broadest range of markets and transactions. You will also benefit from our long-standing, excellent relationships with official bodies, and our various cooperation agreements. UBS is the certifying bank for the trade promotion programs of EBRD 5, IFC 6 and ADB 7, which expand the opportunities for risk coverage. We also have a solid relationship with SERV and other export risk insurance companies. Swiss Desks abroad for corporate clients We offer two specialized service teams to assist foreign subsidiaries of our Swiss corporate clients: The New York team serves companies in the USA and Canada, as well as countries in Central and South America on request The Hong Kong team serves companies in Singapore, India, Japan and Australia, as well as countries such as South Korea, Taiwan and China on request This permanent, local presence allows us to develop a profound understanding of the specific needs and issues in each market. Current and comprehensive intelligence With a global network of specialized analysts, the UBS Wealth Management Research team is your leading partner. We offer you in-depth research reports and forecasts on the economy, interest rates, currencies and markets around the world. Our globally integrated teams of analysts and strategists in Europe, the Americas and Asia monitor financial markets and systematically evaluate the information sourced. We offer companies a range of additional periodic intelligence reports on the economy, business sectors and other market-relevant data, as well as in-depth reports on topics such as countries or commodities. UBS Quotes offers you comprehensive financial information on the world s major trading centers, and online news of what s currently happening on the markets. International network Our broad network of more than 3,000 correspondent banks allows us to offer Swiss companies more flexibility in their international operations. We also have more than 900 active trade financing relationships with banks. Our global coverage and support is underpinned by relationship managers based locally in cities such as Shanghai, Beijing, Hong Kong, Singapore, Mumbai, São Paulo, New York and Moscow, ensuring the rapid and smooth execution of your transactions. 5 EBRD = European Bank for Reconstruction and Development 6 IFC = International Finance Corporation (the World Bank) 7 ADB = Asian Development Bank Find out more ubs.com/sme-international ubs.com/quotes ubs.com/outlook 17

18 Find out more This brochure has given you an initial overview of UBS s services for foreign trade. For more details, please ask for our various other publications. This brochure offers you an overview of all the issues related to international trade. We also provide information on our internet site, as well as detailed product brochures, factsheets, checklists and research reports. As a client with a UBS e-banking account you also have access to the exclusive UBS Wealth Management Research online portal. It contains current analyses and forecasts for interest rates, currencies, economic data, equities, commodities, real estate and much more. Brochures, factsheets and weblinks Foreign Exchange ubs.com/sme-currency-risks Factsheets: FX Tools & Services Brochure: Foreign Currencies Trade & Export Finance ubs.com/tef Brochure: Trade & Export Finance Brochure: Bank Guarantees Brochure: Documentary Credits and Collections Brochure: Export Finance Cash Management/Payment Transactions ubs.com/cashmanagement Factsheets: Cash Management Factsheet: Payments abroad Factsheet: UBS EUR Gateway Account Factsheet: UBS Current Account (foreign currency account) Business and corporate clients ubs.com/sme Brochure: Companies Brochure: SME Support at UBS Factsheet: Swiss Corporate Clients Desk North America and Asia Pacific Leasing ubs.com/leasing Brochure: Leasing For all your questions ubs.com/sme-international UBS Client Management Corporations Economic Research ubs.com/sme-international ubs.com/quotes ubs.com/outlook UBS research focus: thematic publications on economic, demographic and geopolitical trends UBS outlook: Analysis of the Swiss economy, quarterly Focus on industry and management topics and elective relevant issues 18

19 This publication is intended for information only and is not intended as a recommendation, an offer or a solicitation of an offer. Before making a decision, you should obtain relevant professional advice. Please note that UBS reserves the right to alter its services, products or prices at any time without prior notice. Certain products and services are subject to legal restrictions and cannot be offered worldwide on an unrestricted basis. Reproduction in whole or part is prohibited without prior permission from UBS. UBS Switzerland AG P.O. Box 8098 Zurich a b UBS The key symbol and UBS are among the registered and unregistered trademarks of UBS. All rights reserved. Published in German, French, and Italian. July E