International Trade Finance A 4-Day Masterclass This course is presented in London on: 12-15 November 2018 The Banking and Corporate Finance Training Specialist
Course Objectives Participants on the 2-day course will learn how to identify customer needs and recommend appropriate product solutions, as well as assess various risks to both bank and customer in international trade transactions. They will also gain an ability to explain and identify ways of mitigating the underlying risks associated with trade finance transactions and carry out the processes involved in documentary collections, documentary letters of credit and contract guarantees. The programme Course Overview will also address the purpose and application of the various International Chamber of Commerce rules and practices as used in international trade, identify customer needs for finance of exports/imports and explain the features and benefits of each method. The course is highly interactive and centres around the use of a variety of case studies, many of which are based upon actual files and ICC Opinions. Explore the current market place including Brexit, Trump and the traditional bands of clients Learn about financial crime compliance & sanctions Understand the risk based approach and the impact on trade finance Get to grips with DDD, FATF, TI, CPI and their impact Understand and identify the traditional risks Review the key products and how the customer analyses his risk Master an understanding within the supply chain management and finance Learn about the traditional letters of credit and the four contract concept Explore the standby letters of credit and their history & origin Learn about exporting finance issues and controlling credit exposure Explore the effective use of collections for short-term finance Get to grips with the international demand and contact guaratees/bonds Learn about the commodity sector and its players Background of the trainers Days 1 & 2 The trainer worked for 34 years in a large UK Commercial Bank during which time he gained extensive experience in the management and processing of foreign trade transactions on behalf of corporate customers. He was also responsible for managing the training provided to all International Trade Services staff working in the UK branch network. He has trained bankers, lawyers and corporates in South America, Asia, Africa, the Middle East and throughout Central and Eastern Europe. Days 3 & 4 Your course director has spent more than 40 years in the banking and financial sector, much of it in a senior managerial/director role. He is a former Institute of Banking Lecturer, having gained distinctions in the exams. He is a subject matter aspect on all aspects of retail, corporate and global banking, including risk management and regulatory compliance. He has lectured extensively to both leading global financial institutions and to smaller bespoke specialists. He has delivered extensive programmes in all parts of the world including the USA, Europe, MENA, Africa and Hong Kong. He is currently an accredited Master Trainer at the world s biggest global bank.
Course Overview On days one, two and three, Participants will learn how to identify customer needs and recommend appropriate product solutions, as well as assess various risks to both bank and customer in international trade transactions. They will also gain an ability to explain and identify ways of mitigating the underlying risks associated with trade finance transactions and carry out the processes involved in documentary collections, documentary letters of credit and contract guarantees. The course will also address the purpose and application of the various International Chamber of Commerce rules and practices as used in international trade, identify customer needs for finance of exports/imports and explain the features and benefits of each method On the last two days the course is advanced and will provide delegates who are already familiar with or are working in a trade finance environment, with an insight into the more complex trade finance techniques that are becoming more common. International Trade has always been the engine for global economic growth and is playing an ever important role, as new powerful economies emerge, shifting the balance of trade influence from the traditional wealth creators to new regions and economies. This advanced course will provide delegates who are already familiar with or are working in a trade finance environment, with an insight into the more complex trade finance techniques that are becoming more common. Much of complex International Trade is either misunderstood or undervalued mainly because the terminology and practices seem difficult and confusing to master. This course will completely de-bunk this misconception and will leave delegates with a clear and working knowledge of how trade is undertaken at its most complex level. It will show what actually happens and just how profitable this section of a bank s business can be. It will also suggest methods of handling problems when things go wrong. At the end, all delegates will have a clear and full understanding of exactly how complex trade takes place across the globe at an advanced level. A good working knowledge and familiarity with International Trade finance is required to derive the maximum benefit from this course. Course Content Role of Banks in International Trade Incoterms 2010 and Methods of Settlement General Risk Considerations Know Your Customer Correspondent Banking Risk Counterparty Risk The advantages/disadvantages to Importer/Exporter in the use of Incoterms 2010 and in the main methods of settlement. Case Study: Short exercise to check understanding of Incoterms application. Key characteristics of Commercial Documents used in international trade Invoices (commercial, tax, customs, consular, pro-forma invoice) Marine/Ocean Bills of Lading
Title, transfer Control over goods (transferable B/L v. straight consigneed) Delivery of goods Multimodal Transport Document Air Transport Document Road, Rail or Inland Waterway Transport Documents Insurance Policy/Certificate Certificate of Origin (main types, GSP form A) Certificate of Inspection This session is run using a full set of commercial documents which enables the participant to understand the technical content, the linkage between each document and importance of each document as used in the sale and movement of goods internationally. Export/Import Documentary Collections Relationship between Principal and Remitting Banker Relationship between Correspondent Banks (agency arrangements) Legal and practical issues regarding the duties of the banks involved in handling collection (remitting bank, collecting bank, presenting bank) Conditions for release of documents Difficult areas of risk: Partial payments Avalising Consignment of goods to banks Release of goods on trust Procedures for Protest of B/E and underlying risks Complexities of the Uniform Rules for Collection ICC 522 Case Study: Several practical case studies which checks understanding of the collections procedure and the practical application of the URC 522. Documentary Letters of Credit Introduction Banker/Customer Relationship Risk factors when issuing letters of credit The autonomy of letter of credit operations (Independence Principle) Contract between Applicant and Issuing bank - reducing risk Case Study: Group Q & A on Bank Considerations when requested to issue Letter of Credit on behalf of corporate clients. Instructions to issue/amend credits The importance of the application form (legal issues) Workability of the credit Case Study: Involves checking customer Application and formal issue of the Letter of Credit Introduction to the International Chamber of Commerce UCP 600 Rules: Structure and obligations under documentary credits; Availability of credits: Expiry date and place for presentation Availability by payment, deferred payment, acceptance, deferred payment standard for examination of documents; dealing with discrepant documents, waiver and notice of refusal;
Case Study: Questionnaire which ensures familiarisation and understanding the varied Articles within UCP 600 Examination of documents Key elements of the main articles of UCP 600 The standard for examination of documents: no conflict rule article 14 Processing non-compliant documents as Nominated/Confirming Bank Processing non-compliant documents as Issuing Bank Risks arising from non-adherence to UCP 600 Legal cases and ICC Banking Commission opinions DOCDEX dispute settlement mechanism of ICC for trade finance Analysing irregularities in documents Case study: Examination of documents presented under an LC. Analysing problem scenarios affecting payment and rejection of documents, including legal considerations, ICC opinions and dispute resolution International Standard Banking Practice ISBP 745 (2013 Rev) What constitutes an alteration or addition to a document, when and how should these be authenticated? How should documents be signed, if this is not explicitly stated in the credit? How should one handle typing errors on documents regarding the name and address, different addresses of same company, etc.? Instructions to advise and confirm credits Obligations and Risks associated with the Advising Bank, Nominated Bank, Confirming Bank The use of the Bill of Exchange in Letters of Credit Application of the Uniform Rules for Bank-to-Bank Reimbursement ICC 725 Rationale Concerns Familiarisation of articles, including: types, parties, issuance, documents and presentation Assignment of Proceeds Case Study: Read through various official bank documents relating to the above issues and discuss best practice and compatibility with local laws and practice Specialised Letters or Credit Case Study: Participants work in groups and analyse various customer need scenarios in order to provide the most appropriate and practical solutions. Transferable: procedure, risks, UCP 600 article 38 in detail Back-to-Back: procedure, risks Red Clause and Green Clause Credits Revolving & Reinstatement Credits Standby Letters of Credit: the purpose and procedure Guarantees
Two main categories: Types of guarantees: Tender/bid bonds Advance payment guarantees Performance bonds Retention money guarantees Warranty Guarantees (Maintenance guarantees) Bail bonds Payment guarantees Indemnities/counter guarantees Risk Assessment Wording of Guarantees Demand under guarantees: issues Extend or Pay demands Expiry and Cancellation Uniform Rules for Demand Guarantees 758: main principles, URDG 758 guarantee sample wording, sample clauses Case Study: Analyse and comment on guarantees which caused a loss to the bank. Discuss the practical application of URDG 758 and potential for use in local banking practice and legal jurisdictions. Examine the wording of a range of guarantees issued by banks abroad. The Current Market Place Recent evolution and current developments The challenge of emerging markets The challenge of China Brexit President Trump New products The traditional three bands of clients: Global and Large Corporate, MME s, the rest! Understanding trade finance at a fundamental level. Typical users of Trade Finance products and services Financial Crime Compliance & Sanctions Understanding the risk based approach Impact on Trade Finance TI, CPI and its impact FATF DDD and the need to obtain a clear line of sight across the value chain Money laundering methodologies Ghost payments and variations Under/over invoicing and variations Documentary fraud PEPS Sanctions Risk mitigation, management and transfer Case Study: Delegates will be asked to consider a real case to identify FCC risks and suggest how they may have been managed and mitigated Traditional Risks The Critical Issues Understanding, identifying and managing risk Credit risk, Market risk & Operational risk
Sovereign, Political / Country risk Institutional risk / Bank risk Corporate and other critical risks Importer and Exporter s risk Other risks in the transaction and how to mitigate them (transport risk, warehousing, force majeure, etc.) Risk mitigation, management and transfer Case Study: An example using three different payment methods. Delegates will be asked to identify and explain what type of client would choose one in preference to the other two and why, to illustrate risks in reality. Review of Key Products How does the customer analyse his risk? Which products does he use and why? Payment in Advance Open Account Collections Outward & Inward / Clean & Documentary Letters of Credit (covered in more detail below) Risks and opportunities Control possibilities Case Study: Showing how clients sometimes see the world of risk in a different way to bankers. Supply Chain Management & Finance The origins of SCM and what does it mean in practice Understanding the issues in SCM the tug of war between supplier & buyer Bringing about a balance between parties for effective processing Understanding about movement of information, goods and cash Supply Chain Finance Main SCF models: accounts payable - centric, accounts receivable, BPO Review the risk aspects of SCF Case Study: Showing how Reverse Factoring works and how both Buyer Centric and Seller Centric models are being employed. Letters of Credit (L/Cs) Traditional L/C s The four contract concept Confirmations Red Clause Green clause Revolving L/Cs Evergreen Transferable L/Cs Back to Back L/C structures Case Study: Showing how different types of LC s are used, why this is the case and what difference it makes to the risk profile. Standby Letters of Credit History and origin The dominant trade finance product Uses
Risk management Issue and assessment Pricing Understanding the applicability of ISP98 and UCP 600 for standbys Fraud and unfair calling Export Finance issues Looking at the big picture Understanding the purpose of borrowing Country risk issues The reality of title and control Negotiation under letters of credit Discounting of deferred payment L/C, acceptance credits (with or without recourse) Controlling Credit Exposure Formulating a Limit Understanding and explaining the trade cycle The use of time lines Assessing and appreciating funding gaps Structuring Finance for the Trader Analysing the trade flows Assessing facility size and structure Specific lending with identifiable maturity dates Appreciating and controlling sources of repayment Effective Use of Collections for Short-Term Finance Using collections as financing opportunities Identifying and mitigating risks Maintaining control Supporting the Trader Using the goods as collateral Assessing the value of goods The value of pledges and trust receipts The need for structured lending Warehousing of Goods Warehouse location Management assessment Legal frameworks Obtaining and retaining title and control Risks and responsibilities of Collateral Managers Cost versus control International Demand and Contract Guarantees / Bonds Scope and Application an introduction (suretyship v. demand guarantee) Indemnities versus guarantees Different types - Bid, Performance, Advance payment, Warranty and Retention bonds Rules governing guarantees and bonds
Legal jurisdiction and expiry date issues Value of using URDG 758 ICC Rules for demand guarantees Impact of non-bank competitors COFACE, Euler Hermes Receivables Financing Mechanics of Factoring and Invoice Discounting Forfaiting an important adjunct to the TF mechanism Role of Credit Insurance Mechanics of Securitisation FCC risks The Commodity Sector and its Players History and origins of the commodity industry Understanding the nature of commodities Analysing the players growers / producers; traders and end-users Financing of commodities Looking beyond the balance sheet Available documentation taking and retaining title Commodity futures, options and derivatives Hedging a critical process in commodity finance Role and function of the exchanges Main risks in the commodity trade (market, fraudulent practices, legal issues, recent legal cases) Countertrade Overview when to use Pitfalls and complications Possible structures and Time management Syndications When to syndicate Lead or participant role The completion from capital markets high yield bonds Selling down exposure Impact of quasi-governmental agencies Risk/reward analysis Course Conclusion and Review / Feedback Delivering this course in-house for you to a number of participants could be very cost effective. 9:30-17:00 London Standard Price: 1,995 + VAT Membership Price: 1,596 + VAT