The Banking and Corporate Finance Training Specialist

International Trade Finance

A 4-Day Masterclass

This course is presented in London on:

26-29 September, 6-9 February 2017, 20-23 November 2017

Course Overview

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.

Course Content

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

Course Content

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 Market Historical evolution and current developments in the market place

Trade Finance versus ‘balance sheet lending’ Understanding and controlling the cash flow Typical users of Trade Finance products and services

Risk – The Critical Issues Understanding, identifying and managing 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

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 below)

Risks and opportunities Control possibilities

Course Content

Supply Chain Management & Finance

The origins of SCM Understanding the issues in SCM – “the tug of war” between supplier & buyer

Identifying Market Opportunities Bringing about a “balance” between parties for effective processing Understanding about movement of ‘information’ ,’goods’ and ‘cash’

Supply Chain Finance – not just a new opportunity but an essential element for sustainable business

Main SCF models: accounts payable - centric, accounts receivable – centric, other models (four corner model of BPO)

Review the risk aspects of SCF

Letters of Credit (L/Cs) - Advanced Mechanisms

The mechanics and use of: Revolving L/Cs

Transferable L/Cs Back to Back L/C structures

Pre-Export Finance The effective use of red and green clause letters of credit

Packing and manufacturing credits

Post-Export Finance Negotiation under letters of credit

Discounting of deferred payment L/C, acceptance credits (with or without recourse)

Export Finance issues Looking at the big picture

Understanding the purpose of borrowing Country risk issues

The reality of title and control

Controlling Credit Exposure – Formulating a Limit Understanding and explaining the trade cycle

The use of time lines Assessing and appreciating funding gaps

Structured Trade Finance Situations (apart from Case Studies) Analysis of 2-3 examples based on above situations

Structuring Finance for the Trader

Facility Management:

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

Course Content

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)

Different types - Bid, Performance, Advance payment and Retention bonds Rules governing guarantees and bonds

Legal jurisdiction and expiry date issues Value of using URDG 758 – ICC Rules for demand guarantees Opportunity spotting

Standby L/C’s (SBLCs) Understanding the applicability of ISP98 and UCP 600 for standbys

Receivables Financing

Mechanics of Factoring and Invoice Discounting Forfaiting – an important adjunct to the TF mechanism

Role of Credit Insurance Mechanics of Securitisation Nightmare scenarios

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 Impact of quasi-governmental agencies

Risk/reward analysis

Course Content

http://redcliffetraining.co.uk enquiries@redcliffetraining.co.uk

+44 (0)20 7387 4484

Structured Trade Finance Situations (apart from Case Studies) Analysis of 2-3 examples based on above situations

Course Conclusion and Review / Feedback

9:30-17:00

London

£2,150+VAT (£2,580)

Discounts available for multiple participants:

3-4 participants: 15% discount per participant 5-6 participants: 20% discount per participant

7-8 participants: 25% discount per participant 9 or more participants: 30% discount per participant

Delivering this course in-house for you to a number of participants could be very cost effective.