February 2008

Treasury Solutions for Trade Finance

Partho H. Chakraborty, SAP India Pvt. Ltd. Solution Architect

February 2008 Introduction

There are a number of regulatory changes happening in Europe and in the US, requiring faster and more real-time payment processing

The banking payments market is going through stormy times

Competition is increasing, and is coming up with innovative payment offerings and new business models, while clients are asking for reduced costs and strict SLA compliance.

These trends are forcing specialization by means of global transaction banks and consolidation of execution by using out-sourcing, in-sourcing, and white labeling.

The need for single payment architecture arose from the fact that in many banks payments were always perceived as a necessary extension of a primarily lender-oriented client relationship.

Today, this has changed and many corporate clients are measuring their banks performance on its transaction capabilities.

Offering clients real-time and scheduled payments execution with advanced cash and liquidity management capabilities will be an important differentiator.

February 2008 Risks Transport-related risks (damage, loss, theft)

Credit risk or non-payment risk

Quality of goods risk

Exchange rate risk

Unforeseen events

Legal risks

Country risk/Political risk

Fraud risk

The risk of misunderstanding

February 2008 Evolving to Cash Flow Efficiencies

Pooling

Netting

Sweep

Reverse Sweep

Liquidity

The idea is to maintain a zero balance account or to keep a minimum balance as required

Challenges are when working with cross-border economies

February 2008 Evolving to Cash Flow Efficiencies

Cash Concentration Multi-Currency Receivables FX Outsourcing BENEFITS

Financial Planning

Reduced Bank Charges

Internal Cost Savings

Ease of Management

Increased Interest Income

Scalability

Time to Market

CONSIDERATIONS

Regulations

Legal Structure

Internal Sell

February 2008 Product Delivery - Innovative Solutions

Commodity Loans

Bank Pays Cash and Customer Pays Back in Kind

Structured Trade Finance

Mix and Match various products

Novel Structures

Credit Derivatives

Islamic Trade Finance

Al-Wakalah : Agency

Al-Murabaha : Deferred Sale

Al-Musharakah : Profit Sharing

February 2008 Integrating Cash, Trade, Supply Chain and Treasury

February 2008 Declining Emerging Market Risks South Asia continues dramatic economic rise

Raw materials drive the market

On the frontline of South-South trade

Emerging markets are growing at more than double the rate of the developed countries of the U.S., Japan, Western Europe, Australia, and New Zealand as they now generate more than half the world’s economic growth, and the proportion is rising fast.

Not only are emerging countries economic growth surging ahead, they are also becoming increasingly sophisticated and integrated into global markets.

The role of Asian markets in the global economy has grown significantly in recent years, and we expect this trend to continue in the future. While Asian companies have recorded significant price appreciation, corporate earnings have also increased, making valuations still attractive.

February 2008 Corporates on SWIFT (via SCORE)

# Registered corporates

2003 2004 2005 2006 Oct-07

268

22 55

108

181

Type of customers • Large corporates with payment factory and ERP

integration • Large corporates with central & regional treasury centers • Mid-sized corporates with 3+ cash management banks

Use: Treasury Management

• Monitor accounts and obtain global visibility on cash

• Manage liquidity and pool cash company-wide

• Do financial risk management

• Invest surplus cash

Use: Cash Management • ACH payments, disbursement files, check files, lock box receipts,

ACH data receipts • Payments and collection factory: Receive account statements and

advices, pay suppliers, debit customers, salaries, …)

Corporate Connectivity - 220108

February 2008 Establish a Business Process Platform with SAP Maximize Innovation, Minimize Disruption

Stable core

Fast-paced innovation

February 2008

34 Years Proven Track Record in Providing Business Solutions SAP AG founded in 1972 and focus only on collaborative

business solutions Market Leader in Inter-Enterprise Software Solution 2005 Revenue over EUR 8 billion (13% increase) with Operation

Income EUR 2.03 billion Proven Experience With Strong Support

More than 33,200 customers worldwide > Banking: 550 customers 15,000,000+ users in 120+ countries running SAP in their

business 36,600+ SAP employees

Customer Oriented Company with Strong R&D Investment Invested more than EUR 1 billion per annum in R&D (19% of total

revenue) 10,600 + Employees in R&D

SAP Worldwide

Incorporated in 1996 in Bangalore, with branches at Mumbai, Delhi, Kolkata & Chennai, Srilanka & Bangladesh Accelerated momentum - growth story continues Record 498 new names – 25% of APJ Announced 1000th customer in Q2, now 1400+, No.1 in APJ in SME Training - phenomenal growth - 45% YOY Successfully launched 22 e-learning centres, growing to 35 centres by end 2007 Accelerated momentum in consulting - breakthrough wins in BFSI & Utilities SAP ACE - becomes a brand on debut Customer Satisfaction continues to grow - TRIM index 95+ IDC-Datatquest CSA 2007 ranks SAP No.1 in Enterprise Application

SAP India a snapshot

About SAP

February 2008 SAP in Banking: A strong and growing customer base

33 of the top 50 European banks run SAP

ERP: 550+ banks in 60 countries

Transaction Banking: 100+ banks in 28 countries

Analytical Banking: 100+ banks in 22 countries

February 2008 SAP Footprint in Banking

No SAP offering

Partial/ Planned/

Partner offer

Current SAP

offering

February 2008

Thank you

Partho H. Chakraborty A - 305, DSR Spring Beauty Apts., 124/1, ITPL Main Road, Brookefields, Kundalahalli, Bangalore - 560 037, India Tel: +91 80 420 50293, Cell: +91 99863 22504 email: parthohc@airtelmail.in parthohc@rediffmail.com Skype: parthohc01