11 EBF Conference : Banks for Growth The challenge of financing business Financing International Trade Financing International Trade Henri d‘Ambrières – Acting Head – EBF Export Credit Group Brussels, 20 March

222 Agenda 1.International Trade and its financing 2.Is there a place for new players ? 3.Any risk ? 4.A new landscape ? 2

International Trade and its financing The importance of International Trade for global growth  WWD GDP 2011 $ 67,509 bn (IMF) Growth % / year  WWD Exports 2011 $ 21,986 bn (WTO) –WWD Export of Goods $ 17,816 bn Growth % / year –WWD Export of Services $ 4,170 bn The importance of the financial tools for international trade  WTO : 80% of International Trade backed by a Financing Instrument  GDP –2.8% but Export –12.1% /clear link with the financial crisis  Berne Union - (Insurance for International Trade) - Production 2011 –Short Term $ 1,492 bn Growth % / year –Medium & Long Term $ 191 bn Growth % / year 3

Is there a place for new players ? Short-term Trade : A flow business with many transactions / limited individual amounts  Unfunded products : Guarantees / Letters of Credit –Possible newcomers Insurance companies for Guarantees Banks from Emerging Markets for Guarantees and LC’s  Funded Trade Products : Discounted LC’s / Forfaiting / BPOs –Possible newcomers Refinancers attracted by low risk and short-term assets Banks from Emerging Markets  Obstacles –Investments required in Back-Offices to deal with large numbers of transactions –Financial and non-financial regulations (Basel III, KYC,…) –Lack of knowledge, education, liquidity,,, + variety of underlying assets,… 4

Is there a place for new players ? Medium and Long Term Export Credits Mostly large deals with long durations (2 to 5 years construction + 8 to 15 years repayment)  Alongside commercial banks, a possible role for public banks and institutions with long-term resources (pension funds, insurers,…)  Possibility to use the bond market in addition to the loan market  Obstacles –Limited flexibility –Limited liquidity –Capacity to analyse and manage the projects 5

Are there risks attached to these changes ? Opportunities  Increased volumes  Lower prices Risks linked to a growing role of new players  New players : changes in habits, introduction of new practices  More volatility in capacities and pricing  Loss of technical skills in banks with no substitution in non-banks  Reduced flexibility brought by some investors in construction period, in drawings, in repayment phases, in renegotiations,…  Reduced access for industry to the networks and other products of banks  Financial risks on importers assumed by exporters 6

A new landscape ? Banks still have the capacity to play a pivotal role in  Arranging  Processing  Funding but will have to work with new players which can bring  Capacity to arrange small deals at lower cost  Capacity to process some flows  Fund over very large durations or in some currencies 7

A new landscape ? Can we expect a split in the roles, which were all managed by banks until recently ?  Arrangers / Coordinators Banks, Advisors, Funds,,,  Processors Banks, Advisors, Funds,,,  Fund providers –Co-Financers –Refinancers Banks, Public vehicles, Funds,… 8