RZB-TF Workshop-OFID (1)

8/6/2019 RZB-TF Workshop-OFID (1)

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RZBs Trade Finance businessactivities

with a focus on CEE and CISMarch 2008


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OPEC-Fund Trade Finance Workshop Slide 2

The Structure

Interests in Austrian

Financial Institutions

8 Raiffeisen Landesbanks

566 Raiffeisen banks, operating 2,300 branches in Austria

RZB Group

Raiffeisen Banking

Group

TOTAL ASSETS: EUR205,361mn

PROFIT BEFORE TAX: EUR 1,697mn

Tier 1: 7.4%RegulatoryOwn Funds: 10.1%

Foreign Branches, Offices

and Equity Participations

Central and Eastern

European Network BanksSpecialist Companies

100%

87.7%*

RZB

Raiffeisen International


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Long term regional experience and wellpositioned in CEE and CIS markets

North America

Asia

Banks

Representative Offices

Branches

Beijing Ho Chi Minh City Hong Kong Mumbai Seoul Singapore Zhuhai Teheran

Chicago Houston New York Los Angeles


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RZB Group Key financial data

- Solidarity among Raiffeisen banks underpinned by acomprehensive protection scheme

- Strong market position and well diversified operations inCentral & Eastern Europe

- Sound financial and risk profile of RZB- Sound financial profile and defensible domestic franchise

of the Austrian Raiffeisen banks

A-1

(stable)

A+

(stable)

N/A

- Central position within the strongly cohesive Austrianco-operative banking sector

- Stable funding base- Stable domestic market position in corporate banking

alongside well developed franchise in several CEEcountries

- Profitable wholesale banking franchise in CEE

Stable funding base

P-1

(stable)

Aa2

(stable)

C

(stable)

Credit StrengthsShort-Term

Credit Rating

Long-Term

Credit Rating

Bank Financial

StrengthAgency

Rating Data


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RZB Group Key financial data

* including one-off effects such as the sale of Raiffeisen Bank Ukraine and 10% of BankTuranAlem

in EURmn 2006* 2006 H12006 H12007 Change H107/06

Balance-sheet total 115,629 115,629 103,189 126,057 22.2%

Profit before tax 1,882 1,286 643 846 46.1%

RoE before tax 39.1% 26.7% 24.2% 25.5% 1.3 PP

Tier 1 ratio (banking book) 9.0% 9.0% 7.2% 8.1% 0.9 PP

Total capital ratio 10.8% 10.8% 9.1% 10.1% 1.0 PP

Cost/Income ratio 56.7% 56.7% 53.9% 55.3% 1.4 PP

Key figures overview


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Award winning Service Quality

In addition, the following Network Banks of the RZB Group have been awarded "Best Bank" in

their respective countries by international publications:

Albania, Bosnia and Herzegovina, Hungary, Kosovo, Serbia, Slovakia and Ukraine

Best Treasury and Cash Management Provider Global Finance

Best Bank in Centraland Eastern Europe Euromoney, Global Finance

Best Bank /Risk Management in CEE Treasury Management International

Bank of the Year in Austria The Banker

Best Bank in Austria Global Finance


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RZBs Trade Finance products overview

Irrevocable letter of credit

Letter of guarantee

Standby letter of credit

Pre-export financing

Post-shipment financing

Warehouse financing

Commodity and structured trade finance

Export finance (ECA)

Receivables purchase

Discounting of promissory notes

Forfaiting


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Commodity & Structured Trade Finance

Close controlof the commodity

flow

Close controlof the payment flow

Commodity and Structured Trade Finance refers to structured short-

term lending to finance the production, the purchase, the storage, the

transportation of exchange-traded commodities, where the loan willbe

repaid from the proceeds of the sale of the commodity to pre-agreed off-

takers with a

Mission


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Commodity producers in emerging markets

(e.g. oil, metal ores,)

Processing plants in emerging markets

(e.g. refineries, steel plants)

International trading companies

Often, balance sheet lending is not possible, therefore

we need to structure our financings!!

Customers


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Crude oil & oil products (accounting for ~ 60% of

results) Ferrous & non ferrous metals

Fertilizers

Others (e.g. chemicals, agricultural products)


Products/Commodities


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Russian Federation

Ukraine

Belarus

Central Asian Republics of FSU(e.g. Kazakhstan, Uzbekistan)

Romania

Bulgaria

Countries of former Yugoslavia

Countries


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Pre-export Financing

Production & Tolling Financing

Storage Financing

Transport Financing

Post-shipment Financing

Transaction Types


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1. Export L/C in

favour of trader

Supply

contract

RZB

Final OfftakerTrader

RZBs customerSupplier

Collection

account

of the Trader

with RZB

Sales contract,

assignment to

RZB

Offtakers

bank

Pledge of collection

account to RZB

Suppliers

bank

2. Import L/C in

favour of

supplier

3. Delivery3. Delivery

4. Payment under the

Export L/C

4. Payment under

the Import L/C

L/C facility structure


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2. Delivery

of

crude oil

3. Delivery

of

crude oil

4. Payment to the

collection account

Final Offtaker TraderSupplier

RZBs customer

RZB

1. Disbursement

Value ofloan to the

Supplier = max. 80%

of the value of crude

oildelivery !

Collection

account

of the Trader

with RZB

Pledge of collectionaccount to RZB

Loan agreement

Supply contract,

assignment to RZB

Sales contract,

assignment to RZB

5. Repay-

ment

6. Release

of cash

cover

Pre-export financing structure


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Production plan of producer

Dispatch notice Railway bills

Forwarder certificate of receipt

Warehouse receipt

Bill of Lading

DAA (documentary acceptance act) in case of crude oilfinancing (via pipeline)


Control of product flow, proof of existence of the goods


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Financing not for 100%, mitigation of price risk in caseof pre-export financing structure

Payment to be effected by the final off-taker to thecollection account with RZB

Notice of assignment and acknowledgement ofassignment from Off-taker


Control of payment flow


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Product experience

Market experience Track record

Strategic partner of producer

Any control over the producer

Strategic partner of the final off-taker

Assessing the trader



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Payment risk

Off-takers pre-approved by RZB in case ofpayment on open account

All other off-takers have to opendocumentary L/Cs in favour of our customer

Notice of assignment, acknowledgement ofassignment

Export off-taker vs. domestic off-taker

Long term relationship vs. spot


Assessing the Off-taker


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Supply contract

Sales contract

Performance undertaking/ Surety of supplier

Purchase confirmation, documentary L/Cs

Invoice of supplier to RZBs customer

Invoice of RZBs customer to the off-taker

Transportation documents

Documents involved



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politicalrisk

payment risk

fraud risk contractualrisks

performance risk

quantity and quality

risk handling risk

transportation risk

market risk

price and FX risks

Generalrisks

risks for

Producer/Exporter

Trader

(Buyer/Seller)

FinalBuyer

Risk overview


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Pledge on Goods

Assignment of supply contract and sales contract

A certain percentage of cash cover (10-30%)

Payment instruments from off-takers issued by 1st class banks(L/Cs, Standby-L/Cs, Guarantees)

Payment undertakings or purchase confirmations from first classoff-takers

Assignment of receivables (assignment of proceeds of Letters ofCredit, Bank Guarantees, Sales Contracts, PaymentUndertakings, Purchase Confirmations)


Possible securities (combination!)


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Pledge on collection accounts

Mortgage on borrowers real estate (real estate register!) Careful selection of and close co-operation with


Freight forwarders

Insurance companies

Inspection and surveillancecompanies

Warehouse keepers



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Syndication of the loan

Assignment of claims against insurance companies (RZB beingnamed as loss-payee)

Insurance of payment risk of off-takers




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What you always wanted to know about....Commodity and Structured Trade Finance

... but never dared to ask!

Trends


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Competence and know-how:

Competence of top leveland decades of experience

Tailor-made export finance services:

The key to successfulcross-border business is a reliable associate

who thinks globally but acts locally

Comprehensive support:

Consulting and supporting RZBs customers concerning all issues in

respect

of export insurance and export finance

Export Finance

Mission


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Multi-Sourcing Transaction with ECA

Corporate Ukraine

Raiffeisen Bank Aval15% Down payment financing

Local cost financingSelf retention

L/C opening bank

Exporter

Austria

Sub-supplier

Germany

Vienna

OeKB

AustriaCOFACE

France

Loan agreement85% of contract value + up to 100% ofECA costs ECA Facility

EulerHermes

GuaranteeFinance credit cover

Re-insurance Parallel insurance

Delivery100% of contract

value

Delivery100% of contract

value

Loan agreementCommercial Loan

* Manufacturing riskcover

**

Sample multi-

sourcing transaction

with ECA

Exporter

France


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Long-term financings for clients of our Romanian

Network bank in cooperation with/based on

guarantees issued by the Norwegian ECA (GIEK)

and by the Canadian ECA (EDC) and COFACE

(France).*

EUR 8,4 mio. Renault TK Axis Deal Leasing

Transaction, Russia

EUR 108 mio. Export Project Financing of a cellulose

factory in Estonia._________________

*) due to bank secrecy we are not permitted to publish the name of the

companies without prior written approval

Examples for SuccessfulExport Financing


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Finalized Transactions with international ECAs within

Cooperation withInternational ECAs

We are currently also in contact with Sinosure (China), EKF

(Denmark), IFTRIC (Israel), NEXI (Japan), KEIC (Korea), IGA

(Serbia), CESCE (Spain) , SERV (Switzerland), ECGD (U.K.)


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The Global Export Finance Department, Vienna

has an outstanding Export Credit Portfolio

totalling approx. EUR 6 billion

as of December 2007

has finalized export financing transactions

in the volume of

EUR 3 billion in the year 2007

with various ECAs

Export Finance


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Export insurance

Export finance

Our Responsibilities

ECA-Multisourcing Center of Competence for

International ECAs with the exception of US-Exim

which is handled directly by RZB Finance LLC, New York, USA.

Network Banks Export Finance for deliveries and services originating(NWB) from the CEE countries is offered directly by our experts in the

respective Network banks (= NWB), e.g. Raiffeisen banks in Poland,

Hungary, Czech Republic, Croatia, Romania and Tatra banka in

Slovakia.

under the Austrian Export

Promotion Scheme


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RISK SHARING EXPERIENCE/SYNDICATIONS

RISK SHARING EXPERIENCE / SYNDICATIONS

OPEC-Fund Trade Finance Workshop

Seite 31


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Trade Finance ProductsKind of Participations used in RZB

L/Cs, bank guarantees and payment undertakings issued by banks

Negotiable instruments guaranteed by a bank as avalised bills of

exchange and promissory notes

Trade related pre- or post-financings to banks


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Syndication Techniques

Risk Participations

Searching forP

articipants in short-mid term trade related primarytransactions offered to other institutions on an undisclosed and

usually unfunded basis

Forfaiting

100% without recourse selling of trade related short and middle term

transactions to other institutions or primary markets on a disclosed

and funded basis


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Participation under L/CKind of Participations used in RZB

FundedRisk Participations (not very common under L/CS)

Settlement Limit

KYC check

UnfundedRisk Participations

Settlement limit

CounterParty Limit

KYC check

Agreements used with:

External Banks: Master Risk Participation

Participation according to Austrian Law

IFA (International Forfaiting Association) Guide lines

Frankfurter Agreement


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Participation underTrade Finance Products

Pre-conditions for risk participations under L/Cs

L/C has to be confirmed by RZB

Following terms and conditions to be met: L/C available by sight payment or deferred payment

with or without post financing

valid for presentation of documents at the counters of RZB

payable at the counters of RZB

include order for confirmation

acceptable L/C wording


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Participation underTrade Finance

Confidentiality of data: especially with L/Cs

Written consent from issuing bank that RZB Vienna is allowed to

pass on data to third parties regarding the L/C under the riskparticipation. (Due to Austrian Banking Law)

In case it is not possible to get this agreement from issuing bank, FI

management has to authorize syndication department to proceed

without such letter under full responsibility of FI.


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Main Drivers for Risk Participations

Advantages:

Reduction of exposure to particular names, sectors or countries

presents new reciprocity opportunities Increase in capacity to lend to particular entities/countries

Diversification of risk and acquisition of target exposures where

appropriate

Additional income generation

A market oriented capital allocation Building up international market expertise

Optimising equity allocation within the group

Broadening of the investor base


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Source: Dealogic

Syndicated Trade Finance

Volumes in CEE-CIS (2003-2007)

7.653,46 7.827,47

16.380,54

31.575,79

12.832,75

87

123

87

181207

0,00

5.000,00

10.000,00

15.000,00

20.000,00

25.000,00

30.000,00

35.000,00

2003 2004 2005 2006 2007

0

50

100

150

200

250

Vo ume

No o Dea


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Trade Finance InvestorsGeographicalDistribution

Russia/CIS-CEE region

attracting

Trade Finance investors

Many small investors gettinglimits for trade related risks

to invest

Borrowers keen to diversify

lending group

Trade Finance Investors:

EUROPE

ASIA

GCC


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Trade Finance Market Trends

Market Trends:

Although Trade Finance volumes diminished in 2007, we expect volumesto increase in 2008 upwards due to market conditions (liquidity);

Exporters- Importers willuse:

Less open accounts Less Documentary collections

Less cash payments

CEE-CIS Banks will use Trade finance products for their own fundingneeds,(Sight L/Cs with Post Financing)

Strong competition among Banks, Insurance companies and ECAs

Due to the complexity of the Structured Trade Finance Products,corporates used to borrow through projects finance or corporate financesyndicated markets. 2008 and upwards, we expect this trend to bechanged.


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RZB expects from potentialPartners

Regional Expertise

Risk taking Capacity

Product knowledge

Master Risk Participation in place

Funding


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Thank you for your attention!