DID COVID-19 PUSH DIGITAL HANDLING OF DOCUMENTARY PRODUCTS TO THE NEXT LEVEL ?BNP PARIBAS FORTIS PORT CO. INNOVATION HAPPY HOURFRANK HAAKWEBEX, 17.05 – 17.35 – THURSDAY 26/11/2020

2Classification : Internal

’’ 11th largest exporter and 14th largest importer of goods worldwide (2019)World Trade Organization; World Bank Group; UNCTAD

355,3 357,8 359,8

381

396,6 397

341,4 338,6342,8

362,5

385380,6

2014 2015 2016 2017 2018 2019

Belgian Exports in Goods (in billion EUR)

Belgian Imports in Goods (in billion EUR)

Source: Eurostat – Community Concept (*)

* Community concept/national concept The results are presented according to the community concept which, unlike the national concept, takes into account imports and exports carried out by non-residents subject to VAT in Belgium and for which no resident intervenes. Returned goods are also taken into account.

3Classification : Internal

BELGIAN IMPORTANCE IN GLOBAL TRADE - 2019

Impact of Covid-19

Exporters ValueShare

in World

Change vs 2018

1 China $2,499 Bn 13,2 % 0%

2 United States of America $1,664 Bn 8,7% -1%

3 Germany $1,469 Bn 7,9% -5%

4 Netherlands $709 Bn 3,8% -2%

…

7 France $570 Bn 3,0% -2%

…

11 Belgium $445 Bn 2,4% -5%

Source: WTO and UNCTAD

Importers ValueShare

in World

Change vs 2018

1 United States ofAmerica $2,568 Bn 13,4% -2%

2 China $2,077 Bn 10,8% -3%

3 Germany $1,234 Bn 6,4% -4%

4 Japan $721 Bn 3,7% -4%

…

6 France $651 Bn 3,7% -3%

…

14 Belgium $426 Bn 2,2% -6%

4Impact of Covid-19

1IMPACT OF COVID-19 ON TRADE DURING LOCK DOWN OF MARCH – MAY 2020

5Classification : Internal

BELGIAN FOREIGN TRADE (IN BILLIONS EUR)

Impact of Covid-19

33,634,2 34,1

32,733,3

32,433,6 33,9

31,432,0

33,2

24,7 25,2

29,7

28,0

31,4

23,8 23,7

28,6 28,2

March April May June July

Exports 2019 Imports 2019 Exports 2020 Imports 2020

* Community concept/national concept The results are presented according to the community concept which, unlike the national concept, takes into account imports and exports carried out by non-residents subject to VAT in Belgium and for which no resident intervenes. Returned goods are also taken into account.

Source: Eurostat – Community Concept (*)

6Classification : Internal

’’ WTO PREDICTSINTERNATIONALTRADE TO SCHRINKWITH 9,2%World Trade Organization – November 2020

7Classification : Internal

87 –Vehicules

12% 30 – Farma10%

29 – Chemicals8%

27 – Mineral Fuels8%

39 –Kunststoffen

7%

71 – Precious Metals

6%84 –

Machinery6%

72 – Steel5%

90 – Medical Instruments

3%

73 – Steel Appliances

1%

xx -- Other34%

Average March-May 2017-2019

100,9 Billion EUR

EXPORT – MARCH -> MAY

Impact of Covid-19

EUROSTAT -- In Billion EUR Community Concept2020 is based on estimated –9,2% loss (WTO)

30 – Farma18%

87 – Vehicules9%

29 – Chemicals8%

84 –Machinery

7%39 –

Kunststoffen7%

27 – Mineral Fuels4%

71 –Precious Metals

4%

72 – Steel4%

90 – Medical Instruments

3%

73 – Steel Appliances

1%

xx -- Other35%

March-May 2020

82,9 Billion EUR

- 18%

381 396,6 397 360

2017 2018 2019 Est. 2020

* Community concept/national concept The results are presented according to the community concept which, unlike the national concept, takes into account imports and exports carried out by non-residents subject to VAT in Belgium and for which no resident intervenes. Returned goods are also taken into account.

Source: Eurostat – Community Concept (*)

8Classification : Internal

87 –Vehicules

14% 27 – Mineral Fuels12%

30 – Farma9%

84 –Machinery

9%29 – Chemicals7%

71 – Precious Metals

5%

39 –Kunststoffen

4%

72 – Steel3%

90 – Medical Instruments

3%

73 – Steel Appliances

1%

xx -- Other33%

Average March-May 2017-2019

97,5 Billion EUR

IMPORT – MARCH -> MAY

Impact of Covid-19

30 – Farma14% 87 – Vehicules

9%

84 –Machinery

8%

29 – Chemicals8%

27 – Mineral Fuels8%

39 –Kunststoffen

4%

71 –Precious Metals

4%

90 – Medical Instruments

3%

72 – Steel3%

73 – Steel Appliances

1%

xx -- Other38%

March-May 2020

79,9 Billion EUR

- 18%

362,5 385 380,6346

2017 2018 2019 Est. 2020

EUROSTAT -- In Billion EUR Community Concept2020 is based on estimated –9,2% loss (WTO)

* Community concept/national concept The results are presented according to the community concept which, unlike the national concept, takes into account imports and exports carried out by non-residents subject to VAT in Belgium and for which no resident intervenes. Returned goods are also taken into account.

Source: Eurostat – Community Concept (*)

9Impact of Covid-19

DID COVID-19 PUSH DIGITAL HANDLING OF DOCUMENTARY PRODUCTS TO THE NEXT LEVEL ?

2

10Classification : Internal

EVOLUTION MT700 SWIFT SEND/RECEIVED BANKS LOCATED IN BELGIUM (IN MIO EUR)

Impact of Covid-19

551 574502

896

494 512

709610

561

690598 607

728

628 607

339266

557

424349

396

572

832904

956875

1.0051.057

796881

1.0591.153

1.014

1.566

915

702

1.009

896 910 887 879 865

981 961

Total Swift Send (in Mio EUR) Total Swift Received (in Mio EUR)

Source: Swift

No Lockdown Lockdown

11Classification : Internal

EVOLUTION MT700 SWIFT SEND/RECEIVED BANKS LOCATED IN BELGIUM (IN MIO EUR) – COUNTERPARTY ASIA

Impact of Covid-19

239 243210

297

183158

223205

242

331

256

201

395

324

368

147116

301

261

172 164

338

512

447

543 557

598

377

471

427396

435

591

493

552

320

493

642

521541

637

573

629600

Total Swift Send (in Mio EUR) Total Swift Received (in Mio EUR)

Source: Swift

No Lockdown

Lockdown

Asia

12Classification : Internal

o Letters of Credit are old - historical products – paper-based (for banks and all other intervening parties like buyers,

sellers, shipping-transport & insurance cies, chambers of commerce, inspection cies, port authorities, tax & VAT authorities,…) in combination of swift exchanges (for banks)

o Costly product for all parties and o clearly “not” classified as “green” product

o During last decade different initiatives took place to digitize trade - close collaboration of intervening parties led to creation of different “blockchain” platforms aiming at stopping physical sending of documents and startsending digital data between parties.

o Why digitisation: o win time o reduce costs o mitigate fraud for all parties concerned

DIGITALIZATION OF TRADE FINANCE PRODUCTS

Impact of Covid-19

13Classification : Internal

SOME “WELL-KNOWN” PLATFORMS ACTIVE IN TRADE FLOWS

Impact of Covid-19

14Classification : Internal

o We Trade => mainly continental European trade flows

o MarcoPolo => world-wide ambition

o Komgo => mainly EU/ASIA/US trade flows

o E-trade Connect => initiative taken by major Chinese bank

o Finacle Trade Connect => mainly focus on Indian marketo …

DIFFERENT TRADE “GEOGRAPHICAL” FOCUS PER PLATFORM

Impact of Covid-19

15Classification : Internal

o We Trade => mainly Small Medium Enterprises

o MarcoPolo => Bigger Corporates

o Komgo => focus on commodity flows – Mercuria & Shell are partners = shareholders –

=> Komgo also aim to offero KYC services, o documents certification, o Working Cap solutions, o L/C and stand-by L/C

DIFFERENT “CLIENT SIZE” FOCUS PER PLATFORM

Impact of Covid-19

16Classification : Internal

o Trade Deals need to be managed and operational costs need to be reducedo Assure that clients (and by default their bankers) are safeguarded from fraudso Secure the trade flows of its clients by offering trade finance backed financing

(pre and/or post shipment) like L/C confirmation, L/C discounting, Bank2Bank financing, Discount of bank avalised drafts, Factoring - Reverse Factoring, Working Capital & SCM solutions, etc…

o In all these platforms “one or several” international banks are partners / shareholders

o Standard Chartered Bank: 5 initiativeso HSBC: 4 initiatives

o BNP Paribas: 4 initiatives (Contour-ex Voltron, Etrade connect, Komgo, MarcoPolo)

INTERNATIONAL BANK GROUP’S INTERESTS

Impact of Covid-19

17Classification : Internal

o Good & fast solutions found with impacted countries (even in emerging counties e.g. sub-continent India) – adapting regulations is high on the agenda but will take time to turnaround the globe – also ICC regulation wise adaptations are welcomed

o Physical docs routing replaced by exchange of scanned documents (after sometimes “intensive” discussions with all intervening parties)

o But once situation normalized, we still needed to send/handle the physical documents as well (cost intensive)

OPERATIONAL EXPERIENCES IN HANDLING DOUMENTARY PRODUCTS => FIRST LOCK DOWN

Impact of Covid-19

18Classification : Internal

o COVID-19 clearly showed the weakness of our present physical & operational handling of Doc Products.

o Banks/clients found alternative and workable solutions through digital handling, even with far distanced emering markets.

o But as soon as the lock-downs eased (e.g. international flights by courier express services resumed) we returned to the old normal.

o So my personal answer is “yes, it did” but more time will be needed before the digital solutions will be standard and I’m personally happy that BNP Paribas group continues to invest to make this happen asap!

DID COVID-19 PUSH THE DIGITAL SOLUTION IN TRADE ?

Impact of Covid-19

19

THANK YOU

Impact of Covid-19

Frank Haak, Head of GTS Sales Belgium

20Classification : Internal

This presentation was created for informative purposes by BNP Paribas Fortis SA/NV. The informationcontained in this presentation is subject to change. While BNP Paribas Fortis SA/NV takes great careto ensure that the information is correct, it may not be held liable for possible errors or omissions, or thedirect or indirect damage that might result from this.

BNP Paribas Fortis SA/NV, Montagne du Parc 3, B – 1000 Brussels

DISCLAIMER

Impact of Covid-19