Bullion Banking in the New World Bullion Banking in the New World OrderOrder

Presented by:

Ajay Mathur

24th April 2006

ContentsContents

1. Changing Business Dynamics.2. Bullion Banking.3. KYC / Due Diligence.4. Sharing of info./Transparency.5. Ask Questions.6. Demand Explanation.7. Be more involved in your business.8. Take New Initiatives.9. Concluding Remarks.

Changing Business Changing Business DynamicsDynamics

• The world order is changing .• It means business dynamics are changing

- to accommodate newer ideas.• This entails changes in the way we do

business.• Since changes are frequent, we need to

be adaptable.

Bullion BankingBullion Banking• Bullion Banking

commenced in 1980s.• It has now expanded its

scope:– Traditional financing of

mining projects– Financing of Metal

Inventory– Trading Positions– Exchange Traded Funds– In-process Manufacturing– Bridge Financing for many

Industries

KYC / Due DiligenceKYC / Due Diligence

• Days of secrecy are over.• KYC is not just a form-filling

exercise.• We need to understand your

business in much greater detail.

• Group connections, ultimate beneficial owners, size/frequency of transactions.

• Do you comply with regulations?

• How do you handle large transactions?

Sharing of Sharing of Information/ Information/ Transparency Transparency

• It enhances your credibility in the eyes of your suppliers and customers.

• Prepare business plans/ projections & share them with your bank

• For e.g. tell banks how a $50/oz rise in gold price overnight would affect your business and how will you deal with it.

• Treat this as an investment.

Sharing of Information / Sharing of Information / TransparencyTransparency

• Audited Financial Statements– Do stocks include gold

borrowed against Guarantees? If not, are details part of notes?

– Are stocks commensurate with your borrowings?

– Have gold loans been used for gold purchases only?

– Are borrowing & security details provided in notes?

Ask QuestionsAsk Questions• Why is a bank asking for

information?• Why should you comply with

that?• Why is a facility structured in a

particular way? For e.g. should you opt for a Trust Receipt facility on Gold or a S.T.Gold Loan?

• Why are you signing a particular document? What purpose does it serve?

Demand ExplanationDemand Explanation

• All terms and conditions in writing, including the facility size and pricing.

• Pricing should be specific such as “Base Rate/LIBOR + %” so that you know what can change it and how often.

Be more involved in your Be more involved in your BusinessBusiness

• Banks learn from their customers.

• Banks want their customers to perform well.

• Think of newer ways of doing business and tell your bank about it.

• Your old style has been successful. It may not, however, ensure success in future.

• Invest your time and money on your future.

Take New InitiativesTake New Initiatives

• Support industry initiatives such as DMCC, GJG, WGC etc. as they are aimed at benefiting you.

• Be a catalyst to change.• Think positively and provide constructive

criticism.• Be futuristic and deal with steady partners

(suppliers / FIs / banks) who can help you achieve your goals.

Concluding RemarksConcluding Remarks

• Past success is no guarantee for future success….

• …unless you change with the times.

Thank You.Thank You.