INTERAMERICAN DEVELOPMENT BANK

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INTER-AMERICAN DEVELOPMENT BANK
Structured and Corporate Finance
Department Financial Markets Division
Regional Trade Finance Facilitation Program (TFFP)
October 2007
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About Us
Inter-American Development Bank (IDB)
Structured and Corporate Finance Department (SCF)

• Regional multilateral institution dedicated to
  accelerate economic social development in Latin
  America
• Authorized capital of US101 billion
• 47 member countries, 26 borrowing member
  countries
• AAA/Aaa Rating (SP, Moodys)
• Accounting taxation advantages

• In charge of private sector operations within the
  IDB
• Privatizations, concessions and "Corporate
  Finance
• Capital Markets, International Trade Finance
• Catalytic role each 1 of IDB financing
  mobilizes over 5 of overall investment

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TFFP The Context

• During times of volatile capital flows,
  international banks are obliged to either
• Force up confirmation fees or loan margins
• Reduce, freeze or cancel bank and/or country
  limits
• thus
• Creating difficulties for local banks to provide
  trade financing to their clients
• Hindering a countrys prospects for economic
  recovery and growth

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TFFP Value Proposition

• Play a counter-cyclical role providing liquidity
  during times of economic difficulty
• Assist LAC banks broadening their international
  funding/financing sources base
• Assist international banks reducing country and
  commercial exposure, while leveraging their trade
  financing activity
• Support trade fostering LAC international trade
• Support global integration leveling the playing
  field for international trade

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Program Characteristics
Trade Finance Facilitation Program
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TFFP Participants

• Issuing Banks
• Private or state-owned banks incorporated in
  IDB-BMCs
• Demonstrated track record in trade financing
  activities
• Established relationships with international
  correspondent banks
• Satisfactory credit worthiness based on the
  application of a standardized risk assessment
  methodology
• Compliance with customary Environmental, Social,
  Labor and Health Safety (HS) requirements
  and IDB integrity standards.
• Confirming Banks
• Any international/regional bank with recognized
  track record in international trade financing and
  compliant with IDB integrity standards.

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Transaction Schemes

• Documentary Credits L/C Confirmation Imports

Importer
Exporter
1. Sales Contract
1. Importer Exporter conclude a sales contract
providing for payment by L/C
4. Confirming Bank informs the Exporter that the
Issuing Bank has issued the L/C and confirms the
corresponding payment at maturity.
2. The Importer instructs its (Issuing) bank to
issue a L/C in favor of the Exporter
2. L/C Application
4. L/C Confirmation
Trade Finance Facilitation Program
CG - TFFP
Issuing Bank
Negotiating/ Confirming Bank
3. L/C

• 3. The Issuing Bank asks the Negotiating Bank to
  advise / confirm the L/C

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Transaction Schemes (contd)

• Export Financing Promissory Notes

Importer
Exporter
1. Sales Contract
7. Goods
11. Docs against payment
2. Request for Export Financing
10. Payment
8. Shipping docs BofE
6. Funding
Trade Finance Facilitation Program
CG - TFFP
4.
Confirming Bank
Issuing Bank
5. Funding
3. Request for Export Financing (Promissory
Note)
9. Shipping docs BofE
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TFFP Typical Transaction Process

• Confirming or Issuing Bank contacts IDB
• Transaction, tenor pricing agreed between all
  three parties reference prevailing market
  pricing
• SWIFT application sent to IDB
• Normally processed by IDB in 24hs to 48hs
• IDB sends SWIFT CG (on-demand guarantee) in the
  form of Stand-by L/C to Confirming Bank

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TFFP Status Snapshot (as of October 2007)

• US527 million of approved lines with 29 Issuing
  Banks located in 14 LAC countries

• Ecuador
• Boliviariano
• Pichincha
• Produbanco
• Banco de Guayaquil
• Banco Internacional
• Guatemala
• Agromercantil
• Honduras
• Banco Ficohsa
• Jamaica
• First Global Bank
• Nicaragua
• Bancentro
• Banco de la Produccion
• Panama
• Banco Aliado
• Paraguay
• Interbanco

• Argentina
• BBVA Frances
• Banco Rio
• Brazil
• Bicbanco
• Banco Pine
• Industrial do Brasil
• Indusval S/A
• Bolivia
• Banco de Credito
• Colombia
• BBVA Colombia
• Banco de Bogotá
• Banco Davivienda
• Costa Rica
• Banco Nacional
• Banco de Costa Rica
• Banco Improsa
• Dominican Republic

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TFFP Current Status (as of October 2007)
(contd)

• 116 Confirming Banks belonging to 54
  International Banking Groups in 35 countries.

Argentina BBVA Francés Austria Intesa
Sanpaolo Investkredit RLB Ooe
Belgium BBVA Brazil Brasil
Bicbanco Bradesco Indusval Itau BBA Pine
Unibanco Canada BofA Scotiabank TDB Toronto
TDB Montral Cayman Unibanco
Chile Banco Bice Banco EstadoBBVA
Corpbanca China Hong Kong BBVA
Intesa Sanpaolo TDB Wachovia
Shanghai Intesa Sanpaolo
Colombia Bancoldex BBVA
Costa Rica Nacional Improsa Ecuador
Internacional Pacifico Pichincha
France BBVA BNP Paribas SOCGEN Germany AM
EX Commerzbank LBBW Intesa Sanpaolo
Frankfrut Greece Intesa Sanpaolo Athens
Guatemala Agromercantil Italy BNL BBVA
Milan Cassa di Risparmio Bologna Cassa di
Risparmio Padova Cassa di
Risparmio Venezia Friulcassa SpA Intesa
Sanpaolo Popolare di Sondrio Sanpaolo
Banca dell Adriatico Sanpaolo Banco
di Napoli Japan Bank of America BBVA Intesa
Sanpaolo Tokyo Mitsubishi UFJ Mizuho
SMBC Wachovia
Trade Finance Facilitation Program
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TFFP Current Status (as of October 2007)
(contd)

• 116 Confirming Banks belonging to 54
  International Banking Groups in 35 countries.

Korea, Republic of AMEX BofA
Wachovia Mexico BANCOMEXT BofA
BBVA Netherlands ABN Amro Intesa Sanpaolo
Nicaragua Bancentro Norway DnB
Panama BBVA BLADEX BNP Paribas
Paraguay BBVA Peru Banco Continental BCP
BIF Interbank Portugal CGD
CGD-Madeira Caja Madrid Singapore Intesa
Sanpaolo Spain Banesto BBVA Caja Madrid
Intesa Sanpaolo Santander
Sweden Nordea Bank
Switzerland BNP Paribas ZKB Taiwan Wachovia
UK BBVA Intesa Sanpaolo
Wachovia USA Cleveland National
City Greenwood Village, CO Cobank Houston
TDB Philadelphia Wachovia Miami Caja
Madrid New York ABN AMEX BofA BBVA
BNP Paribas CGD Citibank
Commerzbank HVB Intesa
Sanpaolo Mizuho NORD LB SMBC Standard
Chartered Tokyo-Mitsubishi UFJ
Uruguay BBVA Venezuela Banco Provincial
Trade Finance Facilitation Program
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Member Countries of the IDB

• Non-borrowing Member Countries
• Austria
• Belgium
• Canada
• Croatia
• Denmark
• Finland
• France
• Germany
• Israel
• Italy

• Borrowing Member Countries
• Argentina
• Bahamas
• Barbados
• Belize
• Bolivia
• Brazil
• Chile
• Colombia
• Costa Rica
• Dominican Republic
• Ecuador
• El Salvador
• Guatemala

• Guyana
• Haiti
• Honduras
• Jamaica
• Mexico
• Nicaragua
• Panama
• Paraguay
• Peru
• Suriname
• Trinidad and Tobago
• Uruguay
• Venezuela

• Japan
• Korea
• Netherlands
• Norway
• Portugal
• Spain
• Slovenia
• Sweden
• Switzerland
• UK
• USA

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TFFP Current Status (as of October 2007)
(contd)

• Guarantees Issued
• Totaling US181 million
• Supporting US244 million for 224 individual
  trade transactions involving export and import
  of goods such as Aluminum, Ceramic Tiles,
  Copper, Frozen meat, Leather, Rubber, Sewing
  machines, Soy beans, Sugar, Textiles, Gas,
  Electricity Generators, Trucks, Tractors, Wind
  Turbine components etc.
• Tenor of Transactions
• Average of 206 days, ranging from 47 to 540
  days

Trade Finance Facilitation Program
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How to Join the TFFP

• Contact the TFFP Team

• JOAO VIANEI DA SILVA
• 202.623.1352 joaov_at_iadb.org
• ULRIKE AULESTIA VARGAS
• 202.623.3298 ulrikea_at_iadb.org

• Trade Finance Facilitation Program (TFFP)
• Financial Markets Division (SCF/FMK)
• Structured and Corporate Finance Department (SCF)
• Inter-American Development Bank
• 1300 New York Avenue, N.W.
• Washington, DC 20577 USA
• Fax [phone]