EBRD Trade Facilitation Programme - Development of Trade Finance in Morocco

Kamola Makhmudova, Senior Banker, TFP

November 2018

Where we are

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What is the EBRD?

Shareholding structure

(1) Includes European Community and European Investment Bank (EIB) each at 3%.

Among other EU countries: France, Germany, Italy, and the UK each holds 8.6%

The EBRD is investing in changing people’s

lives and environments in more than 30

countries that stretch from central Europe to

Central Asia, the Western Balkans and the

southern and eastern Mediterranean and more

recently Cyprus and Greece.

With an emphasis on working together with the

private sector, we invest in projects, engage in

policy dialogue and provide technical advice

that fosters innovation and builds sustainable

and open-market economies.

Owned by 65 countries and two

inter-governmental institutions

(the EU and EIB)

Capital base of €30 billion

Highest credit rating (AAA/Aaa) from all three

main rating agencies (S&P, Moody’s and Fitch)

EU 28 Countries (1)

63% EBRD region excluding EU

7%

Others 11%

USA 10%

Japan 9%

EBRD Trade Facilitation Programme

(TFP)

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• Support and develop trade, both inter- and intra-regional

• Help local banks create track records with foreign banks

• Provide liquidity to the trade finance system

• Strengthen EBRD relationships with local banks, develop opportunities for

further operations

• Institutional development is a key goal

TFP – Strategy

Strong focus on:

• Small- and medium-sized private banks in the CIS and south-east Europe

• Early Transition Countries

• Southern and eastern Mediterranean (Greece, Cyprus, Egypt, Jordan, Morocco and

Tunisia). New: Lebanon and the West Bank and Gaza

• Intra-regional trade (= trade between the EBRD’s countries of operations)

• SMEs

• Co-financing with commercial banks

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TFP - Achievements 1999-2017

• More than 21,600 foreign trade transactions

• Total business volume EUR 15 billion

• 95 Issuing Banks in 27 countries

• Over 800 Confirming Banks worldwide

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EBRD Trade Facilitation Programme

Annual Business Volumes 1999 – 2017

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TFP – 1, 905 Transactions in 2017 Ranking No of Transactions by Country

1. Greece

2. Serbia

3. Ukraine

4. Cyprus

5. Belarus

6. Armenia

7. Georgia

8. Morocco

9. Turkey

10. Egypt

11. Mongolia

12. FYR Macedonia

13. Romania

14. Kyrgyz Republic

15. Bulgaria

16. Jordan

17. Moldova

18. Croatia

19. Tajikistan

20. Azerbaijan

21. Kosovo

22. Montenegro

23. Bosnia and Herzegovina

24. Tunisia

25. Turkmenistan

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TFP Application Area

Facilitates financing of all stages of the trade chain

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EBRD Trade Facilitation Programme (TFP) –

How does it work?

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EBRD supports trade by providing:

• guarantees that cover risks arising from trade finance

transactions

• short-term advances/financing to banks in the Countries of

Operation for trade finance purposes

• trade finance training and advisory service to local banks

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Trade Facilitation Programme (EUR 1.5 bln framework)

Trade Finance

Guarantee

Facility

(fully operational

since 1999)

Trade Finance Cash

Facility -

Revolving Credit

Agreement (RCA)

(launched in 2000)

EBRD TFP Facilities

Two Main Components

TFP: Structure and Application

Confirming Bank,

Worldwide

Issuing Bank,

Country of

Operations

Buyer Seller

L/C Issuance with request to confirm

(L/G Issuance with counter-guarantee,

other banking trade finance

instruments)

Application for L/C opening L/C Confirmation

EBRD issues a Stand-By

Letter of Credit covering

the risks of Issuing Bank

towards the Confirming Bank

SALE-PURCHASE

AGREEMENTS

TFP – Guarantee Transaction (1)

• Always involves a local bank (“Issuing Bank”) which issues a trade

finance instrument (e.g. letter of credit) and a foreign bank which

confirms it to the beneficiary (“Confirming Bank”);

• Issued only to confirming bank, not to exporters or importers;

• The trade finance instrument (e.g. a letter of credit) ensures that the

beneficiary receives payment upon or after delivery.

TFP – Guarantee Transaction (2)

Covers all types of trade finance instruments:

• documentary letters of credit (LCs), including deferred payment/post-

financing;

• bank payment guarantees;

• trade related standby LCs from issuing banks;

• bid and performance bonds;

• advanced payment guarantees;

• trade-related promissory notes or bills of exchange.

EBRD Guarantee (a SBLC under UCP 600) is usually issued within 24

hours from application

TFP – Guarantee Transaction (3)

• Cover of exports, imports and distribution of imported goods in the

EBRD’s countries of operations, irrespective of the country of origin

(no origin rule)

• Tenor: 3 years maximum

• Amount: no minimum amount

• EBRD pays on the claim within 15 days

• EBRD Guarantee covers up to 100% of the face value of the

underlying trade finance instruments, covering payment, political

and currency risks;

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EBRD TFP Guarantees: Example

Import of steel to Morocco

1. A Moroccan importer buys

steel from an exporter in

Brazil

2. The Moroccan commercial

bank (TFP partner bank)

issues a Letter of Credit in

favour of Banco Santander,

Brazil

3. EBRD covers 100% of the

political and commercial

payment risk

TFP Benefits (1)

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For Issuing Banks and Customers

• Issuing Banks develop track record with Confirming Banks (strong evidence that Confirming Banks follow EBRD’s lead in establishing unsecured trade exposure limits to Issuing Banks)

• No cash collateral required from Issuing Banks, hence cheaper financing terms for exporters/importers

– Clients: more competitive exports and imports

– Issuing Banks: enhance competitiveness vis-à-vis other banks

– EBRD: reduce costs of transactions

– Additional Opportunity of flexible financing through RCA for pre-export and

post-import financing

• Assistance to Issuing Bank in structuring trade transactions through institutional building in form of technical assistance

TFP Benefits (2)

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For Confirming Banks &

Exporters

• Additional export business to EBRD

countries of operation in Central &

Eastern Europe CIS and SEMED

countries with mitigated risks

• Business development

• Possibility to offer favourable credit

terms to the customers, including

longer tenors and larger amounts

Trade Finance Cash Facility

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Local Company

Local Bank (EBRD’s borrower)

•Takes local company risk

•Borrows from EBRD

•On-lends to the local company

EBRD

Takes local bank risk and lends to the

local bank against sub-borrower base

Repayment to EBRD EBRD’s disbursement

loan repayment loan disbursement

TFP - Our partner banks in Morocco

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1. Banque Centrale Populaire S.A.

2. BMCE Bank of Africa

3. Credit du Maroc

4. Societe Generale Marocaine de

Banques

TFP Most Active Partner Bank in

Morocco in 2017

BMCE Bank won

award as of the Most

Active Partner Bank in

Morocco in 2017

EBRD – Capacity Building Projects

Face-to-Face

Learning

Self-paced

Learning

Online

collaborative

Learning

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EBRD Trade Finance e-Learning Programme

To date > 3,000 trade

professionals from 240

institutions in 36

countries enrolled

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EBRD TFP e-Learning Programme

List of Courses

• Introduction to Trade Finance

• Introduction to Factoring

• Collections

• Mentor 600

• DC Master

• ISP Master

• URDG Master

• Incoterms 2010

• Environmental and Social Issues in Trade

• Going Global

• Trade Based Financial Crime

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Target Audience

• Trade finance team

• Relationship managers

• Risk managers

• Legal team

• Operations team

• Other professionals interested in factoring

products

EBRD TFP e-Learning Programme

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Best students receive further scholarships and

sponsored training programmes in leading

European confirming banks and training

companies:

• Commerzbank

• ICC PARIS

• ICC Vienna

• ICC Academy

• ICC Austria

• Banca Popolare di Sondrio

• BHF-Bank, Germany

• BCR Publishing

• Coastline Solutions

• China Systems

• KBC Bank

EBRD TFP Trainings Courses

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In 2016 and 2017, EBRD TFP has delivered trade finance trainings to Banque

Centrale Populaire S.A. and BMCE Bank of Africa and their sub-Saharan

subsidiaries:

- Trade Finance workshop

- Documentary Credit workshop

- Case Studies

NEW TRAINING FRAMEWORK 2018 EBRD compliance training

I. E-Learning Courses

II. ICA certification and ICA membership

III. Individual advisory services for EBRD partner banks

IV. Workshops

Know your client? Kill your client?

OR

NEW TRAINING FRAMEWORK 2018

EBRD compliance training for trade finance 1/3

E-learning : Since 2010 EBRD offers wide range of

Trade Finance

E-learning programmes to partner banks. The

programme was developed with the co-operation of

International Chambers of Commerce (ICC).

NEW: Trade Based Financial Crime Compliance

training module covering GBP 795.00

1. Financial Crime Regulation

2. The Compliance Programme

3. Exercising Due Diligence

4. Indicators of Trade Based Financial Crimes

5. Combating Financial Crime

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NEW TRAINING FRAMEWORK 2018

EBRD compliance training 2/3

EBRD and International Compliance Association (ICA) to offer scholarships on Compliance

Certification Courses.

• ICA Certificate in KYC and CDD EUR 695.00

• ICA Specialist Certificate in Trade Based Money Laundering (TBML) EUR 695.00

• Target Audience

• Trade finance operations staff

• Trade finance relationship managers

• Trade finance risk managers

• Bank audit and compliance staff

• Bank management

• Lawyers working in compliance

• Further, the EBRD will support individuals to improve their existing knowledge still further

by proving them access to comprehensive CPD, news and information as well as the

global compliance community through professional membership of the International

Compliance Association.

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NEW TRAINING FRAMEWORK 2018

EBRD compliance training in Morocco

Compliance workshops held in Morocco in June 2018

• KYC/CDD and TBML workshops organised by EBRD, delivered by the consultant from

International Compliance Association and hosted by BMCE Bank of Africa.

NEW TRAINING FRAMEWORK 2018

EBRD compliance training in Morocco

Compliance workshops held in Morocco in September 2018

• KYC/CDD and TBML workshops organised and arranged jointly by EBRD and

International Compliance Association and hosted by Banque Centrale Populaire

(BCP).

• 50 attendees in total from BCP, Morocco and its sub-Saharian subsidiaries.

TFP and SWIFT’s KYC Registry

• The EBRD joined SWIFT’s KYC Registry in 2017

• The EBRD’s KYC information is available to all issuing and confirming

banks (via the usual request process)

• From the TFP’s issuing banks: 91 issuing banks from 27 countries have

already joined The KYC Registry

Our KYC information is now available on The KYC Registry

NEW TRAINING FRAMEWORK 2019

EBRD compliance initiatives 1/3

Customised Advisory Services

EBRD will offer individual correspondent banking advisory services to its partner

banks as part of the Compliance Advisory Services Framework.

• The goal of the programme is to help partner banks to optimise and standardize

KYC required documents and enhance their correspondent banking relationships

with EBRD TFP networking platform of over 800 Confirming Banks.

• The EBRD will help to design and implement new improved compliance functions

and processes in accordance with the international standards such as ISO

19600.

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Comprehensive two day training workshop

• Workshop will be launched for all partner banks active in trade finance and

respective regulators.

• The workshop will over the new Wolsberg Due Diligence Questionnaire (DDQ)

NEW TRAINING FRAMEWORK 2018

EBRD compliance initiatives 2/3

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Handbook / Manual for Correspondent Banks

• EBRD plans to work with the Bankers Association for Finance & Trade (BAFT) and

ICC to develop handbook/manual for correspondent banks to improve quality of the

Wolsberg DDQ in EBRD’s Countries of operation.

“Gold Standard” of Compliance

The ICC Banking Commission has also invited the EBRD to contribute to the

development of a compliance certification process and standard with reviews or

audits completed by approved and trusted third parties, and a clear articulation of a

“Gold Standard” of compliance.

The rule book will set out standards and procedures for banks in developing

countries how to become and remain an eligible correspondent bank for their

counter-part banks in industrialised countries.

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NEW TRAINING FRAMEWORK 2019

EBRD compliance initiatives 3/3

Contacts

11 December, 2018

Trade Facilitation Programme

European Bank for Reconstruction and Development

One Exchange Square, London EC2A 2JN, UK

E-mail: Group-TFPOps@ebrd.com

Web-site: www.ebrd.com/tfp

Kamola Makhmudova

Senior Banker

Tel: +44 20 7338 7731

E-mail: makhmudk@ebrd.com

Join us in social networks:

Twitter: www.twitter.com/ebrdtrade

Facebook: www.facebook.com/ebrdtfp

LinkedIn: www.linkedin.com/groups?gid=4667852

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Irina Tyan

Associate Banker

Tel: +44 20 7338 7124

E-mail: tyani@ebrd.com