Alan Andrews Vice President, Global Trade, PNC Bank

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Presentation transcript:

Alan Andrews Vice President, Global Trade, PNC Bank Banking in the United States for Turkish Investors – Financial Resources Available

PITTSBURGH STEELERS –SUPER BOWL CHAMPS!! 2006

Tunç Ilkin 12 years with Pittsburgh Steelers Pro Bowl Honors ‘88, ‘99

Who is Owns & operates banks in 8 states and the Washington D.C. 13th largest bank in the United States Established in 1860 Head Office located in Pittsburgh, PA Assets of US$93.2Bn Owns & operates banks in 8 states and the Washington D.C. Listed on the NYSE - PNC www.pnc.com One of the 15 largest banks. We are not well know like other international banks that you have heard. In international banking we are a niche bank. Our niche is financing of US exports with the support of Ex-Im Bank. A: In terms of Ex-Im Bank transactions, …..

Who is Finance companies from start-up to $5 billion in revenue ATMs: 3,600 Total staff: More than 23,000 in 27 U.S. states and overseas locations Customers: 2.9 million consumer and Small and Medium Sized Enterprises (SME’s = Family Businesses) PNC ranks as 9th largest Small Business Lender in the USA One of the 15 largest banks. We are not well know like other international banks that you have heard. In international banking we are a niche bank. Our niche is financing of US exports with the support of Ex-Im Bank. A: In terms of Ex-Im Bank transactions, …..

Who Are We?

SME’s = Family Businesses In the USA, SME’s comprise 97% of U.S. exporters SME’s create 70% of new jobs in America SME’s account for only small share of U.S. exports SME’s desire to grow through exports Untapped potential !

Why Are We Here? PNC has increased its resources and services that specialize in international banking, evidenced by: In 2005, PNC awarded the Presidential “E” Award. In 2005, PNC selected by the U.S. Department of Commerce as first financial partner to help SME’s grow internationally. In 2005, PNC largest user of U.S. Export-Import Bank programs.

Why Are We Here? Provide attractive financing to Turkish SME’s that are investing in U.S. SME produced capital goods and services

Actual Case Study #1 2005-2006 U.S. manufacturer of environmentally friendly “supercritical fluid solution” systems 4 Turkish SME’s in SÖKE form new company to invest in this new technology to extract oils from flax and herbs – US$1 million 5-year PNC financing Unique and challenging structure

Actual Case Study #2 2004-2005 U.S. manufacturer of plastics extrusion systems Turkish SME in Izmir invests in this technology with PNC financing for 5 years to extrude plastic parts for automobiles – US$1.5 million New $3mm investment planned for 2006-2007

Financing Solutions Medium term financing – up to 7 years with U.S. Export-Import Bank support The least expensive way to finance U.S. equipment purchases

Machines and equipment - new or used Services that can be capitalized Which Goods Can be Financed Medium-Term? Machines and equipment - new or used Services that can be capitalized

Borrower Benefits Medium Term Financing Low interest rate – US$ LIBOR or € LIBOR base All-in annualized rate of 6.2%-8.5% p.a. Flexible Terms Payment terms of up to 7 years for end users No need for collateral No local bank guarantee or L/C Semi-annual repayments Grace period (up to 18 months)

Information Required Last three years of financial statements Financial information must be audited if request is US $ 1 million or larger Project information Business activities of borrower “Good” credit references

OTHER U.S. Government support OPIC Targets US Joint venture in Turkey that may result in US exports; products mfgd can be exported back to US small business focus insurance, direct loans

Banking in the U.S.?? Most US banks tried to have specialized groups (Foreign Direct Investment - FDI) internally covering all foreign investment But… Too differentiated, too unique Most now handle as normal course of their business

Banking in the U.S.?? Opening accounts A bit more than what we would require of a US co. Patriot Act validation (OFAC) & AML documentation – 48-72 hour turnaround Basic KYC: to ESTABLISH IDENTITY most important, purpose of the account, source of funds (evidence) DEPENDS on Type of Entity, incl. Articles of incorporation; Partnership Agreement; official documentation; Copy of By-Laws, Incumbency Cert.(who officers are) Corp. Resolution Tax Forms – W-8 Turkish Bank or counsel REFERRAL helps No U.S. Address? (special circumstances –agents, overseas lending), challenging

Banking in the U.S.?? Opening accounts Physically present self…again - KYC! Probably no different that other OECD country governmental requirements

Banking in the U.S.?? CREDIT All types and sizes – depends on entity (business Life cycle) and needs Secured, unsecured, Working Capital, equipment financing, leasing, real estate lending Business Credit Card, Business Insurance (property & casualty, risk mgmnt svcs); Employee benefits (401k, workplace bkg,etc.) Personal Bkg - Checking & Savings, vehicle loans, credit cards, home mtgs. Investments – Brokerage Svcs, Stocks, Retirement Planning, Savings plans

Banking in the U.S.?? CREDIT Controlled Block Agreement (also called Blocked Account Agreement or Deposit Access and Control Agreement) 3rd party or pvt lender (can be overseas bank) Lender requires lockbox set up by PNC to control sale proceeds – high cost, but available or Turkish bank standby L/C with beneficiary being PNC to support local sales office borrowings

Banking in the U.S.?? Cash Flow The right type of checking accounts The right type of money Mkt, and Business LOC Merchant Services On-line money mgmnt services On-Line FX On-Line Trade Services

Banking in the U.S.?? Leveraging US Federal Gov’t Programs and State assistance Programs – wide variety – for start-ups, commercial real-estate, equipment inventory and working capital Typically less stringent requirements as to equity and collateral Lower down payments, and longer terms PNC Bank is an SBA preferred lender

Banking in the U.S.?? Relationships still important Find your CHAMPION!!

Actual Case Study #1 2000-2006 Etimine USA, Inc. (sub of Eti Aluminyum) Importer of boron, chemicals and ferrochrome for steel industry in U.S., 5 direct employees, approx $20mm sales currently Has substantial deposit accounts at PNC, currently no borrowing (industry doing very well now, has borrowed in past, small amounts <$100k, unsecured), originally wanted $500k LOC “because it is largest aluminum co in Turkey” …(it doesn’t work this way)

Actual Case Study #2 1999-2006 U.S. Electro-Fused Metals LLC Brazilian mfr of metal coatings ($12mm in sales in BZ) 1st met w/Real Estate Development Fund, intro’d to PNC lender, who reached out to PA Dev Authority, recvd $3.4mm 15 year plant loan jointly w/PNC, workig cap of $1.5mm, on line bk svcs, personal bkg, now US has $20mm in sales and is largest revnue generator of group No personal gtees, no parent gtee – all domestic liens WIN-WIN situation

Actual Case Study #3 2005-2006 LEEDS INC. $12mm-in-sales U.S. importer/distributor of promotional items, bought by large French firm; PNC taken out of credit by aggressive European lender Co found borrowing from Euro bank too cumbersome PNC structured $10mm LOC secured only by A/R Lockbox, purchasing card, merchant svcs Canada lockbox for Canada sales Unique and challenging structure

Actual Case Study #4 1986-2006 PROMINENT FLUIDS, INC. German owned mfgr of pumps; 20-year relationship with PNC. Originally we financed plant development with PA state assistance, and parent gtee. Now, $3mm LOC extended against inventory and A/R, large FX dealings, all Treasury management Services on-line…no personal or corp gtees but does have a subordination agreement of parents credit to US company

Contact Alan D. Andrews Vice President and Manager Global Trade PNC Bank, N.A. Two PNC Plaza Pittsburgh, PA 15222 412. 768. 7662 office 412. 762. 5022 fax alan.andrews@pncbank.com www.pnc.com/tradefinance