Dealing with Risk Archimedes, TPM, and the Regional Bank

1
Dealing with Risk Archimedes, TPM, and the
Regional Bank

• George Fowler
• National City International
• October 26, 2007
• National City

2
A Brief History

• By 2000 National City virtually out of
  International
• Opportunity to Rebuild Trade-centric Approach
• Needed to generate revenue fast!

3
A Strategy Evolved

• Credit driven
• Emerging Markets
• Primary Financial Institutions
• Secondary Government Corporate Trade Partners
• Internal sales effort line and credit support
• External sales effort selected banks
  countries

4
Credit is Critical --- but We needed a niche!

• Differentiated credit
• Realistic credit
• (We love you, but not THAT much Credit
  Officer)
• Build relationships develop flow of
  transactions

5
Archimedes?

• Archimedes "Give me a place to stand on, and I
  will move the World."
• National City International Give me a country
  limit and I will travel the World.

6
TPM?

• OPM Other Peoples Money
• TPM ?

7
Tax Payers Money!

• Willing to do business in risky markets
• Social good

8
Archimedes, his Lever and TPM

• For National City, TPM programs became the lever
• Bring more
• Longer tenors
• Leverage small country limits credit lines

9
Archimedes, his Lever and TPM

• National Citys fulcrum Overseas Private
  Investment Corporation
• Global Framework Agreement I (2003)
• 35MM up to 10 years
• OPIC full guarantee 75-90 100 inconvertibility
• NCB controls price documentation
• Correspondent banking product
• GFAs II III and now GFA IV. Total 985MM

10
Eureka!

• Nearly 30 OPIC loans totalling 500MM
• Terms to 10 years (but avg net maturity 2.5
  years)
• Projects programs
• Variety of countries
• Greater visibility CEO/Vice Chairman level
• Sharply expanded relationships L/C, Due-to
• Found our niche
• Expand beyond OPIC
• Dedicated, relationship team

11
Beyond OPIC

• Development Banks
• IFC
• MIGA
• EBRD
• IADB
• IIC
• ADB
• Government Agencies
• Eximbank
• USAid
• Agriculture
• Private Insurers

12
Trade Finance Programs

• Partial or full coverage on trade transactions
• Letters of credit
• Pre- and post- export finance
• Drafts
• Terms to three years longer can be negotiated

13
Program or Project CreditsMedium-Term

• Structures
• Loan guarantees
• Insurance
• A/B Loan Structures
• Bank takes some MT risk

14
Summary Risk-mitigated programs have Enabled
NCB

• Build emerging market credit portfolio to over 1
  billion
• Turn unit into profitable and rapidly growing one
• Differentiate ourselves externally and
  internally
• Mitigate our exposure
• Develop strengthen ties with foreign banks

15
Eucaristw Arcimhdhs! (Thank You,
Archimedes!)