2. How can Commerzbank enhance your success?
Darko Trbojevic Financial Institutions Belgrade / September 2011 1
3. Commerzbank – the leading German commercial bank
A strong universal bank A strong brand
Germany’s leading wholesale bank leveraging its The brand mirrors the principles the new
successful franchise Commerzbank abides by, partnership and
performance
No 1 retail bank in Germany
The logo which symbolizes how the merger of
One of Europe’s largest FI departments
two traditional brands has given rise to a new,
One of the world’s largest networks exciting and innovative institution
of representative offices
The brand promise: “Achieving more together”
Client-centred investment bank with a European
footprint
Darko Trbojevic Financial Institutions Belgrade / September 2011 2
4. 7,000 bank clients, over 60 locations, one bank: Commerzbank
Riga
Moscow
Minsk
Dublin
Amsterdam Warsaw
London Hradec Králové
Brussels Prague Ostrava Kiev
Luxemburg Plzen Brno Košice
Paris Vienna Bratislava
Zurich Budapest
Zagreb
Milan Bucharest
Belgrade
Barcelona Istanbul
Madrid
Novosibirsk
Almaty
New York Baku Tashkent Beijing
Ashgabat Seoul
Tianjin Tokyo
Tripoli Beirut Shanghai
Cairo
Dubai Hong Kong Taipei
Mumbai
Bangkok
Caracas Addis Ababa Ho Chi Minh City
Panama City
Lagos Kuala Lumpur
Singapore
Jakarta
São Paulo
Johannesburg
Commerzbank worldwide: Santiago de Chile Buenos Aires
Representative offices - Financial Institutions Melbourne
Foreign branches
Group companies and major foreign holdings
Darko Trbojevic Financial Institutions Belgrade / September 2011 3
5. Trade Services:
Expertise and experience since 1870
“Made in Germany” around the globe …
Team with experience, understanding and the desire to make you more successful
1,350 documentary and transaction services staff
globally in 50 trade units
In-depth knowledge of markets and drivers of clients success
Member in major initiatives such as ICC Trade Default Register, UCP Consulting
Group, BAFT Global Trade Industry Council, WTO, etc.
1.75 % of all Letters of Credit worldwide
are handled by Commerzbank *)
Every 25th guarantee in the world
is handled by Commerzbank *)
*) Source: SWIFT Watch
Darko Trbojevic Financial Institutions Belgrade / September 2011 4
6. Risks in International Trade
Risks
…for the Exporter …for the Importer
Economic Risks
Manufacture Delivery
Acceptance of delivery Quality
Unwillingness to pay Exchange rates fluctuations
Inability to pay
Exchange rates fluctuations
Political Risks
Revolution, War Revolution, War
Payments ban/ Moratorium Payments ban/ Moratorium
Foreign exchange controls Foreign exchange controls
Darko Trbojevic Financial Institutions Belgrade / September 2011 5
7. Commercial Interests
Importer:
Ensuring receipt of goods/completion of services in due time and in agreed
quality.
Exporter:
Ensuring payment in due time and in the agreed currency.
Darko Trbojevic Financial Institutions Belgrade / September 2011 6
8. Intermediation of the different positions via:
Banks
Leasing Companies
Factoring
Forfaiting
Darko Trbojevic Financial Institutions Belgrade / September 2011 7
9. Specific Options available in Serbia:
AOFI
SIEPA
Serbian Development Fund
National Bank of Serbia
Darko Trbojevic Financial Institutions Belgrade / September 2011 8
10. Payment instruments & security aspects from an exporter‘s perspective
An additional security for the
financial compensation of losses
Advance-
payment or damages if one of the involved
in
parties does not fulfil their
cr
contractual obligations by
ea
si
Confirmed Letter providing a
ng
of Credit
se
cu
rit
Bank Guarantee
y
Unconfirmed Letter of Credit
(Aval)
Documentary Collection
The guarantee compensates for
e.g. financial disadvantages out of
Payment after receipt of goods
non-payment, non-delivery,non-
perfomance, warranty.
Darko Trbojevic Financial Institutions Belgrade / September 2011 9
11. The Documentary Letter of Credit: Advantages and Disadvantages
Exporter‘s view
Advantages Disadvantages
The risk of non acceptance of goods and the The commercial and the political risk remains
risk of Importer‘s unwillingness to pay or (if the credit is not confirmed/ silently confirmed).
inability to pay are excluded by the irrevocable
Exporter is liable for costs arising from handling
payment undertaking of the issuing bank and, if
of the credit.
so, the confirming bank.
Increased time and effort for the compiling of
The credit can serve as a financing instrument.
complying documents.
Importer‘s view
Advantages Disadvantages
Exclusion of risk of quality: quality and quantity The risk of non-delivery and non-performance
of goods can be ensured by requirements of remains (if the goods and/or services are not
specific documents (e.g. inspection certificate). delivered/rendered in due time).
Payment will be only effected upon presentation Utilisation of credit line.
of complying documents.
Importer is liable for costs arising from issuance
and handling of the credit.
Darko Trbojevic Financial Institutions Belgrade / September 2011 10
12. The Documentary Letter of Credit: Flow Chart
(Credit available with the advising bank by sight payment)
1. Order, Contract or similar
Importer Exporter
5. Shipment of goods
8. 2. Instruction 6. Presentation 4.a
Delivery of Advising,
documents/ to issue of Documents/ confirmation
Debit of a credit Payment 4.b
(if any)
account
7. Remittance of documents/
Debit of account
Issuing Bank
3. Issuing of credit Advising Bank
Darko Trbojevic Financial Institutions Belgrade / September 2011 11
13. The Bank Guarantee: Advantages and Disadvantages
View of the Ordering Party
Advantages for the Guarantee Orderer Disadvantages for the Guarantee Orderer
He avoids to deposit an unfavourable and high- His credit line is charged.
risk cash collateral with his partner.
He must pay the costs for the issuance of the
The guarantee amount will be debited to his guarantee.
account only in case of a complying claim for
Additional costs of the second bank occur in case
payment.
of an indirect guarantee.
View of the Beneficiary
Advantages for the Beneficiary Disadvantages for the Beneficiary
He holds an irrevocable payment undertaking of a The economic and political risks remain (in case
bank, in case of an indirect guarantee of a bank of direct guarantee or if the guarantee is not
he has chosen, in his own country, according to confirmed).
local law and with the possibility of a simple and
Payment will only be effected when a complying
fast claim for payment.
claim for payment has been lodged.
Darko Trbojevic Financial Institutions Belgrade / September 2011 12
14. Flow chart Direct Guarantee (example: performance guarantee)
1. Contract
Buyer/ Seller/
Importer Exporter
3. Guarantee
2.
Order to
issue a
guarantee
Guaranteeing
Bank
Darko Trbojevic Financial Institutions Belgrade / September 2011 13
15. Legal Regulations for the Documentary Business in Germany
Foreign Trade Act (Außenwirtschaftsgesetz/AWG)
is the law that provides guidelines for the German Foreign Trade and Payments Ordinance (AWV) mentioned
below, and contains definitions, authorizing bodies as well as penal, fine and monitoring provisions.
German Foreign Trade and Payment Ordinance (Außenwirtschaftsverordnung/AWV)
contains current provisions such as reporting provisions, foreign trade restrictions (embargo provisions,
boycott regulations) and the country list K.
DUAL-USE Regulation (DUAL-USE-Verordnung)
governs the export of items, technologies and skills from the European Union, which can serve both civil and
military purposes. Violations are punishable in accordance with, amongst other things, the Foreign Trade Act.
War Weapons Control Act (Kriegswaffenkontrollgesetz/KWKG)
provides a ban on the production of and trade in ABC weapons as well as involvement in such activities and
the duty to obtain a licence for the production and transport and trade of equipment, substances and
organisms specified in the War Weapon List.
Money Laundering Act (Geldwäschegesetz/GwG)
obligates banks to verify the identity of the customers and economic beneficiaries of business transactions
when entering into business relations and certain transactions („Know Your Customer“-/ KYC-principle).
Darko Trbojevic Financial Institutions Belgrade / September 2011 14
16. Darko Trbojevic Commerzbank AG
Financial Institutions
Representative Commerzbank Belgrade Kaiserplatz
Telephone: +381 (0)11 / 3018 520 Frankfurt am Main
Fax: +381 (0)11 / 3018 523
E-mail: darko.trbojevic@commerzbank.com Postal address:
Vladimira Popovica 6, A-112
11070 Beograd, Serbia
Darko Trbojevic Financial Institutions Belgrade / September 2011
