Financing your Global Expansion

Glen Dooley(for Ruth Bender)

June 18, 2003

Scope

• Profile of An International Bank - WACHOVIA

• Understanding and Managing Risk

• Trade Finance/Letters of Credit

• Structured Trade Credit

• Asset-Based Finance

• Clean Credit

WACHOVIA CORPORATION - SUPERIOR MARKET SHARE AND A DISTRIBUTION POWERHOUSE

MANAGEMENT: G. Kennedy Thompson –Chairman, President and CEO

HEADQUARTERS: Charlotte, North Carolina

US RANKINGS: Largest deposit share on the East Coast, second largest U.S. share Second largest cash management provider Third largest branch network Fifth largest in assets Fifth largest brokerage firm based on registered representatives

TOTAL ASSETS: $342 billion

MARKET CAP: $ 49 billion

BRANCHES: 2800

ATMs: 4600

EMPLOYEES: Over 84,000

(As of 12/31/02)

WACHOVIA CORPORATION

As of 12/31/02

Citigroup $180.9Bank of America 104.4Wells Fargo 79.0Wachovia 49.4J.P. Morgan Chase 47.9Bank One 42.5U.S. Bancorp 40.6Fifth Third Bancorp 33.6FleetBoston Financial 25.5Bank of New York 17.4BB&T 17.4National City Corp 16.7SunTrust 16.0PNC Financial 11.9KeyCorp 10.6

Market Capitalization of BanksDollars in Billions

Citigroup

$1,097.1J.P. Morgan Chase

758.8Bank of America

660.4Wells Fargo

349.2Wachovia

341.8Bank One

277.3FleetBoston Financial

190.4U.S. Bancorp

180.0National City Corp

118.2SunTrust

117.3KeyCorp

85.2Fifth Third Bancorp

80.8BB&T

80.2Bank of New York

77.1PNC Financial

66.3

Asset Size of BanksDollars in Billions

Los Angeles

Mexico City

SantiagoBuenos Aires

Sao Paulo

MiamiCharlotte

PhiladelphiaNew York

London

Paris

Madrid

Johannesburg

MumbaiBangkok

Singapore

Jakarta

Kuala la Lumpur

Sydney

ManilaTaipei

Shanghai

Tokyo

SeoulBeijing

Hong KongDubaiCairo

IstanbulMilan

Hamburg

Bogota

International Processing Centers Offices Overseas Branches

Guayaquil

Washington, D.C.

Cebu

Global Government Banking

Guangzhou

Frankfurt

San Diego

Winston-Salem

Wachovia International Division

A Global Presence

Understanding and Managing Risk

• Risk Mitigation Begins With Identification and Measurement

- Credit Risk

- Liquidity Risk

- Market Risk

- Operational Risk

- Reputational Risk

- Settlement Risk

- Sovereign Risk

Understanding and Managing Risk……

• Correspondent Bank Infrastructure• Credit Appetite For Letter of Credit Confirmation• Deposit Products-USD & Foreign Currency• FX - Global Netting and Pooling• Economic Analysis (Wachovia Resources Available to You)

• Lending Services

wachovia.com/international

Jay Bryson provides

analysis on financial markets and

macroeconomic developments in foreign economies. Before joining Wachovia, Dr. Bryson was an economist in the Division of International Finance at the Federal Reserve Board in Washington, DC where he monitored and analyzed developments in the foreign exchange market.

Expert International Commentary

Subscribe via: Denise.LaMartina@wachovia.com

Trade Finance/Letters of Credit

• Methods of Payment/Credit Sales• The Trade Letter of Credit• Pre-export and Bankers Acceptance

Financing• A Body of Governing Laws and

Regulations• The World of E-Commerce

Comparison of Various Methods of Payment

Export Letter of CreditIssuing and Advising

Export Letters of CreditPresentation

Structured Trade Credit

GOVERNMENT PROGRAMS• Export Import Bank of the United States (“EX-IM

BANK”)• Overseas Private Investment Corporation (“OPIC”)• Commodity Credit Corporation (“CCC”)• Small Business Administration (“SBA”)• USAID - Developmental aid via grants, loans and project

support• U.S. Department of Commerce - Trade Advocacy Center• State Sponsored Trade Promotion Centers• Multilateral Agencies (World Bank, IMF, IFC, IDB, ADB,

EBRD)

U.S. EX-IM BANK

• Independent Agency of the U.S. Government• “Full Faith & Credit” of the U.S. Government• Promotes Exports of U.S. Goods & Services• Not an AID or Development Agency• Requires “Reasonable Assurance of Repayment” • Does not Compete with U.S. Banks

The Export Import Bank of the United States

EX-IM BANK PROGRAMS• Short Term Programs (Up to 360 Days) - Most U.S. exports are eligible

– Working Capital Guarantees: 90% guarantees to U.S. banks for export related financing facilities to U.S. exporters

– Export Credit Insurance: 90% risk protection provided to U.S. exporters on their foreign accounts receivables.

– Bank LC Insurance: 95% risk protection provided to banks on their LC confirmation risks.

• Medium/Long Term Programs (Up to 12 years) – U.S. capital goods/services– Project Finance: Larger projects supported by project cash flows & pre-established off-

takes (usually deals of $50 million +)– Direct Loans: Loans from Ex-Im to a foreign borrower, often government to

government (usually deals of $50 million +)– Guarantees: Guarantees to lenders on loans to buyers of U.S. goods– Medium Term Insurance: Risk protection to lenders (< $10 million)

OPIC

• Independent Agency of the U.S. Government (“Full Faith & Credit”)• Promotes U.S. Investments Overseas• Programs:

Direct Loans/Guarantees - financing the new plant and expansion of U.S. joint ventures or offshore projects with U.S. equity interestsPolitical Risk Insurance - coverage of offshore assets of U.S. investorsInvestment Funds - participation in investment funds focused on emerging marketsSME’s - increased focus on supporting small & medium sized U.S. companies expanding overseas including partnership with SBA and pilot program with Wachovia announced in 2002

Overseas Private Investment Corporation

OPIC Wachovia - SME Pilot Program

Program: $100mm Framework AgreementPurpose: To support overseas investments of U.S. small and medium businesses (sales up to $350 million)Borrower: Local Banks or Corporate Borrowers Projects: New plant or project development involving eligible U.S. investors in OPIC eligible CountriesTerm: Up to 10 yearsCoverage: For years 1-3: 50% (U.S. Obligor) 75% (Offshore*)

For years 3-5: 75% (U.S. Obligor) 90% (Offshore*)For years 5+: 90% (U.S. Obligor) 90% (Offshore*)*100% Currency Inconvertibility

Loan Size: $100,000 - $15,000,000Spread: Set deal by deal based on underlying project

Commodity Credit Corporation GSM(102/103) Programs

Program: U.S. Department of Agriculture Guarantee ProgramProducts: Bulk agricultural commodities exported from the U.S.Borrower: Local Banks approved by CCC in more than 40 countries around the world.Term: GSM-102 Program - LC refinancings to 3 years

GSM-103 Program - LC refinancings to 10 yearsCoverage: 98% of principal & partial interest protectionAverage Size: $250,000 - $25,000,000Benefits: Lower pricing and longer tenors than would otherwise be available in the private markets.

Export Credit Insurance

• Providers: Specialized insurance offered by Ex-Im & private insurers such as AIG, FCIA, EIC, Euler, Coface, NCM, Zurich

• Coverage: Comprehensive coverage for non-payment that is conditioned on insured performance (premium payment,

valid debt obligations, no product disputes, etc...)

• Uses: Risk Protection on short term foreign a/r’s against bankruptcy, refusal to pay, and/or country events

Financing/Liquidity Qualifying foreign a/r’s for commercial banking collateral Bank purchases of insured foreign a/r’s Securitization of larger pools of insured foreign a/r’s

Political Risk Insurance

• Providers: Specialized insurance offered by Ex-Im, OPIC, MIGA and private insurers such as AIG, Chubb, Sovereign, Zurich

• Coverage: Coverage against certain defined country risks such as war, insurrection, terrorism, nationalization, confiscation, currency inconvertibility

• Uses: - Protection of assets located in offshore markets - Risk mitigation component in a Project Finance

structure - Piercing “Sovereign Ceiling” in Intl. Securitizations

Trade Related Asset Sales

• LC Discounts: Post negotiation prepayment of LC of the obligations of confirming, accepting or issuing bank.

• Forfaiting: Purchase of promissory notes, drafts, debt instruments Often guaranteed (avaled) by a local bank.

Typically larger $ size & longer tenors ($1mm+/1 year+). Offered by international banks & forfaiting boutiques

• Factoring: Purchase of open account receivablesU.S./European debtors Typically smaller in $ size & shorter tenors Offered by specialized factoring companies (CIT, GE,)

Asset-Based Finance

• Secured Working Capital (inventory and accounts receivable) Credit

• Factoring• Fixed-Asset Finance and Leasing• Asset Securitizations

- Mortgages - Collateral Loan Obligations - Future Flow Transactions

Clean Credit

• Requires Well-Developed Commercial Laws, Detailed, Accurate and Timely Financial Reporting and Cash Flow-Oriented Lenders

• Typically Not Available in Emerging Markets• Unsecured Lenders Stand Last in the Queue for

Repayment• Personal Guarantees and the Pledging of Outside

Assets May be Required