Bankia International Confirming

Bankia International Confirming

Index 01 Definition 02 Actors involved 03 How it works 04 Steps 05 Scope 06 Advantages for suppliers 07 Advantages for our customers 08 Costs for suppliers 09 O.I.E. Procedures (Oficina Internet Empresas) 10 Internal Procedure

01 Definition Deferred Payment Management + Advanced or Payment Undertaking Bankia International Confirming is a service and financial product through which Bankia manages deferred payments in favour of its customer s foreign suppliers and simultaneously offers these suppliers (beneficiaries of such deferred payments) the proceeds prior to maturity on a non recourse basis (Advanced Payment) or a undertaking of payment at maturity (Undertaking of Payment).

02 Actors involved Our Client Import company that maintains regular trade relations with foreign suppliers. We can also name him as Debtor, Importer or Buyer. Its Supplier Foreign company entitled to arising credits resulting from the supply of goods or the provision of a service for the said company. We can also name him as Creditor, Exporter or Seller

1. Commercial Agreement: Goods/Services Delivery International Confirming 03 How it works Our Client 2. Irrevocable order for deferred payments at due date 6. Execution of payment orders on due date 3. Confirming Offer Supplier 4. Acceptance: a) advance payment / b) undertaking of payment 5.a) Advanced payment at discount (ints & coms) without recourse 5.b) Undertaking of payment at maturity 7.b) Final payment on due date less commisions

04 Steps 1. Commercial agreement signed between the Importer and the Exporter 2. Bankia receives from the Importer through our I.O.S. ( Internet Office Service ) irrevocable orders to proceed to the payment of a number of invoices (which has previously given compliance) for a particular supplier, communicating the established deadlines on the basis of trade agreements between the parties (1) (typically deferred payments at 60/90/120 up to a maximum of 360 days). 3. Bankia notifies the Supplier to have received the mandate of payment and informs about the amounts and due dates of invoices subject to irrevocable order of payment. Such notification is not, in itself, a guarantee of payment from Bankia unless the Supplier accepts any of the Confirming options offered. Bankia offers the Supplier: a) an opportunity to discount without recourse the payments represented by a list of invoices, under certain conditions (interest + commissions), without having to wait for the deadline to receive payments, or b) to receive the guarantee of payment at maturity by means of an irrevocable and unconditional undertaking of payment by Bankia in favour of the Supplier assuming the relevant fees.

04 Steps 4. If Supplier confirms its interest to discount without recourse (a) or to receive the payment undertaking (b), Bankia sends confirmation of their mandate with the detail of the conditions applied depending on the option selected. If Supplier does not accept any of the offers within the validity period, payment will be made at maturity and Bankia only acts as payment agent without any other responsibility. 5.Upon reception of the Supplier s acceptance, Bankia will issue: a) an immediate advance payment at discount (interests + commissions) on a nonrecourse basis b) payment undertaking at maturity date. 6. On due date, Bankia will execute the original payment order debiting the account of our client. 7. In case of payment udertaking (b) Bankia will issue the payment order for the original face amount minus our commissions.

05 Scope International Confirming Is based in deferred payment of supplies relating to revolving trade flows between exporters and Bankia's customers acting as importers. Its procedure is particularly suitable for recurrent flows and continuing trade relations. Substitutes more expensive and complex means of payment. Is specially applicable before restrictions resulting from a strict exporters policy with regard to conditions of sale vs credit risk granted to buyers (payment undertaking). Gives an answer to situations where Bankia can help to develop a relationship of trust between the parties, acting as a good faith guarantor of buyers. Offers support for a solid business relationship by means of tailor-made financial solutions

06 Advantages for suppliers Through International Confirming, the Supplier ELIMINATES the credit risk MAKES CASH from deferred credits IMPROVES its financial position CONTRIBUTES to IMPROVE its rating REDUCES the use of its own credit lines with banks. INCREASES its sales capacity REPLACES more expensive means of payment from both financial and administrative points of view International Confirming

07 Advantages for our customers Through International Confirming, our Clients IMPROVE their creditworthiness before international suppliers. REDUCE costs by replacing more expensive and complex means of payment KEEP working capital financing with costs borne by the supplier IMPROVE their negotiating position ENSURE good suppliers regardless of their financial position OBTAIN priority in the supply of goods HAVE THE OPORTUNITY to negotiate better prices and delivery terms for cash or guaranteed payments International Confirming

08 Costs for suppliers Costs for Suppliers Discount without recourse: Management fee (% flat) over invoice amount Rate: EURIBOR/LIBOR + spread Payment undertaking: Management fee (% flat) over invoice amount Risk fee (% per anum), calculated as the number of days elapsed between the acceptance of the undertaking of payment and maturity date International Confirming

09 OIE Procedures This product is implemented through our website service: OIE (Oficina Internet Empresas) Our client has to contract the services of our self-service website for corporate clients, OIE, through which he will be able to include, and send to Bankia, invoices to be discounted, either one by one or through adhoc files. In order to be able to send files, our client needs to subscribe the General Unit Option of Bankia Intenet Office Service Txt. Files are included and sent to Bankia. These files are created by incorporating invoices in OIE one by one or by importing a file created ad-hoc, following the lay-out provided by Bankia

09 OIE Procedures Invoices can be registered one by one to create the file to be sent

09 OIE Procedures Details of invoices are incorporated in this screen

09 OIE Procedures Once the invoices are selected, the confirming file is generated

09 OIE Procedures The client s debit account must be selected

10 Internal Procedures Once the file has been issued: 1. The supplier will receive an e-mail with Bankia s Confirming proposal from the following address: confirminginternacional@bankia.com 2. This proposal will be valid for a period of 15 calendar days 3. Suppliers have to reply to the same address selecting the option they prefer, and will receive a confirmation letter from Bankia 4. At this moment: In case of selecting the Advanced Payment, will transfer the funds to the Supplier s account (Invocie s face value less interests less fees) In case of selecting the Undertaking of Payment, Bankia will sent the payment undertaking to the Supplier. 5. In case the Supplier does not accept the offer or fails to answer in the established period, Bankia will operate as a simple payment agent at the invoice s maturity date

10 Internal Procedures At invocies maturity: If they have been discounted, the amount financed will be charged on our client s account If they have been guaranteed, the funds will be transfered to the supplier (face value less fees) If Supplier has not selected any of the above options, Bankia will act as payment agent.

This document has been prepared by Bankia, S.A. ( Bankia ) for information purposes only and does not constitute a commitment for Bankia Bankia does not guarantee the accurancy or completeness of the information contained in this document. Distribution of this document in other jurisdictions may be prohibited. This document does not presuppose a contractual offer in any way, as it is exclusively for information purposes. The information contained in this notice may not be considered definitive. Bankia reserves the right to update, modify or eliminate any elements at its own discretion. The definitive conditions of the product shall be regulated in the corresponding contract, signed between Bankia and the customer, if s/he ultimately decides to enter into the agreement.