Member Executive Committee – ICC Banking Commission Impact of Global Trade Trends On Risk Management for International Operations 22 May 2013 Vin O’Brien Member Executive Committee – ICC Banking Commission

Chair, Market Intelligence Group ICC Global Survey 2013 ICC Market Intelligence Group Vin O’Brien Chair, Market Intelligence Group

ICC Global Trade Finance Survey 2013 Partners ICC Global Trade Finance Survey 2013 ‘Market Intelligence Group’ Partnership Relationship

Trends in International Trade and Finance Pascal Lamy, WTO Director General, November 2008 “W e do not know the impact of the financial crisis on trade and trade finance ” Pascal Lamy, WTO Director General, April 2009 - “ICC Global Survey contributes to help leaders make informed decisions on World Trade Finance”

- 260 Banks from 102 Countries 56% 2013 Global Survey - Banks & Countries - 260 Banks from 102 Countries 56%

The Story Starts September 2008

3% 2012 Trade Growth Uneven and harder to predict but Asia – South East Asia and South South comparatively constant 3%

South South Trade is expected to accelerate, South South comparatively constant and momentum to be maintained ! South South Trade is expected to accelerate, - reaching 50 percent of world trade by 2021, - 70 percent by 2031.

Exports are growing pretty much everywhere but equilibrium balance has changed!

The South South dynamic is accelerating !

Emerging Asia - Exports Imports

Emerging Asia - Primary Market Focus for Trade Finance 30%

Trade Finance Activity Up 68%

Confirmations – up! 67%

Trade Pricing - CONSTANT OR DOWN !

COURT INJUNCTIONS - DOWN ! 69%

CLAIMS - GUARANTEES AND STANDBYS ! 52%

ALLEGATIONS OF FRAUD - DOWN! 65%

93% SPURIOUS DISCREPANCIES IN DOCUMENT - PROBLEMATIC ! 93% INCREASE OR SAME PROBLEM 93%

TIGHTENING OF TRADE CREDIT GUIDELINES 69% - 82%

KYC - impact on trade finance business ! 66%

Compliance challenges 51% reported that Sanctions Compliance restricted trade finance operations in 2012 to a greater extent than in previous years. 57% or respondents reported that in their view Basel III will impact negatively or very negatively on their trade finance business Consequences identified in order of priority were increased fees charged to customers, reduced international trade activity and banks withdrawing from the trade finance market.

57% Trade Credit Losses lower or much lower than conventional lending ! 57%

SWIFT TRADE MESSAGING DOWN 2.25%

MT 700 – ISSUANCE SLGIHTLY UP

2012 – Asia Pacific 76% of Export Trade World Traffic

2012 – ISSUE LC Asia up – Europe down – US flat!

the countries with the highest growth in 2012 compared to 2011 were: Bangladesh: 42% Bahrain: 22% Qatar: 22% Russia: 20% Venezuela: 16% Nepal: 13% Ethiopia: 11% The countries with the highest decrease in 2012 compared to 2011 were: -Syria: -40% Italy: -19% Netherlands: -15% Spain: -15% Germany: -12% Portugal: - 12 Nigeria: -12% Lebanon: -11%

83%

2012 – Multilateral Development Bank - USD 50 BN Trade Support

The Typical Trade Facilitation Deal How the TFP programme works! Goods Exporter International Bank (Confirming) BANK IRE DUB Payment Importer Confirm L/C Documents Request L/C Issuance Local (Issuing) L/C in favor of exporter IMPORTER EXPORTER STANDBY - UCP 600 EBRD STANDBY AAA 32

2012 – 1.4 % increase to USD 17 Trillion Berne Union members history 2012

Member Executive Committee – ICC Banking Commission Thank you for your most…… valuable time ………..and hospitality! Impact of Global Trade Trends On Risk Management for International Operations 22 May 2013 Vin O’Brien Member Executive Committee – ICC Banking Commission