The 11th AsiaEurope Business Forum AEBF 11

1
The 11th Asia-Europe Business Forum (AEBF
11) Seize the trend, Time for Action and
Public-Private Partnership Intervention
by Margrith Lütschg-Emmenegger President 21st
23rd October 2008China World HotelBeijing,
P.R. China  
2
CONCURRENT SESSION III  SME DEVELOPMENT
WORKING GROUP

• FIMBank Corporate History in Brief
• SME Financial Crises Evaluation and
  Consequences
• Some Potential Solutions Trade Finance and
  Products
• Which Products and Why
• What it can mean for China
• Way Forward Actions Needed

3
100
38.5
SOLD
40
INCREASED
100
100
100
4

• Acquisition of LFC
• Global reach
• Forfaiting expertise

IFC joins as a shareholder and long term partner
Initial licence DIFC Dubai for MENAFACTORS
FIMBank established in Malta by leading Middle
East businessmen
Increase in capital US15m

• Acquisition of GTF
• Factoring
• India

Rights issue US25m
Setting up of FIM Business Solutions
Mar 01
Feb 03
Jun 05
Nov 03
Dec 05
Oct 06
March 08
1994
Sep 01
Dec 04
Nov 05
Jun 05
Dec 06
Oct 03
Dec 07
Opening of LFC office in Singapore
FIMBank is listed on the Malta Stock Exchange
Rights issue US15m
Selling Equity in GTF India
Hired key management from WestLB (leader in trade
finance)
Setting up EGYPTFACTORS
Debut in the International Capital
Market Syndicated loan US30m
5
BE THE BEST TRADE FINANCE BOUTIQUE IN THE WORLD
BY PROVIDING INNOVATIVE SOLUTIONS IN ALL TRADE
RELATED ACTIVITIES GLOBALLY
6
FIMBank Focus
Trade-related Business
Trade will never stop
Trade drives economies
7
We provide TRADE FINANCE, i.e. the following
products
8
LFC FIMBank Joint Ventures Joint Venture and
FIMBank LFC and FIMBank
Moscow
London
New York
Dubai
Mumbai
Sao Paulo
Singapore
Istanbul
Cairo
Malta
UKGMT
MaltaGMT 1
SingaporeGMT 7
US WestGMT -9
US EastGMT -5
SydneyGMT 9
9
(No Transcript)
10
Basel II impacted ratios (as from March 2008),
however capitalization remains well above
regulatory threshold
11
FIMBanks liquidity ratio (monitored daily)
consistently above the regulatory minimum, with
an upward trend in the last two months (despite
global liquidity crunch)
12

• SMEs are in (almost) all countries the
  main Drivers of the Economy
• SMEs will be the first to suffer from the
  lack of liquidity
• Larger financial institutions in crises
  and in normal circumstances have
  found/find it difficult to service the SME
  sector
• Trade (domestic and international) will
  continue to drive the global economies for
  many centuries to come
• Trade Finance is not synthetic business but
  real and true hard work and honest
• There are certain products that support
  trade finance for SMEs particularly
  strong and well

13

• Discounting of international trade receivables on
  a without recourse basis
• In essence, a form of supplier credit
• Negotiable documents
• Accepted Bills of Exchanges by Importer/Buyer
• Promissory Notes issued by Importer/Buyer
• Letters of Credit
• Book receivables with separate guarantee
• Tradable assets
• After discounting the debt instruments, the
  forfaiter can hold them to maturity or trade them
  in the secondary market

14

• Offered within the FIMBank Group through our 100
  Subsidiary
• Acquired in 2003
• Market Leader Best Forfaiting House Award in
  2005, 2007 and 2008

14
15

• Financing of Open Account sales/invoices on a
  continuous basis
• Tenors usually 30-90 days (max. 180 days)
• Usually covering exports from Emerging Markets
  (performance risk) to Developed Markets (payment
  risk)
• Notice of assignment is given by debtor/buyer
• Factor assumes at least two of the following
  functions
• Credit Protection
• Financing/Prepayment
• Collection
• Credit Management
• Sales ledger administration and analysis

16

• Blueprint for Factoring within FIMBank
• Joint Venture with Export Import Bank of India,
  International Finance Corporation (World Bank)
  Bank of Maharashtra FIMBank 40 acquired in
  2004
• SOLD in 2008 NOT Strategy but good profit
  opportunity
• Case Study !
• Followed by in 2007 and
  in 2008

16
17
Source FCI
Source FCI
Factoring is the fastest-growing product in
global trade finance
18
Similar but different highly complimentary
FACTORING
FORFAITING
MORE STABLE MATURE PRODUCT
FASTEST GROWING TRADE FINANCE PRODUCT

• Market size US80 billion (est.)
• Single transaction based
• L/C or Bank Acceptance Required
• Primarily a Financing Service
• For medium/long-term transactions which could be
  one-off (90 days to 7 years)
• Without recourse
• Usually for export receivables
• Transactions should be minimum US100,000
• Cross border trend DEVELOPED ? EMERGING

• Market size US1 trillion
• Ongoing arrangement
• Open Account Sale
• Provides other than financing services
• Used for offering short-term credit to regular
  buyers (up to 180 days)
• Both with and without recourse
• For domestic and export receivables
• No minimum size
• Cross-border trend EMERGING ? DEVELOPED

19
Trade/Bank Finance
Factoring/Forfaiting

• Pre-Post shipment
• Financial Risk
• Security/Collateral driven
• Price effective for good Balance Sheet
• With recourse

• Post shipment
• Performance and Debtor Payment Risk
• Cash flow/Portfolio/Buyer driven
• Value proposition for all clients (including
  SMEs)
• Without/Limited (performance) recourse

FACTORING and FORFAITING By experience does
not work at its best within a Banking Environment
but much better in a separate independent
Company.
20

• These products can support SMEs to
  facilitate trade (domestic and
  international)
• Access to trade finance NOT based on balance
  sheet/size
  
  but performance, track record, quality of product
  and buyers
• Less risk better conditions
• Less cost better cash flow
• Concurrent Session IV Trade and Investment
  Facilitation Working Group

21

• IMPORTANT
• Products must be offered professionally
  NOT as a pure banking product
• Non-Banking-Financial-Institution proven to
  be the best format to offer these products
  most successfully and beneficial
• CHINA does NOT YET have the right
  environment to offer these products optimal
  to the Chinese SMEs which need the help urgently
  to master the crises !
• Jointly we should be able to cooperate with
  the authorities to adjust to the market needs
  so that SMEs can get access to these products
  professionally and easily and accelerated.

22
Thank you for your attention
We cannot change the direction of the
wind, however we can adjust our sails!