The head of the practice of attracting bank financing of KSK groups, Andrey Tyurin, spoke with Kommersant FM host Pyotr Kosenko about what a bank guarantee is and why such a service has been gaining popularity recently, as part of the “Goals and Means” program.
Hello, the program “Goals and Means” is on air. I am Peter Kosenko. And today the guest of the Kommersant FM studio is Andrey Tyurin, head of the practice of attracting bank financing of KSK Group. Hello Andrei.
Good afternoon.
So, the topic of our conversation today is: “Difficulties in the way of a bank guarantee, or a bank guarantee as a tool for business development.” Is applying for a bank guarantee really a popular interest among representatives of various types of businesses today?
Now private Russian business is in demand for this tool more than ever. For the last two years, we have been experiencing a protracted crisis in our country, and, of course, companies are looking for a way to earn extra money and have begun to turn their attention to the government procurement sector. And in order to work in this sector, according to Federal Law 44, bank guarantees are required.
What is a bank guarantee? As a simple man in the street, I can imagine a scheme where an entrepreneur goes to the bank to get a loan for some project. What is a bank guarantee? Is it the bank's money, or is it potential bank money?
This can be called the bank's virtual money. The bank guarantees the fulfillment of the obligations that our potential client undertakes in the event of some force majeure, and if the bank guarantee is requested by the customer - this is called disclosure of the bank guarantee - then the client owes money to the bank, as with a classic loan.
- In other words, this is perhaps an indirect way for a businessman to get credit?
This can be called one of the forms of financing.
Who today in what areas of business most often resorts to this type of obtaining financing or obtaining guarantees for financing?
The activities are very different - this includes construction, trade, and equipment supply. There are quite a lot of orders, enough for everyone, so for everyone who is interested in developing their business, in increasing revenue and profit, this will be relevant.
How to choose the right partner bank? Because it is absolutely obvious that the conditions will be different for different banks. And, accordingly, the entrepreneur will need to leave various types of guarantees, property, and so on as a kind of collateral.
The most basic thing to start with is to choose a reliable partner bank. Because we see that every week there is news in the media that this or that bank’s license has been revoked. There are absolutely no guarantees that if the bank is large, the license will not be revoked, because the licenses of a bank in the top 100 or top 50 have already been revoked. Therefore, it is important for the client to understand how reliable the bank is. Of course, a client who is a professional in his field cannot be a professional in some other field where he does not work. This is why there are consultants who constantly monitor the market, study it, and look at the dynamics that are happening in banks. In particular, at KSK group we have a powerful analytical center that constantly monitors our partner banks. Banks come to us with offers of cooperation. We initially look at the conditions they offer, but after that we definitely check them thoroughly. If a bank is unreliable, then we refuse to work with such a bank. We use this principle to select partner banks.
Regarding the conditions, the presence of consultants for the client must be justified. Therefore, we solve various problems for the client. We can make exclusive conditions, offer something, somewhere a lower rate, somewhere loyalty in terms of security, and so on. Now banks, in order to cover their risks, ask clients for collateral. As a rule, this is a deposit, this is real money. But in my understanding, the economic meaning of this is lost, because if the client had money, he, in principle, guaranteed his obligations with his real money. Then the customer would not worry. It's logical.
- Wouldn’t it make sense, relatively speaking, to go and apply for a bank guarantee?
And pay more money for it, because it’s not free. Therefore, for our clients, when we attract bank guarantees, in addition to choosing a reliable partner bank, we also offer them exclusive conditions. All our clients who contact us receive bank guarantees without collateral or collateral. Perhaps in some other difficult situation there may be collateral, but it is insignificant, literally 10-15% of the market.
- What amounts do they apply for bank guarantees?
The amounts are completely different. KSK groups for the target client focuses on amounts somewhere from 50 million rubles. But this does not mean that if some client comes, and at the moment he does not need such a large amount, but he wants to work within the limits, and these limits provide for amounts less than 3, 5, 10 million rubles, we We won’t work with them. We will, of course, get involved in this project and implement it.
Very often, business representatives complain that in order to get, for example, a bank loan, you need to spend a lot of time and effort. How long does it take to conclude a bank guarantee agreement?
The terms, of course, are much shorter than with a loan, but, nevertheless, they are present. Typically, on average, banks take up to two weeks to close this deal. At KSK Group, our transactions are much more dynamic; we actually close the issue in three to five days.
These are some absolutely incredible numbers, even taking into account the fact that the client is a regular bank partner. It's still very fast. How is this efficiency achieved?
This means a long experience of working with these banks, well-established processes, and mutual understanding. Therefore, another of the points that we offer to our clients is efficiency in making some decisions and achieving some goals.
Your company works with amounts starting from 50 million rubles, you help obtain bank guarantees. Are there many cases when your clients, for some reason, fail to fulfill all their obligations, and what happens in this case?
Such cases are quite frequent, because banks have quite strict requirements for borrowers, especially now. Therefore, when some non-standard situations arise, it is already difficult to find some kind of mutual understanding with the bank. This is why we need consultants, professionals who, believe me, in this area, mostly encounter non-standard situations and solve them.
There is a certain, as far as I understand, blacklist - these are those companies, those businessmen who once violated the terms of bank guarantees or loans. Do they have a chance to correct their tarnished reputation? And, again, are you helping with this?
Companies are blacklisted when they fail to fulfill their obligations to the customer. They are blacklisted for two years. It is already impossible to get out of this list, so the maximum that can be done is to immediately approach the issue correctly and receive a bank guarantee in a timely manner. According to the regulations of Federal Law 44, there is a certain number of days that are allowed for the provision of this financial product. To prevent being blacklisted, you need to deal with this quickly. Consultants help with this.
How long has your company been working in this area, and is it now possible to trace some dynamics of demand for this product on the market in recent years? And some forecast for the future: will this area develop?
We have been working since 2008, but in terms of bank guarantees, we have been seeing such positive dynamics and a surge of interest from private businesses for the last two years. My vision is that this market will grow.
- I'm sorry, but what does this have to do with? Why has there been growth in these last two years?
It seems to me that due to the crisis situation that occurred in the country, and a lot of companies went bankrupt, there were a lot of unreliable customers. Of course, private business began to look and analyze where a way out could be found. And in my understanding, we still have trust in the state, they understand that the state will pay after all. But in order to use these benefits, you need to use these tools. In my understanding, demand will continue to grow due to this, and the volume in this segment will only increase. The growth potential is very high.
- Do you attribute this to the fact that it is government projects that will develop?
Government projects at the state level.
How many proposals are there specifically related to private business - with some major projects or foreign partners?
No, there are private projects from Russian companies, they also organize tenders and competitions, this also requires bank guarantees, because the customer also wants to protect himself. Their only difference is that they can limit, as they see fit, the list of banks from which they will accept bank guarantees. These are mainly the largest banks, state banks, banks with state participation. They accept bank guarantees from them. This, of course, complicates the work, because large banks have very strong requirements for the borrower. There may be a deposit sometimes up to 100%, and some other covenants that the client is not able to fulfill, but, of course, they compensate for this with a rate. For example, Sberbank has some of the lowest rates on the market, but these rates must be obtained.
If it’s not a secret, how much do your services cost, if we talk not in real numbers, but as a percentage of the cost of the same transaction or contract?
It all depends on what we have to work with, what problems. Because first, we analyze the project, look at its weak points, understand how we will solve them, and constantly coordinate this with the client. We have a so-called diary that we keep, and we are constantly in touch with the client, and, having explained to him what this or that money will be taken for, we already present him with the amount of the commission. We have it from 1% and then individually.
- But not out of the blue in any case, there are completely clear calculations and an explanation of why exactly this amount?
Clear calculations of how this is achieved. And, among other things, ROI is calculated (return on investment rate - Kommersant FM) - this means that the client will receive a return on his investment, this is also for the client so that he understands what he is paying for.
Andrey, can you give an example of a non-standard approach to solving an issue related to bank guarantees?
Yes, sure. Not long ago, KSK Group was contacted by a client who is engaged in design. He participated in a contract worth 300 million rubles, and he needed a bank guarantee for 60 million rubles. for 10 months. The situation was complicated by the fact that this contract was to be implemented in the Republic of Crimea, and secondly, this client acted as a subcontractor in this contract, and there were very tight deadlines. The client himself tried to obtain a bank guarantee from banks, but was constantly rejected based on these criteria. Our consultants took up this project, analyzed it, selected the right partner bank, and managed to provide this service within the time frame that the client needed. For this, the client paid KSK Group 2%, and taking into account the bank guarantee from the bank, the client paid a total of 2.946 million rubles. But at the same time, his profit under the contract amounted to 45 million rubles. The ROI for the client was 1527%.
- Are there already regular clients for whom there are some privileges?
Of course there is. KSK Group is always committed exclusively to long-term business relationships. Of course, for clients who are constantly with us, there is loyalty in terms of work and rates.
1 TRADE FINANCE INSTRUMENTS
2 Towards clients Joint Stock Bank “Pivdenny” is a leader among banks in the South of Ukraine in servicing documentary transactions of guarantees and letters of credit. The bank provides its clients with a full range of services in the field of documentary transactions. The Bank's policy is to provide advice to clients when conducting settlements and transactions using documentary transactions. Bank employees will help you prepare and carry out such operations, starting with the development of draft agreements and documentary obligations (letters of credit, guarantees), and ending with the preparation of documents for receiving payment. You can obtain from the Bank comprehensive information about the types of documentary obligations and their applicability in various situations and in connection with various types of transactions. We will tell you about the disadvantages and advantages of each type of documentary obligations in order to help you choose the most convenient settlement scheme with your partners. The Bank has the ability to ensure confirmation of its obligations by first-class European banks, which allows it to issue documentary obligations in a form acceptable to you and your counterparties. Our goal is to protect your interests.
3 We bring to your attention this presentation to demonstrate how the use of guarantees, letters of credit and export insurance will help to conclude profitable transactions with moderate risk for the parties without high costs.
4 International payments Prepayment Payment upon delivery Deferred payment
5 Why are documentary obligations needed? When making payments by bank transfer, depending on the terms of payment under the contract (advance payment, payment upon delivery, receipt or provision of deferred payment), risks arise associated with: Failure to comply with the terms of the contract by the seller. Failure to comply with the terms of the contract by the buyer. Risks associated with force majeure. These risks can be divided into the following categories:
6 Risks associated with a party to the contract Types of risk Risk of non-payment Risk of non-fulfillment of the contract For the seller Insolvency or unwillingness of the debtor to pay. Example: the buyer's unstable financial condition. Cancellation or change of order by the buyer. Example: goods are purchased for further sale, the conditions of which have changed. Causes of damage For the buyer Inability or unwillingness of the seller to return the advance payment. Example: the seller’s unstable financial condition. The inability or unwillingness of the exporter to fulfill the terms of the contract for technical or financial reasons. Example: the seller is not the manufacturer of the product, and he cannot purchase it under pre-existing conditions.
7 Political risks Types of risk Risk of non-payment Risk of non-fulfillment of the contract For the seller Political events (war, revolution, moratorium) prevent the buyer from making payment. Example: funds frozen in the accounts of Vnesheconombank of the USSR. Political events or measures (war, revolution, confiscation of imports, embargo) prevent the buyer from fulfilling the contract. Example: US embargo on supplies from Iran. Causes of damage For the buyer Political events (war, revolution, moratorium) prevent the seller from returning the advance. Example: Political events in Ukraine in 2004 led to an increase in the US dollar and problems with payments. Political events or measures (war, revolution, confiscation of imports, embargo) prevent the seller from fulfilling the contract. Example: UN embargo on supplies from Iraq.
8 Economic risks Types of risk For the seller Causes of damage For the buyer Risk of delay in the transfer of amounts due Risk of non-fulfillment of the contract Currency risk Refusal or inability of states or organizations to make payments in the agreed currency (moratorium). Example: 1998 economic and financial crisis. The introduction of import quotas or taxes (fees) makes it impossible or unprofitable for the buyer to fulfill the contract. Example: the introduction of an excise tax on goods that were not previously subject to it. Revaluation of the contract currency in relation to the buyer’s currency makes the execution of the contract unprofitable for the buyer. Example: an increase in the exchange rate of the Euro against the US dollar reduces the volume of American imports from Europe. Inability to receive payment under guarantees or return of advance payment. Example: defaults of Russian banks and companies in 1998. The introduction of export quotas or taxes (fees) makes it impossible or unprofitable for the seller to fulfill the contract. Example: the introduction of export quotas for grain in Ukraine. Devaluation of the contract currency in relation to the seller’s currency makes the execution of the contract unprofitable for the seller. Example: European companies are renegotiating long-term contracts for which the payment currency is the US dollar.
9 In order to optimize risks, payment is accompanied by financial instruments. In order to reduce risks, payment is accompanied by financial instruments, letters of credit and guarantees. How can you reduce risks? If you make an advance payment (prepayment), you have the risk of non-fulfillment of the contract by the seller and the risk of non-return of the advance payment. Advance payment guarantees and contract performance guarantees, which are issued by a reliable bank in your favor, will reduce your risks, since the obligation to pay in this case lies with the bank, and not with the seller. You can also avoid the risk associated with upfront payments by choosing documentary letters of credit as your payment instrument, which are accepted by the vast majority of sellers and manufacturers. If you are shipping goods and receiving advance payment from the Patel buyer is not possible, ask the buyer to open a letter of credit or payment guarantee in your favor, which will reduce the risk of non-payment. Pivdenny Joint Stock Bank will help you agree on the terms of such instruments.
10 You can persuade the buyer to make an advance payment in your favor against an advance payment guarantee, which can be issued either by our bank or by one of our European partner banks. If you want to make payment after receiving the goods or even get a deferred payment from the seller, but the seller is not ready to take on the risk of non-payment on your part, invite your partner to open a guarantee in his favor to secure your payments. You can also offer him a letter of credit with deferred payment. If your partner wants to receive payment immediately after shipment, it is still possible for you to defer payment for up to 1 year from the date of opening the letter of credit through financing from foreign banks. If you are importing machinery or equipment, and the seller (manufacturer) is not ready to provide you with a deferment due to the risk of non-payment or for financial reasons, it is possible to finance such exports by foreign banks under the insurance of a national export insurance agency. In this case, you can receive installment payments for up to 5 years.
11 Thus, the use of bank obligations, guarantees and letters of credit will help not only to reduce the risks of the parties during settlements, but also to carry out settlements on terms more favorable than the use of own or credit funds. When financing using documentary obligations, bank commissions are ALWAYS lower than the interest on the loan for the corresponding period.
12 Bank guarantees A bank guarantee is a monetary obligation of the guarantor bank to the Applicant’s creditor for the fulfillment of his obligation in full or in part. A bank guarantee, unlike a letter of credit, usually does not require the provision of documents to the bank to confirm the validity of payment under the guarantee. The guarantee is usually paid against the creditor's presentation of only a demand for payment. A bank guarantee is an instrument to ensure the fulfillment of obligations, while a letter of credit is an instrument of payment. A bank guarantee is designed, first of all, to protect the interests of the creditor.
13 Types of bank guarantees: Payment guarantee is the most common type of bank guarantee used to secure obligations to pay for goods and services. Typically, payment guarantees are used to obtain a commercial loan. The seller (beneficiary) agrees to defer payment if receipt of such payment is ensured by a bank guarantee. If the buyer (applicant) does not pay on time, the seller sends his payment request to the bank and receives the required amount within the guarantee amount. Performance guarantee is a type of bank guarantee used to ensure the fulfillment of contractual obligations for the supply of goods, works, and services. Tender guarantee is a type of bank guarantee opened in favor of the tender organizer (beneficiary) to ensure the obligations of the tender participant (applicant) to sign an agreement for the supply of goods, performance of work, provision of services on the terms specified in the tender proposal of the participant, in the event of such participant’s victory in tender Advance payment guarantee is a type of bank guarantee, according to which the bank undertakes to pay the buyer (beneficiary) the amount of the advance payment in favor of the seller (or part thereof) in the event of non-fulfillment or partial non-fulfillment by the seller (applicant) of its contractual obligations for the supply of goods, performance of work, provision of services.
14 Bank guarantees give you the following advantages in your business: deferred payment for the supply of goods from domestic and foreign manufacturers; the opportunity to participate in tender procedures and enter into contracts with government organizations; receiving an advance payment (prepayment) from counterparties
15 Scheme of settlements using a payment guarantee 1. Agreement Joint Stock Bank "Pivdenny" 3. Product 2. Bank guarantee 4. Deferred payment Seller Buyer
16 Documentary letters of credit A documentary letter of credit is a monetary obligation of a bank issued on the basis of an order from its client-buyer in favor of the seller. The issuing bank must make the payment to the seller or ensure that another bank makes the payment. This obligation is conditional, since its implementation is associated with the seller’s fulfillment of certain requirements (primarily with the submission to the bank of documents provided for in the letter of credit confirming the fulfillment of all its conditions). It is the conditionality of this obligation that makes the letter of credit a settlement instrument that simultaneously protects the interests of the buyer and seller. The seller is confident of receiving payment after delivery of the goods, since the bank will pay him the amount due against the shipping documents. The buyer knows that the bank will pay for the documents only if they comply with the terms of the letter of credit, that is, after the seller fulfills his delivery obligations.
17 Documentary letters of credit will allow you to: Make payment for the goods only when the shipment of the goods is confirmed by the relevant documents. Ship goods to counterparties when payments on their part are guaranteed by banks. Finance the production and supply of imported goods without making an advance payment. Receive a deferred payment for up to 1 year through post-financing under letters of credit from partner banks of Pivdenny Joint Stock Bank at a rate BELOW THE CORRESPONDING LOAN RATE.
18 Scheme of settlements using letters of credit 1. Agreement Joint Stock Bank "Pivdenny" 2. Letter of credit 3. Goods + documents to the bank 4. Bank payment under the letter of credit within the agreed period Seller Buyer
19 Export insurance using documentary letters of credit Export insurance is a unique tool for Ukrainian importers of machinery and equipment, which has the following advantages: Obtaining installment payments for the import of equipment for a period of up to 5 years from the date of delivery. Interest rates are BELOW RELEVANT LOAN RATES, which is of particular importance given the duration of the financing. nia. Foreign manufacturers, banks and national export insurance agencies are interested in working under such conditions. Restrictions: It is not possible to finance the supply of consumer goods under the specified conditions. The approval procedure with a foreign bank and export insurance agency may take considerable time. The contract amount must be at least 500 thousand euros.
20 Interaction scheme 1. Importer’s application for the provision of services by Pivdenny Joint Stock Bank 2. Contract between the exporter and importer 3. Ukrainian importer’s request to open a letter of credit with Pivdenny Joint Stock Bank 4. Pivdenny Joint Stock Bank issues a letter of credit and sends it to the executing bank 5. Insurance policy of the export insurance agency in favor of the executing bank 6. Advising the letter of credit to the exporter by the executing bank (with or without confirmation from the executing bank) 7. The exporter makes the shipment and submits documents to the executing bank 8. The executing bank pays proceeds under the letter of credit to the exporter 9 Reimbursement to the executing bank with installment payment for a period of up to five years and corresponding payments by the importer in favor of the Joint Stock Bank "Pivdenny"Pivdenny"
21 Insurance of the executing bank National Export Insurance Agency letter of credit Importer 5 Pivdenny Joint Stock Bank Executing Bank Exporter
22 Contacts Likhota Dmitry Sergeevich, head of the department of correspondent relations and documentary operations. tel Vityuk Vladimir Aleksandrovich, head of the documentary operations department. tel Dobriy Andrey Anatolyevich, head of the international business department. tel
23 Note: Letters of credit and guarantees described in this presentation are credit transactions, the implementation of which is accompanied by appropriate credit procedures.
Public Joint Stock Company "Joint Stock Commercial Industrial Investment Bank" Services of PJSC "Prominvestbank" in the field of trade and structured financing of foreign trade operations of bank clients
FINANCING COVERED BY EXIAR In life there is always a place for discovery open.ru EXIAR: RUSSIAN AGENCY FOR EXPORT CREDIT AND INVESTMENT INSURANCE About the agency EXIAR JSC was created in October 2011.
FINANCE INTERNATIONAL TRADE This section discusses the key aspects that you should consider when carrying out international trade, as well as how trading banking tools
Services Corporate clients Trade finance products 1 Trade finance Trade finance for clients - a range of banking products and services for servicing foreign trade contracts,
For corporate clients Reliable guarantee of business success Documentary letters of credit and bank guarantees The sole shareholder of VTB Bank (Armenia) CJSC is the state bank of the Russian Federation OJSC VTB Bank
DOCUMENTARY OPERATIONS 1 CONTENT RISKS OF THE IMPORTER/EXPORTER WHEN CARRYING OUT TRANSACTIONS BANK GUARANTEES DOCUMENTARY LETTER OF CREDITS CONTACTS OF SPECIALISTS 2 RISKS OF THE IMPORTER/EXPORTER WHEN CARRYING OUT TRANSACTIONS
LETTERS OF CREDIT IN FOREIGN ECONOMIC CONTRACTS 2015 Letters of credit A competent choice of the form of payment under the contract is the most essential part of any foreign economic transaction. When carrying out export-import
. “Sberbank products to support customer exports” Head of the Department of Trade Finance and Documentary Operations of the Ural Bank OJSC Sberbank of Russia D.S. Ustyugov 1 04/16/2014 FINANCING
Trade finance: current issues and new opportunities Page 1 Contents International trade. Risks. Tools. The Bank's capabilities in the field of trade finance New conditions
OJSC "Russian Agency for Insurance of Export Credits and Investments" Moscow, February 2013 ABOUT THE AGENCY OJSC "EXIAR" was created in October 2011 as a 100% subsidiary of the State Corporation
Proposal for lending to the Importer at the Export-Import Bank of China Brief information about the company and the bank The company RK Energostroy LLC, as a supplier of Chinese
Trade and structured finance 1 Since its founding, the Bank has been one of the largest Ukrainian banks and in 2010 it was recognized as one of the most important financial institutions
Support for small and medium-sized businesses in Russia Portrait of the Agency...2 Insurance protection of the Agency...4 Support for export-oriented enterprises...7 Advantages of insurance for exporters and banks...9
DOCUMENTARY LETTER OF CREDIT Dear client! If you are a participant in a foreign trade transaction and inevitably face risks and restrictions arising during the implementation of your contract, in particular, the impossibility
BANK GUARANTEES What is a BANK GUARANTEE? Bank guarantee The purpose of a bank guarantee is a written obligation to pay a sum of money upon presentation of a written demand for its payment from
OJSC "Russian Agency for Insurance of Export Credits and Investments" New opportunities for Russian exports ABOUT THE AGENCY OJSC "EXIAR" was created in October 2011 as a 100% subsidiary of the State
OJSC "Russian Agency for Insurance of Export Credits and Investments" New opportunities for Russian exports Moscow, December 17, 2013 ABOUT THE AGENCY The main goal of EXIAR's activities: providing
Financing of Russian exports under EXIAR insurance coverage May 2017 2 EXIAR EXPORT INSURANCE AGENCY OF RUSSIA The sole shareholder of EXIAR is Russian Export Center JSC. JSC "Russian
Effective VTB solutions for financing Clients’ international business using Trade and Export Finance instruments Products and Benefits Igor Ostreyko, Managing Director,
TRADE AND EXPORT FINANCE PRODUCTS AND INSTRUMENTS CONTENTS TRADE AND EXPORT FINANCE PRODUCTS AND INSTRUMENTS...1 TRADE FINANCE OF IMPORT OPERATIONS...4 FINANCE
Documentary transactions AS A MEANS OF SETTLEMENTS AND SECURITY OF OBLIGATIONS TREASURY CREDITWESTBANK Contents Subjects of a foreign economic transaction The concept of a letter of credit and guarantee Risks in foreign trade
Trade financing and documentary operations of the Bank for foreign trade participants Documentary operations are Documentary operations a group of banking services that serves to carry out settlements between buyers
24408/146 dated 02/24/10 Association of Financiers of Kazakhstan Hereby the National Bank of the Republic of Kazakhstan sends for consideration draft recommendations on accounting of transactions with documentary
New tools to support exporters of the Tomsk region. FINANCIAL PRODUCTS OF THE RUSSIAN EXPORT CENTER Tomsk 2017 Contents: Loans to support exports Financing trade turnover with foreign
Proposal for lending to the Importer from the Bank of China Brief information about the company and the bank RK Energostroy LLC LLC, as a representative of Amur-Sirius Energy Equipment LLC and supplier
COVERED DOCUMENTARY LETTER OF CREDIT Dear customer! If you are a participant in a foreign trade transaction and inevitably face risks and restrictions arising during the implementation of your contract, in particular,
24410/941 dated October 6, 2009 to the Chairman of the Association of Financiers of Kazakhstan S.A. Akhanov. Dear Serik Akhmetzhanovich! National Bank of the Republic of Kazakhstan in order to supplement the Accounting Recommendations
Optimization of calculations. Tools for reducing risks in the field of foreign trade Features of structuring export transactions Terms of payment of a foreign trade contract The following details are included: Currency
LETTER OF CREDITS PAYMENTS IN THE TERRITORY OF THE RF INTERNATIONAL TRADE (EXPORT/IMPORT) SECURING A COMMERCIAL CONTRACT FINANCE INSTRUMENT Securing the obligations of the parties in international and domestic commercial transactions
GUIDE TO MEDIUM AND LONG TERM EQUIPMENT IMPORT FINANCING COVERED BY EUROPEAN EXPORT INSURANCE AGENCIES Medium and long term equipment import financing by European banks
Bank financing Bank financing of transactions with various product groups that have a wide sales market and predictable liquidity. The bank finances: 1. the purchase of goods intended
INTERNATIONAL BANK GUARANTEES AND STANDBY LETTERS OF CREDIT In life there is always a place for opening otkritiefc.ru OJSC Bank "FC Otkritie". General license of the Central Bank of the Russian Federation 2209 (issued for an indefinite period). SELECTION OF CALCULATION FORM
International trade operations International business management Trade finance Main goal: Short-term (up to 2 years) financing of current activities, optimization of payment terms, as well as
Moscow, April 2015 ABOUT THE AGENCY Key facts: EXIAR OJSC was created in 2011. EXIAR’s activities are regulated by Decree of the Government of the Russian Federation of November 22, 2011 No. 964 “On the procedure for carrying out activities
MAIN FINANCIAL SUPPORT Lending to export contracts Providing bank guarantees SERVICES Insurance of export loans and investments (including export-oriented industries)
Opens markets Closes risks Agency Portrait... 4 Agency Insurance Protection... 7 Agency Insurance Products... 9 Buyer Credit Insurance... 10 Confirmed Letter of Credit Insurance...
BANK RUSSIAN CHECK SPORTERS STATE SPECIALIZED RUSSIAN EXPORT-IMPORT BANK (JSC ROSEXIMBANK) Financial and guarantee support for Russian non-resource exports
Trade finance for clients of MTS-Bank PJSC Contents 1. Trade finance services. Overview of services 3 2. Letter of credit with post-financing. Financing scheme 4 3. Letter of credit with post-financing.
Interregional Banking Group RRDB Credit products for counterparties of NK Rosneft October, 2014 About the Bank Open Joint Stock Company “All-Russian Regional Development Bank” was created in accordance with
ITALIAN FINANCING FOR YOUR PROJECT ITALIAN FINANCING FOR YOUR PROJECT Contents: 1. Introduction 2. Options for Italian financing 3. Option 1 “Bank Guarantee” 4. Option 2 “Insurance”
EXIAR as an element of the state system for supporting Russian exports and Khabarovsk. 2015 FOREIGN EXPERIENCE DIRECT SUPPORT OF EXPORTERS Insurance of political and commercial risks - the most common
DOCUMENTARY OPERATIONS of TASKOMBANK JSC for corporate business 2013 1 About the Bank History of TASKOMBANK JSC TASKOMBANK JSC is a universal commercial bank that provides a full range of financial
Commission rates of PJSC Bank St. Petersburg for transactions with counterparty banks in foreign currency Name of banking operations, products, services, tariffs Tariff rate 1.1
BANK GUARANTEES INTERNATIONAL TRADE SECURING OBLIGATIONS IN THE RF EXPORT GUARANTEES / CONTRACT PERFORMANCE GUARANTEES Ensuring the fulfillment of obligations in international trade and commercial activities
Documentary transactions as a risk management tool for trade and industrial enterprises Alexey Volchkov Deputy Chairman of the Board of FUIB for Corporate Business Contents Main risks,
“Export financing. Difficulties and ways to overcome.” to the materials of the conference “Foreign economic activity as a factor in the effective development of enterprises operating in the field of medical circulation
Attracting foreign trade financing from the countries of the Arab world January 28-29, 2016 WE Trade finance: Russia and the CIS 2016 COUNTRIES OF THE REGION 3 DISTRIBUTION OF RISK LEVEL IN THE REGION 4 EXPORT VOLUME
GOVERNMENT OF THE RUSSIAN FEDERATION RESOLUTION dated March 23, 2015 262 MOSCOW On amendments to the resolution of the Government of the Russian Federation dated November 1, 2008 803 Government
TRADE AND STRUCTURAL FINANCE 2 For companies engaged in foreign trade activities (export-import of goods, equipment, works, services and results of intellectual activity) and interested
Export financing under guarantees of the Russian Agency for Export Credit and Investment Insurance Chelyabinsk, 2014 EXIAR: general information EXIAR OJSC 100% subsidiary of the State Corporation
FINANCING IMPORT CONTRACTS WITH THE HELP OF ECA In life there is always a place for discovery open.ru CONTENTS What are export credit agencies? Scheme and procedure for organizing financing Cost and features
Structure of the report Financial instruments for solving the problems of producers, sellers and consumers of paints and varnishes in Ukraine. Provide a list of problems and solutions. Exchange rates: undervalued
TRADE FINANCE SHORT-TERM FINANCING OF OPERATIONS FOR IMPORTING GOODS AND SERVICES 2016 Short-term financing of operations for importing goods and services INFORMATION ABOUT THE BANK TransKapitalBank operates
To enter into force on April 30, 2014. Chairman of the Board of CJSC KOSHELEV-BANK O.V. Bagaev Tariffs and list of banking services provided to legal entities and individual substation List of operations
FINANCING OF PROJECTS MEDIUM-TERM AND LONG-TERM FINANCING OF PROJECTS INVOLVING IMPORT OF FIXED PRODUCTION INSTRUMENTS, RECONSTRUCTION AND CONSTRUCTION OF PRODUCTION FACILITIES 2016 Medium-term
FINANCING OF PROJECTS MEDIUM-TERM AND LONG-TERM FINANCING OF PROJECTS INVOLVING IMPORT OF FIXED IMPROVEMENTS, RECONSTRUCTION AND CONSTRUCTION OF PRODUCTION FACILITIES 2017 Medium-term
NEW OPPORTUNITIES FOR FINANCIAL SUPPORT Head of Representative Office Viktor Viktorovich Doronkevich NEW OPPORTUNITIES FOR FINANCIAL SUPPORT / CONTENTS 2 CONTENTS 1 2 3 4 INFORMATION ABOUT ACTIVITIES PRODUCTS
Approved by the Board of Directors of JSCB "Krosna-Bank" (OJSC) Minutes 7 dated March 20, 2015. TARIFFS FOR THE PROVISION OF BANKING SERVICES OF JSCB "KROSNA-BANK" (JSC) Moscow 1. General provisions 1.1. These sizes set
EXPORT FINANCING Goals and objectives of the Development Bank 2 GOAL FORM OF CREATION OBJECTIVES Increasing the reliability of the country’s financial and credit system and the economic development of the state Specialized financial
TRADE FINANCE TOOLS AND PRODUCTS Thriving international trade is a sign of a healthy global economy. Exports and imports are significant engines of growth and development in the world,
International settlements Liliya Gennadievna Kiryanova Lectures 7-8 November 2009 International settlements system for regulating payments for monetary claims and obligations arising between governments,
Thanks to foreign owners, Ukrainian banks are intensifying the financing of foreign trade. This process also has a negative side: it contributes to the growth of imports, exacerbating trade imbalances.
2009 Documentary transactions and modern forms of financing export-import transactions Contents Business card of the Bank Bank guarantees Guarantee as a risk management tool Guarantees issued
The key to success is simple letters of credit, guarantees and export credit agencies Igor Breev Department of Trade Finance and Correspondent Relations October 10, 2017 Tyumen 1 Main points Letter of Credit
PROGRAM FOR FINANCING PURCHASES OF EQUIPMENT ABROAD NATIONAL CONTAINER UNION, 2009 About the program National Container Union is a non-profit association of packaging market participants, uniting manufacturers
UDC 001.201 Toichkina I.V. 3rd year student of the Federal State Budgetary Educational Institution of Higher Education "Oryol State University named after. I.S. Turgenev" Russia, Orel FORFATING IN RUSSIA: FEATURES AND PROBLEMS OF DEVELOPMENT The article discusses
Information for foreign customers Importing from Germany March 2012 Information for foreign customers Importing from Germany Are you importing goods or services from Germany? In this case, export guarantees
Long-term international financing guaranteed by Export Insurance Agencies (ECAs) February 2015 Long-term international financing guaranteed by ECAs is: attracting foreign resources
A bank guarantee is a written obligation of the bank (acting as a guarantor), issued at the request of the client (principal) or another party authorized to do so by the client-principal, according to which the bank
Topic 6 Government measures to support exporters Financial measures to support exports 1. Loans - State Corporation "Vnesheconombank" CJSC "Roseximbank" OJSC "SME Bank" provision of preferential export loans to State Corporation "Vnesheconombank"
Banking structures are presented as a fairly reliable financial instrument, which is used in cases where it is necessary to minimize the risks of failure to fulfill the financial obligations of the principal to the beneficiary. In fact, this structure acts as a guarantor of timely and full fulfillment of the terms of the agreement upon submission of a written request by the lender to the borrower. Such relationships are called a bank guarantee and can be used, in particular, in the field of government procurement, as well as when collecting customs duties and taxes. In other words, when a deal is concluded with a counterparty, the company invariably faces the possibility of its failure to fulfill its financial obligations, which will certainly entail financial losses. And in this case, the guarantee issued by the bank almost completely eliminates such excesses.
If we consider a bank guarantee in terms of jurisprudence, then it can be called a document that is issued by a financial institution and addressed to a specific creditor of the company. This document displays the financial institution’s obligations to repay the company’s possible debt to the creditor, who may make such a demand under certain conditions. In fact, in this case we are talking about reimbursement to the credit company of a specific, pre-agreed amount. At the same time, there is one feature that boils down to the absence of the obligation itself from the company at the time of issuing the bank guarantee, which gives it the status of a potential creditor, while debt may not arise in the future.
If we translate the concept bank guarantee in human language, then this enterprise can be called an ordinary tripartite transaction with the participation of a financial institution (guarantor), a company that requires a bank guarantee (principal) and, directly, the company’s creditor (beneficiary). By the way, on the website http://12041961.ru/ you can urgently obtain a bank guarantee without collateral and with a minimum package of required documents. And since the Raketa company works with several financial institutions, we can definitely assume that you will receive the required guarantee without fail . Moreover, you will even be able to choose the most acceptable option from all the offers from banking structures, which will allow you to appear before the beneficiary as a fairly serious company with which to cooperate.
Large-scale business transactions are always associated with great risks. It is not always possible to verify the reliability of a partner. To reduce the share of these risks, financial instruments such as letters of credit and bank guarantees are intended.
The purpose of both banking products is the same. But the essence of their actions differs from each other, although this difference is not always visible to bank clients.
It is used more often than a letter of credit. A bank guarantee is understood as a written agreement under which a financial institution - a bank - assumes obligations under an agreement between the customer and the contractor.
The bank is the guarantor of the transaction. He undertakes to pay the customer money if the contract for the supply of goods and services has not been fulfilled. He insures himself with a deposit. The bank will be able to dispose of the collateral if the deal falls through.
Bank guarantee, bills
Depending on the purpose, this tool is used for:
The bank has a number of requirements for those applying for this product. Each financial institution sets its own conditions. However, we can highlight a list of mandatory requirements:
The applicant should collect a certain package of documentation, which includes:
A pledge is provided as security.
The debtor has the right to provide real estate, transport, material assets, equipment. A bank guarantee against a bill of exchange is also widely used.
For collateral, bills of exchange are accepted, both issued by other credit institutions and by the same bank to which the applicant applied for a guarantee.
A bill of exchange is a security issued in a strictly defined format. It represents a written obligation to pay its owner a specified amount within a specific period. This is a kind of promissory note.
Guarantee secured by a bill of exchange
There are two main types: simple And translated.
A promissory note is not conditional on anything. It obliges the debtor to pay a specific amount at a specified time to the creditor. The debtor issues it independently.
When using a bill of exchange, another participant is involved. The creditor obliges the debtor to pay a specified amount to a third party, who in this case is the holder of the security.
According to the nature of the profit received, it can be interest and discount. In the second case, profit in the form of interest does not accrue. Its income is the difference between the sale price and the par value. This is a discount, which can have a zero value.
Most often, a bill of exchange is a registered security. It includes a specific person who receives the right to claim the debt. There are also bills of order payable to bearer. They indicate only the debtor, the amount of debt, the term and place of payment.
A bill of exchange applying for collateral for a bank guarantee must include the following mandatory details:
According to current laws, the total amount of debt of the issuing organization should not exceed half of the money it has. The currency of the funds of the security and those insured by the guarantee must be similar. Such securities are issued individually, in the quantity required by the client. A bill of exchange can be issued to both a legal entity and an individual.
Not every credit institution is ready to accept a bill of exchange as collateral. Indeed, in this case, it becomes necessary to check the drawer for his financial stability.
However, the main advantage of these securities is their liquidity. It is not difficult to sell bills, and there is no need to convert the face value of the paper into cash equivalent, as was the case with transport or real estate. To pay the debt if the terms of the agreement are violated, you can transfer not money, but the papers themselves.
If an apartment or vehicle is offered as collateral, first of all, they need to be assessed, which means spending time considering the possibility of issuing a bank guarantee. Analysis of a bill of exchange document is much faster and easier. If a guarantee is needed to secure an auction, the time factor becomes very important, because the auction has a certain period. You may simply not have time to receive a guarantee before the start of the competition.
The banking institution also issues such type of risk insurance as letter of credit. This is an obligation of the bank issued at the request of the buyer to pay the seller a specified amount if the latter complies with all the terms of the agreement. The seller must document completion. Here the bank acts as a third party, transferring money from one party to the transaction to another.
Let's say a buyer and seller enter into a supply agreement. None of them wants to act on prepayment or pre-delivery. Then the buyer goes to the bank and opens a letter of credit. The settlement amount will be the one he must pay for the purchased goods. As soon as the subject of the transaction is received by the buyer, the seller has the right to send the necessary documents to the bank. And he already transfers the payment under the letter of credit. Documents presented by the seller may be:
In this way, companies that have never worked with each other are insured. Letters of credit are also used in foreign trade. The main difference from a guarantee is that the bank does not risk its assets.
Letter of credit as a way to insure risks
Financiers have identified several types of letter of credit forms of payment.
According to security, it can be:
By nature, the following varieties are distinguished:
In practice, covered irrevocable letters of credit are considered the most popular.
It is often confused with a guarantee. The essence of such a document is the payment by the guarantor to the customer of the amount in the event of failure by the supplier to fulfill the terms of the transaction.
The reserve type is characterized by a number of features:
For the executor of the contract, a letter of credit gives the opportunity not to make an advance payment and defer payment. It also provides confidence in the payment of money even in the event of force majeure. The customer receives a payment guarantee from several financial institutions. There are no risks when sending goods without prepayment. Payment under a letter of credit occurs quite quickly.
The only disadvantages of this form of payment are the high cost of registration and a more complex process.
Despite the fact that both banking products protect the interests of the parties, they differ from each other. Main differences:
In trade finance, instruments such as letters of credit and bank guarantees are becoming increasingly common. This ensures security for all parties to the agreement.
