Transcript Slide 1

EBF Conference : Banks for Growth
The challenge of financing business
Financing International Trade
Henri d‘Ambrières – Acting Head – EBF Export Credit Group
Brussels, 20 March 2013
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Agenda
1. International Trade and its financing
2. Is there a place for new players ?
3. Any risk ?
4. A new landscape ?
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1. International Trade and its financing
The importance of International Trade for global growth
 WWD GDP 2011
$ 67,509 bn (IMF)
Growth 2005-11 2.3% / year
 WWD Exports 2011 $ 21,986 bn (WTO)
– WWD Export of Goods
$ 17,816 bn
Growth 2005-11 3.7% / year
– WWD Export of Services $ 4,170 bn
The importance of the financial tools for international trade
 WTO : 80% of International Trade backed by a Financing Instrument
 2009. GDP –2.8% but Export –12.1% /clear link with the financial crisis
 Berne Union - (Insurance for International Trade) - Production 2011
– Short Term
$ 1,492 bn
– Medium & Long Term $
3
191 bn
Growth 2005-11 10.4% / year
Growth 2005-11 10.5% / year
2. Is there a place for new players ?
Short-term Trade :
A flow business with many transactions / limited individual amounts
 Unfunded products : Guarantees / Letters of Credit
– Possible newcomers
• Insurance companies for Guarantees
• Banks from Emerging Markets for Guarantees and LC’s
 Funded Trade Products : Discounted LC’s / Forfaiting / BPOs
– Possible newcomers
• Refinancers attracted by low risk and short-term assets
• Banks from Emerging Markets
 Obstacles
– Investments required in Back-Offices to deal with large numbers of transactions
– Financial and non-financial regulations (Basel III, KYC,…)
– Lack of knowledge, education, liquidity,,, + variety of underlying assets,…
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2. Is there a place for new players ?
Medium and Long Term Export Credits
Mostly large deals with long durations
(2 to 5 years construction + 8 to 15 years repayment)
 Alongside commercial banks, a possible role for public banks and
institutions with long-term resources (pension funds, insurers,…)
 Possibility to use the bond market in addition to the loan market
 Obstacles
– Limited flexibility
– Limited liquidity
– Capacity to analyse and manage the projects
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3. Are there risks attached to these changes ?
Opportunities
 Increased volumes
 Lower prices
Risks linked to a growing role of new players
 New players : changes in habits, introduction of new practices
 More volatility in capacities and pricing
 Loss of technical skills in banks with no substitution in non-banks
 Reduced flexibility brought by some investors in construction period,
in drawings, in repayment phases, in renegotiations,…
 Reduced access for industry to the networks and other products of
banks
 Financial risks on importers assumed by exporters
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4. A new landscape ?
Banks still have the capacity to play a pivotal role in
 Arranging
 Processing
 Funding
but will have to work with new players which can bring
 Capacity to arrange small deals at lower cost
 Capacity to process some flows
 Fund over very large durations or in some currencies
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4. A new landscape ?
Can we expect a split in the roles, which were all
managed by banks until recently ?
 Arrangers / Coordinators
Banks, Advisors, Funds,,,
 Processors
Banks, Advisors, Funds,,,
 Fund providers
– Co-Financers
– Refinancers
Banks, Public vehicles, Funds,…
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