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What You Need to Know About International Banking?
 
In order to be a success in your export activities, you need to know how to finance your import or export and how to get paid, espescially when dealing in foreign currencies.  Your banker can and should be a key member of your advisory team.  Finding a bank that is comfortable and proficient in providing the various products and servcies required by exporting and importing firms is becoming easier as international sales become more and more common.  The expansion of the internet and the advent of e-banking are also helping to increase the number of banks that companies can work with for their international banking requirements. 

Banking Products And Services You Should Know About 

Depending upon the industry in which your company operates, there are several products and services available from major international banks  that can help you to get ahead of the competition.  Financing and speed are integral to any sale and now is the time to look for banks on the leading edge. Multinational companies, commodity companies, capital equipment and consumer product producers are the primary users of trade financing products, which include import letter of credit, export letter of credit, stand-by letters of credit, collections, trade-related loans,  structured  and barter trade.  The most common of these is the letter of credit.  Simply put a letter of credit is a banking mechanism that permits importers to offer secure terms of sale to exporters.

In the past, most companies didn't need to know about letters of credit.  With the expansion of international trade, this has changed and even small companies increasingly are coming to utilize letters of credit and other even more advanced international financing services.  Knowledge is power and you should learn about each of these instruments and evaluate if they are applicable to your particular transaction.  Definitions of most of the products such as letters of credit are included in the Glossary on this website.  The website www.mantissa.co.uk offers both a quick and a more extensive course for learning more about Letters of Credit and other international financing instruments.  This subject is very important both for exports and imports and a visit to the website is definitely recommended. 

In addition to providing the services above, companies should also expect the financial institution to be able to provide products through a web-enabled delivery portal.  Many of the best trade banks are already doing this.  Additionally, your international bank should also be able to offer information on the following  value-added trade products and services such as:

  • Prepayment and structured pre-export facilities: these services finance pre-export fabrication and provide export financing for a country’s key exports.
  •  Export receievables financing.
  • Government-backed insurance and guarantee programs: These are available from government bodies such as Eximbank or private insurers and can help your company spread the risk.
  • Programs offered by regional development banks and institutions: the IFC, ADB, World Bank, and other institutions  support international sales by providing guarantees as credit support or enhancement.
  • Linked exports and import financing: In some countries the export contract can act as security for essential imports.  For example, in some countries that export value-added products (Asia has many), if imports (generally but not always raw materials) do not flow into the country then value-added exports stop.  An international bank can credit-enhance the deal by using the export contract as security thus allowing country imports to continue.
  • Global trade management: This allows you to out-source the trade documentation preparation to others who are more familiar with it and who work with these forms daily.
  • Option-linked financings for commodities: Again, these are risk spreading options.  Examples are trade finance solutions that have interest rate, foreign exchange, and commodity-hedging options.  These can be made part of the transaction if desired.
  • Counter-trade transactions: commodities, durable and other goods are essentially bartered. 
  • Forfeiting: This is a provision of medium-term trade finance where trade contracts are  sold into the secondary market.
  • Multinational inter-company structured trade/tax facilities.


Online Letters of Credit - The International Bank of the Future 

For a company dealing globally, the internet is a critical tool for speed and efficiency of communications.  One area where it is still in its infancy, however, has been in financing international deals.  This is changing.  Recently Imperial Bank launched its online SWIFTrade service at www.imperialbank.com/home.asp The site was in beta testing for two years prior to this so this is a very mature service at this point.  With this service, Imperial Bank’s customers can obtain a letter of credit immediately and have it seen immediately by those who need to know about it.

The information in the system is not public and if fact most people wouldn't have access to it.  For example, the system can be kept secure by a series of passwords.  In the case of imports, the importer can let the person selling to him see the letter of credit online by supplying a password; the exporter then doesn’t have to wait to be advised by his bank in his home city and can begin production immediately.  In the case of fast changing market requirements such as fashion or toys, this speed can be critical.  The company receiving the letter of credit can also allow others to view the document such as freight forwarders, customs brokers or other specialists, so preparation and paperwork can begin in those areas, as well.

The Imperial Bank also has an online system for financing.  The importing company can fill out an application online at the website.

SWIFTrade is still being enhanced but can already provide the following online services:

  • Letter of credit issuance;
  • Sending electronic copies of letters of credit to the beneficiaries via e-mail;
  • Allowing shippers and other partners of the company acquiring the letter of credit to have access to specific portions of the information to speed their work; 
  • Tracking the status of letters of credit;
  • Monitor account activity, even for accounts held with foreign banks.
International Trade Banks 
 

Most of the Major International Banks are already working on systems like SWIFTrade system described above.  Most provide similar services.  A good websites to use in searching for international banks is www.qualisteam.com. This website gives you hotlinks to hundreds of banks around the world.  It also has useful links to many other banking sites.  One additional site that can be very useful to a business seeking information on a particular bank or on banking products is www.bankersalmanac.com   Following is a list of international bank websites:

INTERNATIONAL BANK WEBSITES

ANZ Bank Aust. www.anz.com
Bank of America US www.bankofamerica.com/index.cfm
Bank of Tokyo Japan www.btm.co.jp
Bank One US www.bankone.com/international
Barclays Bank UK www.barclays.co.uk
Bayerische Landesbank Germany www.bayerischelandesbank.com
BNP Paribas Group France www.paribus.com
Canadian Imperial Bank Canada www.cibc.com/
Chase Manhattan US www.chase.com
Citibank US http://gcbweb.citibank.com
Comeica Bank US www.comerica.com
Credit Lyonnias France http://www.creditlyonnais.com/english/home/home_en.jsp
Deutsche Bank Germany http://public.deutsche-bank.de
Dresdner Bank Germany www.dresdnerbank.com
Fleet US www.fleet.com
Fuji Bank Japan www.fujibank.co.jp
HSBC HK www.asiapacific.hsbc.com
HSBC Bank USA UK www.banking.us.hsbc.com
Imperial Bank US www.imperialbank.com/home.asp
LaSalle Bank US www.lasallebank.com
Maybank Malaysia http://www.maybank.com.my/
National City Bank US www.national-city.com
Sanwa Bank Japan www.sanwabank.co.jp
Siam Commercial Bank Thai www.scb.co.th
Societe Generale France www.socgen.com
Southern Bank Berhad Malyasia http://www.sbbgroup.com.my/
Standard Chartered Bank UK www.standardchartered.com
State Street Bank US www.statestreet.com
Thai Farmers Bank Thai www.tfb.co.th
Toronto Dominion Bank Canada www.tdbank.ca/index.html
Sumitomo Mitsui Bank Japan http://www.smbcgroup.com:8080/
UBS AG Switzerland www.ubs.com/e/index
Union Bank of California US www.unionbank.com
Wells Fargo US www.wellsfargo.com/inatl/
WestDeutsche Landesbank  Germany www.westlb.de


Copyright, 2003 © Runckel & Associate

About the Author:  

Christopher W. Runckel, a former senior US diplomat who served in many counties in Asia, is a graduate of the University of Oregon and Lewis and Clark Law School. He served as Deputy General Counsel of President Gerald Ford’s Presidential Clemency Board. Mr. Runckel is the principal and founder of Runckel & Associates, a Portland, Oregon based consulting company that assists businesses expand business opportunities in Asia. (www.business-in-asia.com)

Until April of 1999, Mr. Runckel was Minister-Counselor of the US Embassy in Beijing, China. Mr. Runckel lived and worked in Thailand for over six years. He was the first permanently assigned U.S. diplomat to return to Vietnam after the Vietnam War. In 1997, he was awarded the U.S. Department of States highest award for service, the Distinguished Honor Award, for his contribution to improving U.S.-Vietnam relations. Mr. Runckel is one of only two non-Ambassadors to receive this award in the 200-year history of the U.S. diplomatic service.


Copyright, 2005 © Runckel & Associates
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