July 2012

Supporting International Trade

Rob Keller Head of UK Region, Trade Finance

2

Supporting International Trade

1. Hong Kong – gateway to China

2. Trading considerations: risk, funding, visibility & control

3. Offshore Renmembi - CNH

4. CNH capabilities

5. RBS Corporate Global Account

6. UK Government Support Schemes for Exporters

7. Value added services for UK businesses

8. Further Help

3

2000

US

ASEAN

Western

Europe

Latin America

264 167

138 154

283 102

92 91

Japan 29 37

121 177

52 22

17 22

China’s

Exports

China’s

Imports

2010

Eastern

Europe

Central Asia

16 14

5 7

42 42

1 3

36 9

1 1

(In US$ bn)

Hong Kong – a gateway to China – World’s 2nd Largest Trading Nation

Source: HKMA Website

4

Trading Considerations: Risk, Funding, Visibility & Control

1) Risk

• Guaranteeing payment & performance (Letters of Credit, Collections, Bonds)

2) Funding

• Covering contract costs (Pre and post shipment finance)

• Funding goods purchase for sale (Import Loans)

3) Visibility & Control

• Initiating, tracking, executing trade online (Maxtrad)

5

Growth of the offshore CNH Market Through trade and investments

•Trade settlement: Y1.7trn (Sep’11)

•78% of total China-HK bilateral trade

•6.3% of total China trade

•Deposits: Y622bn (Sep’11)

•10.4% of HK’s total deposits

•20% of HK’s total foreign$ depos

•0.8% of China’s total deposits

•Bonds: Y191bn (Sep’11)

•30% of HK’s total debt market

(excl. EFN issues)

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

Jul 0

9

Sep 09

Nov 09

Jan 1

0

Mar 1

0

May

10

Jul 1

0

Sep 10

Nov 10

Jan 1

1

Mar 1

1

May

11

Jul 1

1

Sep 11

Deposits Bonds CNY trade settled

6

Scope of CNH Services offered by RBS Hong Kong

(1) Account Service

Any eligible enterprise located in Hong Kong and other

regions outside PRC can open CNH account

Current and Saving accounts are available

(3) Currency Exchange

Two ways conversion for trade settlement and non trade

settlement

Available in Spot or Deliverable Forward

(4) Remittance

Outward and inward CNH remittances in and out of PRC subject

to PRC regulations and guidelines

(2) Trade Finance

General trade services including Documentary Collections,

Letter of Credits, Guarantees and etc.

Both Import and Export loans are feasible

Interest rate to be determined by banks on a commercial

basis

(5) Investment

CNH fixed deposits

Investment in CNH bonds issued in Hong Kong

7

Global Account

• Any size of business can now take advantage of our global banking network

• In-country account in up to Hong Kong and 13 other countries – all from the UK.

• One bank, One relationship contact

• Access Online allows account visibility across the globe

• Cash management and trade finance products available locally

USA (Citizens)

EMEA

Belgium, France, Germany, Ireland (Ulster

Bank), Italy, Spain, Switzerland, Netherlands Asia

India, UAE,

Hong Kong & Singapore

8

Government Schemes for Exporters

Objective: Help UK businesses to obtain funding for an export contract

• Risk sharing between the government and the banks

• Govt will take up to 90% of the risk

Most popular schemes:

• Bonds and Guarantees Support Scheme

• Working Capital Support Scheme

• Letter of Credit Guarantee Scheme

9

Value Added Services

Buying machinery from abroad?

• Capital Import Finance : Asset financing with the protection of trade finance in one package.

Need help collecting monies owed to you, from around the world?

•Debt Collection

Minimise risk and spend less time completing documentation

•Document Preparation

10

Further help

Online:

www.rbs.co.uk/international

www.natwest.com/international

Incl. Cashflow Calculator

Offline:

Guide to International Trade

11

Appendix

12

RMB Settlement Infrastructure – Overseas imports from PRC Enterprise

3. Remittance 4. CNAPS

(China RTGS)

2. RMB Payments

If necessary,

HKD / USD RMB 5. RMB Receivable

Our RMB

Corresponding

Bank

PRC Enterprise / Approved

Mainland Designated

Enterprise (MDE)

1. Goods

Hong Kong

Overseas

Enterprise

Beneficiary Bank

in PRC

13

RMB Settlement Infrastructure – Overseas exports to PRC Enterprise

4. Remittance 3. CNAPS

(China RTGS)

2. RMB Payments 5. RMB Receivable

Our RMB

Corresponding

Bank

Remitting Bank

in PRC

1. Goods

Hong Kong

Overseas

Enterprise PRC Eligible

Enterprise

Trading considerations: risk, funding, visibility & control

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Potential Benefits to PRC Suppliers/Customers

Risk Management • To match both payables and receivables in CNY to eliminate the risk of FX

fluctuation and associated costs

• To avoid the risk of CNY appreciation against foreign currencies

Efficiency improvement leading to

quicker application of funds

• No FX verification required

• Quicker settlement of funds

• Faster Export Tax Rebate (provided the suppliers are approved Mainland Designated

Enterprises)

Improvement and Greater

Transparency in Cost Structure

• To manage both production and sales in a single currency to eliminate the need for

FX management

• To improve the overall cost structure and profit margin

Funding Efficiency • CNY L/C issued with tenor over 90 days will not consume any foreign debt quota

15

Potential Benefits to Overseas Buyers/Sellers

Liquidity Management and

Investment Diversification

• To hold and manage CNY liquidity outside of China under various funding and

investment options

• To add CNY as an alternative currency to their portfolio

Risk Management • To hold CNY to hedge for two-way import and export flows with China

Increase Control • To proactively and effectively manage FX transactions

Increase Pricing Transparency • To reduce potential markup from suppliers due to cost of FX

Access to a wider buyer /

supplier base

• Flexibility to settle trades in CNY will become a competitive advantage

• To access suppliers, who might have FX constraints