international trade finance - redcliffe training · a good working knowledge and familiarity with...
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The Banking and Corporate Finance Training Specialist
International Trade Finance A 4-Day Masterclass
This course is presented in London on:
05-08 February 2018, 12-15 November 2018
http://redcliffetraining.com [email protected]
+44 (0)20 7387 4484
Course Overview
Participants on the 2-day course 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 programme 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. The course is highly interactive and centres around the use of a variety of case
studies, many of which are based upon actual files and ICC Opinions.
Explore the current market place including Brexit, Trump and the traditional bands of clients
Learn about financial crime compliance & sanctions Understand the risk based approach and the impact on trade finance Get to grips with DDD, FATF, TI, CPI and their impact
Understand and identify the traditional risks Review the key products and how the customer analyses his risk
Master an understanding within the supply chain management and finance Learn about the traditional letters of credit and the four contract concept Explore the standby letters of credit and their history & origin
Learn about exporting finance issues and controlling credit exposure Explore the effective use of collections for short-term finance
Get to grips with the international demand and contact guaratees/bonds Learn about the commodity sector and its players
Days 1 & 2
The trainer worked for 34 years in a large UK Commercial Bank during which time he gained extensive experience in the management and processing of foreign trade transactions on
behalf of corporate customers. He was also responsible for managing the training provided to all International Trade Services staff working in the UK branch network.
He has trained bankers, lawyers and corporates in South America, Asia, Africa, the Middle East and throughout Central and Eastern Europe.
Days 3 & 4
Your course director has spent more than 40 years in the banking and financial sector, much of it in a senior managerial/Director role. He is a former Institute of Banking Lecturer, having gained distinctions in the exams. He is a subject matter aspect on all aspects of
retail, corporate and global banking, including risk management and regulatory compliance. He has lectured extensively to both leading global financial institutions and to
smaller bespoke specialists. He has delivered extensive programmes in all parts of the world including the USA, Europe, MENA, Africa and Hong Kong. He is currently an accredited Master Trainer at the world’s biggest global bank.
Course Objectives
Background of the trainers
http://redcliffetraining.com [email protected]
+44 (0)20 7387 4484
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.
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.
Key characteristics of Commercial Documents used in international trade Invoices (commercial, tax, customs, consular, pro-forma invoice)
Marine/Ocean Bills of Lading
Course Content
Course Overview
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+44 (0)20 7387 4484
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;
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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 Guarantees
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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 Current Market Place Recent evolution and current developments The challenge of emerging markets
The challenge of China Brexit
President Trump New products The traditional three bands of clients: Global and Large Corporate, MME’s, the rest!
Understanding trade finance at a fundamental level.’ Typical users of Trade Finance products and services
Financial Crime Compliance & Sanctions
Understanding the risk based approach Impact on Trade Finance
TI, CPI and its impact FATF DDD and the need to obtain a clear line of sight across the value chain
Money laundering methodologies Ghost payments and variations
Under/over invoicing and variations Documentary fraud PEPS
Sanctions Risk mitigation, management and transfer
Case Study: Delegates will be asked to consider a real case to identify FCC risks and suggest how they may have been managed and mitigated
Traditional Risks – The Critical Issues Understanding, identifying and managing risk
Credit risk, Market risk & Operational risk
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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
Case Study: An example using three different payment methods. Delegates will
be asked to identify and explain what type of client would choose one in preference to the other two and why, to illustrate risks in reality.
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 in more detail below)
Risks and opportunities Control possibilities
Case Study: Showing how clients sometimes see the world of risk in a different way to bankers.
Supply Chain Management & Finance
The origins of SCM and what does it mean in practice Understanding the issues in SCM – “the tug of war” between supplier & buyer Bringing about a “balance” between parties for effective processing
Understanding about movement of ‘information’ ,’goods’ and ‘cash’ Supply Chain Finance Main SCF models: accounts payable - centric, accounts
receivable, BPO Review the risk aspects of SCF Case Study: Showing how Reverse Factoring works and how both Buyer Centric
and Seller Centric models are being employed.
Letters of Credit (L/Cs) Traditional L/C’s
The four contract concept Confirmations
Red Clause Green clause Revolving L/Cs
Evergreen Transferable L/Cs
Back to Back L/C structures Case Study: Showing how different types of LC’s are used, why this is the case and what difference it makes to the risk profile.
Standby Letters of Credit
History and origin The dominant trade finance product
Uses
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Risk management Issue and assessment
Pricing Understanding the applicability of ISP98 and UCP 600 for standbys Fraud and unfair calling
Case Study/Exercise
Export Finance issues Looking at the big picture Understanding the purpose of borrowing
Country risk issues The reality of title and control
Negotiation under letters of credit Discounting of deferred payment L/C, acceptance credits (with or without recourse) Case Study/Exercise
Controlling Credit Exposure – Formulating a Limit Understanding and explaining the trade cycle
The use of time lines Assessing and appreciating funding gaps Case Study/Exercise
Structuring Finance for the Trader
Analysing the trade flows Assessing facility size and structure Specific lending with identifiable maturity dates
Appreciating and controlling sources of repayment Case Study/Exercise
Effective Use of Collections for Short-Term Finance
Using collections as financing opportunities Identifying and mitigating risks
Maintaining control
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
Case Study/Exercise
Warehousing of Goods Warehouse location
Management assessment Legal frameworks
Obtaining and retaining title and control Risks and responsibilities of Collateral Managers Cost versus control
Case Study/Exercise
International Demand and Contract Guarantees / Bonds Scope and Application – an introduction (suretyship v. demand guarantee)
Indemnities versus guarantees Different types - Bid, Performance, Advance payment, Warranty and Retention bonds
Rules governing guarantees and bonds
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Legal jurisdiction and expiry date issues
Value of using URDG 758 – ICC Rules for demand guarantees Impact of non-bank competitors – COFACE, Euler Hermes Case Study/Exercise
Receivables Financing
Mechanics of Factoring and Invoice Discounting Forfaiting – an important adjunct to the TF mechanism Role of Credit Insurance
Mechanics of Securitisation FCC risks
Case Study/Exercise
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
The completion from capital markets – high yield bonds Selling down exposure Impact of quasi-governmental agencies
Risk/reward analysis Case Study/Exercise
Course Conclusion and Review / Feedback
Delivering this course in-house for you to a number of participants could be very cost effective.
9:30-17:00
London
Standard Price: £1,995 + VAT Membership Price: £1,596 + VAT