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EBF Conference : Banks for Growth The challenge of f inancing business Financing International Trade. Henri d‘Ambrières – Acting Head – EBF Export Credit Group Brussels , 20 M arch 2013. 1. 1. Agenda. International Trade and its financing
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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 1 1
Agenda International Trade and its financing Is there a place for new players ? Any risk ? A new landscape ? 2 2 2
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 Growth 2005-11 10.4% / year Medium & Long Term $ 191 bn Growth 2005-11 10.5% / year 3 3 3
2. Is there a place for new players ? Short-term Trade : Aflow 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,… 4 4 4 4
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 5 5 5 5
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 6 6 6 6
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 7 7 7 7
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,… 8 8 8 8
