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Did you know?. Presentation by the Ad-Hoc Committee on Strategy. Presentation by the Ad-Hoc Committee on Strategy. Strategy. “If one does not know to which port one is sailing , no wind is favourable” Seneca.

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  1. Did you know? Presentation by the Ad-Hoc Committee on Strategy RESTRICTED TO FCI MEMBERS

  2. Presentation by the Ad-Hoc Committee on Strategy RESTRICTED TO FCI MEMBERS

  3. Strategy “If one does not know to which port one is sailing , no wind is favourable” Seneca “Strategy Development is a question based process. Where are we now? Where do we like to go? How do we get there?” P Edelmann “Strategy essentially deals with the interplay of 3 forces: Customer, Corporation, Competition. Good strategy is demonstrated by : * clear market definition * good match between corporate strengths and needs of market * superior performance in the key success factors of the business” K. Ohmae RESTRICTED TO FCI MEMBERS

  4. Here are some answers … what are the questions? 1.19% 130% / 30% 72% 18 days & 39 days 91.66% & 92.33% 44% / 65% 5% 10% 54.6% 61.2% - FCI exports are 1.2% of World Export Merchandise trade values ( 2011). - The top 10 FCI members increased volumes 130% in 5 years. The rest grew 30%. - Average invoice values in FCI increased 72% in 5 years. - FCI collected on average within 18 days of due date. PUGS were on average 39 days late. - FCI Internal Satisfaction with Import & Export Service was 91.66%/92.33%. We do not know how satisfied clients are? - 44% is the average FCI credit appetite in 2012. 65% is the equivalent that one member achieves over their insurance policy. - of members may not earn enough from 2 factor business to even pay their membership fee. - is Core Tier 1 capital ratio expected of major banks under Basel 3 according to the F.T. - 10 members handle 54.6% of export factoring volumes. - 10 members handle 61.2% of Import factoring volumes. RESTRICTED TO FCI MEMBERS

  5. Did you know?… FCI members have 4.2m buyers RESTRICTED to FCI Members

  6. Where will demand come from? Research from HSBC Global Connections Emerging markets still providing the growth in International trade • Outlook for global growth appears significantly brighter than 12 months ago • Recovery in global growth will be very much dependent on the emerging markets • The large Emerging Market economies are set to provide the lion’s share of GDP growth in the near term • Growth in the developed market economies remains subdued, but their total GDP contribution continues to be significant RESTRICTED TO FCI MEMBERS

  7. Global overview - Forecast The larger Emerging markets shifting towards higher-valued exports • Half of the world's main trading nations will drive a shift within their top 3 export sectors towards higher value added goods by 2030 • Opportunities for economies with ample supplies of low-cost labour, such as Vietnam and Bangladesh, to fill the gap RESTRICTED TO FCI MEMBERS

  8. Revenue pools in transaction banking Global trade moves towards open account Revenue pools increase by 80% until 2020 Open accounts mainly driven by increased volume • Strong trade growth • Importers favor O/A • Penetration of financing instruments for O/A will slightly increase • Spreads will rise slightly as environment in emerging markets is more risky • Documentary trade slightly increases • Decline in volume, compensated by increase in L/C fees due to more risky environment Payments grow in line with trade Revenue pools Bn USD Global imports (Trn USD) 100 50 +80% 80 40 69.6 +8.7% 31 60 30 31.2 38.7 40 20 10.5 91% 14 25.0 20 10 82% 22.9 13.5 5.2 18% 9% 0 0 2020 2011 2020 2011 Open accounts Open account Documentary trade Documentary trade Payments Note: Only cross border, wholesale streams were accounted for, Documentary trade includes mainly L/C, documentary collection, pre/post-shipment financing and bank to bank financing; open account includes processing and financing Source: SWIFT, EIU, ICC, ITC, BCG Global payments model, BCG case team experience RESTRICTED TO FCI MEMBERS

  9. Total Global Factoring Volume 1992 – 2012 (In Euro Billions) 20-Year CAGR = 9.7% RESTRICTED TO FCI MEMBERS

  10. Where are our members? Where will they come from? FCI Membership 1993-2013 RESTRICTED TO FCI MEMBERS

  11. Where is our two factor business taking place? FCI 2-factor Exports 2012 FCI 2-Factor Imports 2012 RESTRICTED TO FCI MEMBERS

  12. Which customer segments are served? Global clients Large clients Larger SMEs Small SMEs RESTRICTED TO FCI MEMBERS

  13. Why are they not Members? RESTRICTED

  14. Reputation RESTRICTED TO FCI MEMBERS

  15. Reputation RESTRICTED TO FCI MEMBERS

  16. Food for thought • 1. What should be the Missionof FCI? • 2. What is the demand for our product and how do you see it evolving? • 3. Should our platform continue to be independent of ICC and SWIFT?  ( Forfaiting is 10% of our industry size and yet has achieved UCP acceptance). • 4.Should FCI address the needs of all aspects of receivables finance? • 5. Can FCI attract the participation of non-bank financial institutions ? • 6. Does the FCI brand need to be prominently known to our clients? • 7. What is the role of FCIoutside of IF in the open account space?   • 8.  Who are FCI’s competitors and how they are evolving?  What is our view on BPO and the Supply Chain Finance market? • 9. How can we continue to increase membershipand the country coverage of our network? • 10. What are the expectations from our members? RESTRICTED TO FCI MEMBERS

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