Financing TradeFinancing Trade
LBBC – November 2008
Topics
• About BACBAbout BACB
• The Impact of the Credit Crunch The Impact of the Credit Crunch
• Trade Finance DynamicsTrade Finance Dynamics
• Libyan Payment SolutionsLibyan Payment Solutions
BACB’s Libyan Credentials• ““Libya in London” Libya in London”
– UK Head Office– “A”- rated & UK regulated– Associate HSBC Group– > 35 years market coverage
• ShareholdersShareholders– Libyan Foreign Bank 26.3%
• Physical Presence in LibyaPhysical Presence in Libya– Authorised office/local staff
• Libyan ClientsLibyan Clients– Most Libyan banks & Oil
companies
• Started with sub-prime US Started with sub-prime US MortgagesMortgages– Heavy losses leading to some bank
failures and widespread rescue packages
• Loss of trust between banks– Freezing up of interbank markets
– Rise in borrowing costs
• Move to wider economy– Economic slowdown
– Collapsing asset and commodity prices
– Deteriorating terms of trade
– Recession
Credit Crunch
Credit Crunch – Oil Prices
Credit Crunch – Freight Rates
Establishing Trust
Exporter/Seller Importer/Buyer
Ship and wait See the goods first
Cash in hand Advance payment
Libyan Challenges• BureaucracyBureaucracy
– Market is openingMarket is opening– New policies in place e.g. Need for Libyan partnersNew policies in place e.g. Need for Libyan partners– Legal, Accountancy and Tax issuesLegal, Accountancy and Tax issues– Change usually takes longer in practiceChange usually takes longer in practice
• ComplexityComplexity
– NOCNOC
– Oil CompaniesOil Companies
– IntermediariesIntermediaries
e.g. Oil Sector EPSAJOINT-
VENTUREWHOLLY-OWNED
Approx 30 Internationally active oil and gas majors
ENI Oil
ENI Gas
Repsol
Harouge
Waha
Zueitina
Sirte Oil Co
Ras Lanuf
Jowef
NAGECO
Nat Oilfields
Nat Oilwells
Brega
Akakus Oil Op
Zawia
Libyan Challenges • Oil Sector (continued)Oil Sector (continued)
– Arrival of the majorsArrival of the majors
– Closure of EU Procurement OfficesClosure of EU Procurement Offices
Libyan Challenges• CommunicationCommunication
– Email / Mobile communications Email / Mobile communications – Use of English in international tradeUse of English in international trade
• BondingBonding
– Wording (e.g. non-contestation clause)Wording (e.g. non-contestation clause)– Acceptable bank namesAcceptable bank names– Managing costsManaging costs
• Getting Paid !Getting Paid !
Equipment Consultancy &
Training Opportunities
Trade Solutions
Exporter/Seller Importer/Buyer
Least Secure Open Account Most Secure
Documentary Collection
Documentary Credits
Most Secure Advance Payment Least Secure
Libyan Payment Solutions
• BACB provides a broad range of Libyan payment BACB provides a broad range of Libyan payment solutions including:solutions including:
– OPEN A/COPEN A/C as paying agent
– COLLECTIONS COLLECTIONS London presentation (BACB clients)
– L/C ISSUANCEL/C ISSUANCE existing facilities for oil sector clients
– L/C CONFIRMATION L/C CONFIRMATION as correspondent of Libyan banks
– BONDINGBONDING Bid / AVP / Performance
• BACB aims to be as flexible as possibleBACB aims to be as flexible as possible
Financing TradeFinancing Trade
LBBC – November 2008
