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Trade Finance – an evolutionary time

Trade Finance – an evolutionary time. R apidly changing environment is driving the development of new electronic platforms Globalization of business & movement to treasury centralization to drive efficiencies Move from Commercial Letters of Credit to Open Account Increased regulatory scrutiny

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Trade Finance – an evolutionary time

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  1. Trade Finance – an evolutionary time • Rapidly changing environment is driving the development of new electronic platforms • Globalization of business & movement to treasury centralization to drive efficiencies • Move from Commercial Letters of Credit to Open Account • Increased regulatory scrutiny • Sarbanes – Oxley; USA Partiot Act; AML requirements • Drive for streamining of Global Supply Chain management • Increased number of bank relationships & subsidiary activity results in less control over treasury management • Multiple interfaces / connectivity to various electronic banking systems • Investment in new technolgy is a constant priority for corporates & banks • Greater integration, flexibility & efficiencies across systems & operations

  2. Banks and corporates embark on the same objectives to optimize trade processesing … • increase process efficiency and security • reduction of costs through improved process efficiency and increase of STP (straight-through-processing) • lower operational risks due to reduction of manual processing • complete audit trails for monitoring of all process steps (audit compliance, US-GAAP, SOX) • integration with existing ERP/BackOffice Systems

  3. … but follow different concepts high external communication gateways (e.g. Propriatary networks, DTA, secure email etc.) Multibank /-participant platform (many-to-one concept) proprietary Bank applications (one-to-many concept) banks preferences low customers preferences high

  4. Proprietary bank systems (one-to-many concept) Client Client Bank Client Client Client Client • Customer view • use of various bank portals • data is hosted on various external resources – difficult to consolidate • no customization • no ERP/ Back-Office intergration • Bank view • high level of BackEnd integration • highest STP-ratio possible • high level of customer retention

  5. External communication gateways (e.g. Proprietary networks, DTA, secure email etc.) Bank A Service Provider A Corporate Service Provider B Bank B Service Provider C Corporate • Bank view • BackEnd integration needed separately for each message format • use of network results in additional cost • low STP-ratio if not integrated into BackEnd systems • data transmission via web requires PKI agreements • Customer view • separate BackEnd application needed • use of network result in additional cost • ERP/ Back-Office intergration is cost intensive • the concept of data exchange via external networks leads to multiple identical data sets • data transmission requires PKI agreements

  6. Multi bank/participant Platform (many-to-one concept) buyer supplier Bank 1…n insurer Corporate carrier customs • Customer view • one data source • customization possible • easy ERP/ BackOffice integration • complete audit trail • all participants in a transaction can be involved • Bank view • no participation fees • BackEndintegration can be staged (depending on the number of customer applications)

  7. insurances surveyors procurement production chambers of commerce freight forwards logistics finance/treasury sales entity 1... n subsidiaries banks carriers “Corporate centric multi-bank system“Improves visibility, monitoring and control for Treasury All process participants interact on one web-based true multi-bankand multi-entity process platform: @Global Trade

  8. Case Study: Standby LC/Guaranee Issuance Solution

  9. Case Study: Standby LC/Guarantee Issuance Challenges • Key Objectives • Harmonisation of documentation and saving of L/G commissions • Improvement of transparency and avoidance of discrepancies between banks' and EADS' records • Preserve flexibility for subsidiaries but enforce standard policies • Improve efficiency • Achieve a better diversification of business allocation between the banks • High and quick acceptance of the new solution by subsidiaries and banks • Initial Situation • Management of L/G is decentralized and handled independently by each subsidiary • L/G exposure with 47 banks (applied by 52 subsidiaries) • Reconciliation of L/G data and settlement of fees is time consuming and prone to errors • Central treasury has to monitor the terms and the availability of L/G facilities and the allocation of business to the banks

  10. Case Study: Standby LC/Guarantee Issuance Solution 25 identical Bilateral Facility Agreements EADS N.V. 25 Banks L/G Agent Sub-Limits / Guarantees Co-ordination Agreement 38 Subsidiaries • EADS successfully arranged a new L/G Umbrella (existing exposure was rolled in) with 25 identical bilateral L/G facilities that were allocated in a quantity tender. • EADS appointed HVB as a service provider to 25 banks and 38 EADS subsidiaries.

  11. WWW WWW Case Study: Standby LC/Guarantee Issuance - Technology • Solution: • Web-based for 24x7 availability and easy rollout to 38 EADS divisions and 25 banks • Configurable workflow engine manages all authorizations incl. syndications and club deals • Automatic e-mail alerts and tracers ensure compliance with response-time guarantee • Integrated credit line management module automates monitoring credit utilizations • Flexible transaction data model simplified conversion of the existing guarantee portfolio • Billing module automates calculation and allocation of fees including previous period adjustments and multi-bank reconciliation • 6 months from concept to production • Substantial reduction of operational costs LG Issuance Bank Agent 38 divisions Multi-bank Agent System 25 banks

  12. Case Study: Export Documentary Credit and Collection Solution Automotive Manufacturer

  13. Case Study: Export Documentary Credit & Collection Challenges Improve cooperation between factories, that prepare documents, and L/C department, that receives and allocates L/C advices Improve visibility of each step in the transaction process Reduce number of discrepancies in the presentation Improve efficiency by automating transfer of L/C information into invoicing system and relevant product information into the @GlobalTrade system for preparation of documents Allow L/C department to electronically pre-check L/Cs with banks Enhance straight through processing through enablement of foreign banks to send export L/C messages electronically

  14. Case Study: Export Documentary Credit & Collection Solution e-Advices L/C Department Presentations Instructions and Documents Payments Domestic and Foreign Banks Logistics Providers Electronic Delivery of export L/C messages Financial release and cooperation between the L/C Department and Factories L/C department can assist factories regarding issuing compliant documents Logistic providers can be connected to the platform and exchange electronic documents with the L/C Department, Factories and others Global visibility and real time reporting

  15. WWW Case Study: Export Documentary Credit & Collection - Technology Shipping Forwarding & InsuranceCompanies L/C Department Factories Presentation Information Export L/C Module Collection Module SAP Financials SAP AR Interface Global Ordering L/C Info Vehicles & Parts Data Export System ERP Interface Electronic Banking • Web-based L/C and Collection management system for easy world-wide roll-out to factories, 3rd party document providers and banks • Improved efficiency and reduced discrepancies by automating transfer of: • L/C information into corporate’s ERP system(s) • Relevant product information from the invoicing system into document preparation instructions • L/C and collection presentation information into accounts receivable system for reconciliation of incoming payments

  16. About GTC • GTC’s @GlobalTrade technology helps buyers, sellers, traders, and financial institutions communicate faster and more efficiently to free up working capital, realize cost savings, reduce risks and improve monitoring and control • Our customers are • corporations that need consolidated access to multiple banks and logistic providers • banks that require supply chain finance solutions to meet their clients’ needs • Our Expertise is in multi-bank financial supply chain systems where the corporate drives the business process 2006 Canada’s 10th Fastest Growing Company by Profit Magazine Best Independent Trade Platform/System Provider for 2005, 2006 and 2007 by Euromoney’s Trade Finance Magazine 2005 2006 2007

  17. @GlobalTrade Platform Export LC / Collection Import LC / Collection TSP Back-office and ERP Systems Internet Standby LC/Guarantee Receipt Standby LC/Guarantee Issuance Bank Internet Open Account Financing Custom Built Systems Global Trade Management Systems ERP Interfaces Multi-Office Management Workflow Data & Access Security Data Mapping Multi-Bank and Logistics Connectivity Collaboration Progress Monitoring Credit Limit Monitoring Document Generation Billing User-Defined Reporting Archiving Business & Network Modules • web-based for global connectivity and quick deployment • interfaces to internal and external systems • modular architecture for Global Trade Management product systems • can be installed internally, at a managed hosting provider or offered as an ASP system

  18. Contact Information Jacob Katsman GlobalTrade Corporation katsman@globaltradecorp.com Tel: +1 416 661 8520 www.globaltradecorp.com

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