Trade finance advice for small businesses

1. natwest.com
5th March 2015
Trade Finance
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2. Today’s Presentation
1. Introduction to Natwest South West Trade Team
2. Trade Finance at Natwest
3. Overview of Trade Finance Products Mitigating Risks
4. Product Overviews (what they are and how they work):
 Documentary Collections
 Documentary Letters of Credit
 Bonds and Guarantees
 Standby Letters of Credit
 Pre-Export Finance
 Post-Export Finance
5. UK Export Finance
 Natwest working with UK Export Finance
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3. Natwest South West Trade and International Team
3
Clare Hill
Trade and International
Regional Sales Director,
South West
Clare.A.Hill@rbs.co.uk
Andy Young
Trade and International
Director
Andrew.A.Young@rbs.co.uk
Joseph Cottee
International Cash Director
Joseph.Cottee@rbs.co.uk

4. Natwest Core Capabilities
4
What our customers say about us…What sets Natwest apart?
We can deliver a wide range of trade & supply chain finance solutions to help support your trading needs
 Our dedicated trade teams and qualified trade advisors can
share their specialist knowledge, which could add value to your
business
 Our relationship managers and trade teams are supported by a
dedicated Product Management team and a customer focused
Operations team, that help to ensure efficient processes
 Connectivity across our network to ensure the best outcome for
you
 Products to suit your business needs and working capital cycle
 Our online trade platform, enables you to issue, view, amend
and track your trade transactions, 24 hours a day
“We have a well-established
relationship with NatWest and we
have consistently benefited from the
bank’s commercial acumen and
export expertise.”
Chris Crowther, Managing
Director at Kirton Engineering
“The RBS solution
has helped us
manage costs and
increase control,
supporting our growth,
and as we continue to
expand, the bank’s
capabilities in all
jurisdictions are a
great benefit”
Kevin Deery,
Kingspan Group
Treasurer
“We wanted a financial
solution that was simple and
flexible – and that is exactly
what NatWest gave us.”
Suki Dulai, Flying Trade’s
Managing Director
“Not only did they provide
BTA with excellent
guidance, but the
teamwork between
NatWest and Lombard
was exemplary.”
Mike Shaw, Financial
Controller at Brixham
Trawler Agents (BTA)
“If RBS hadn’t helped us secure a
guarantee under the UKEF Bond
Support Scheme, we could not
have accepted the order. It’s as
simple as that…The team’s
professionalism was exemplary.”
John Roth, Chairman of Jorin
Ltd.
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5. 5
 For importers and exporters, the level of risk involved in a transaction
fluctuates depending on what payment method is used
 Depending on your situation will determine the most appropriate product to
use to help mitigate your payment and performance risk
There are a wide range of products and services available…
Open A/C
Term Collection
Sight Collection
Unconfirmed L/C
Confirmed L/C
Cash in Advance
High Risk for Exporter
High Risk for ImporterLow Risk for Exporter
Low Risk for Importer
Overview of Trade Finance
Trade Finance aids UK businesses in their export, import and domestic trade activities
 Letters of Credit
 Documentary Collection
 Bonds & guarantees
Risk Products
 Import Loans
 Pre and Post Export Loans
 Trade Discounting
Funding Products
ANY PROPERTY USED AS SECURITY, WHICH MAY INCLUDE YOUR HOME,
MAY BE REPOSSESSED
IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR OTHER DEBT
SECURED ON IT.
Security may be required. Product fees may apply. Over 18s only.

6. Overview of Trade Finance
6
Importing
Products to help at each stage of your import process…
Products to help at each stage of your export process…
Exporting
Import Collections
Import Letters of Credit
Bonds & Guarantees and SBLCs
Import Finance
Supply-Side Receivables Purchase (Supplier Finance)
Receive Order Manufacture for Export Ship
Collate & Prepare Export
Documents
Receive Payment
Pre-shipment Finance
Bonds & Guarantees and
SBLCs
Post-shipment and LC
Finance, Bill Discounting,
Receivables Purchase
Export L/Cs – Sight/Usance
B&Gs and SBLCs
Export & Direct Collections
Document Prep Services
Order Goods Receive Shipping Documents Receive Goods Make Payment
Depending on your situation there are a wide range of products to support your trading activities

7. Documentary Collections
7
5) Documents
Seller/Exporter Buyer/Importer
Exporter’s Bank
(Remitting Bank)
Buyer’s Bank
(Collecting Bank)
1) Contract of Sale
2) Ship goods
3) Sends documents
4) Documents
7) Payment/Acceptance
8) Payment/Acceptance 6) Payment/Acceptance

8. Documentary Letters of Credit
8
Seller/Exporter Buyer/Importer
Exporter’s Bank
(Advising Bank)
Buyer’s Bank
(Issuing Bank)
1) Contract of Sale
5) Ship Goods
6) Doc Presentation
7) Doc Presentation
3) L/C
4) Advice of L/C
10) Payment/Acceptance
2) L/C Application
8) Payment/Acceptance
11) Docs Provided
9) Payment/Acceptance

9. Bonds and Guarantees
9
Commonly used bonds and guarantees
Performance
Guarantee
 In the event of failure to fulfil the contract, we will pay out either a percentage (usually 5-10% of the value of the
contract), or a fixed sum to the beneficiary
 Usually required for the duration of a contract, plus a grace period to allow the beneficiary to make a demand in
the event of non-performance of the obligations covered by the guarantee
Tender Guarantee /
Bid Bond
 Often called for in support of contract tenders, particularly in international trade situations
 Provides the beneficiary with a financial remedy if the applicant fails to fulfil any of the tender conditions. Usually for 5-
10% of the value of the tender
Advance Payment
Guarantee
 Used where the applicant calls for the provision of a sum of money at an early stage of the contract
 The beneficiary can recover the amount paid in advance, or part thereof, if the applicant fails to fulfil their underlying
contractual obligations.
VAT / Duty Deferment
Guarantee
 Provided to HM Revenue & Customs enabling the applicant to import goods from outside the EU without the
immediate payment of duty or tax
Shipping Guarantee
 Issued to allow an importer to take possession of goods from a shipping company when the goods arrive at port
before the negotiable Bill of Lading is received. It is a written indemnity by the bank to the shipping company.
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10. Standby Letters of Credit (SBLCs)
10
Irrevocable undertaking issued by a bank for account of its client (the applicant) in favour of a third party (beneficiary) that provides
payment to the beneficiary in the event of default by the applicant
In case of default
Trigger event e.g. non-payment by buyer
Applicant
(Buyer)
Beneficiary
(Seller)
Issuer
(Applicant’s Bank)
1) Contract of Sale
2) Application for SBLC 3) SBLC
4) Documents
5) Payment
7) Documents
6) Debit

11. 11
We could provide you with finance to bridge this funding gap
Pre-Export Finance
Working capital funding to help source, produce, package and ship your goods sold
 Pre-export finance can cover a range of uses, for example, to cover
the cost of raw materials or extra labour you need to fulfil a new
contract.
 Repayment is generally made from the sales proceeds; when your
customer pays you, the loan is repaid. So transactions are self-
liquidating
Benefits of Pre-Export Finance…Key Features…
 Improve your working capital
 Facility may be increased to grow with your business
 Attractive source of financing - usually achieves more
competitive financing terms compared with existing
working capital sources
 Available for commodities (traded or untraded) and
other goods
ANY PROPERTY USED AS SECURITY, WHICH MAY INCLUDE YOUR HOME,
MAY BE REPOSSESSED
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12. 12
Post-Export Finance
Accelerate the receipt of funds once you have shipped the goods to your buyer
 This allows you to offer your clients payment flexibility, such as
extended payment terms, that you might not otherwise be able
to fund from existing cash flow
 By offering flexible payment terms you may be able to secure
more contracts
Benefits of Post-Export Finance…Key Features…
We could provide you with a loan to bridge this funding gap
 Reduces Days Sales Outstanding (DSO), improving
your liquidity and working capital position
 Attractive source of financing – lending against trade
documents is typically priced more attractively than a
direct overdraft
 Funding can be structured without recourse allowing for
improved balance sheet management
ANY PROPERTY USED AS SECURITY, WHICH MAY INCLUDE YOUR HOME,
MAY BE REPOSSESSED
IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR OTHER DEBT
SECURED ON IT.
Security may be required. Product fees may apply. Over 18s only.

13. UK Export Finance Programme Summary
13
Snapshot of the programmes offered to UK exporters
ANY PROPERTY USED AS SECURITY, WHICH MAY INCLUDE YOUR HOME,
MAY BE REPOSSESSED
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SECURED ON IT.
Security may be required. Product fees may apply. Over 18s only.
 UK Export Finance guarantees export letter of
credit (L/C) obligations in connection with
eligible UK exports
Letter of Credit Guarantee Scheme
Features:
 LCs with repayment terms of up to 1 year
 Exports must be from the UK
 Risk sharing up to 90% of the L/C amount
 Exporter’s eligibility will be subject to our normal
transactional due diligence.
Benefits:
 Enables banks to confirm L/Cs where we may
not have the full risk appetite
 Exporter gets confirmation and/or discounting
funded for L/Cs supporting export contracts
Bond Support Scheme
 Helps exporters increase credit limits at their
banks to issue contract bonds, guarantees
(B&Gs) and Standby letters of credit (SBLCs) for
eligible export contracts.
Features:
 UKEF guarantees the nominated bank on a pro
rata basis for up to 80% of the value of B&Gs
and SBLCs in the case they are called and the
exporter fails to reimburse the Bank
 Each export contract must have a minimum of
20% UK content.
Benefits:
 Increases credit capacity for exporters by
enabling the bank to increase limits when there
is limited credit appetite
 May free up credit limits for other purposes
Working Capital Scheme
 Helps exporters increase credit limits at their
banks to finance working capital, both pre and
post shipment, for eligible export contracts.
Features:
 UKEF guarantees the nominated bank on a pro
rata basis for up to 80% of the value of working
capital facilities for export contracts
 Each Export contract must have a minimum of
20% UK content
 Maximum value of the working capital facility
cannot be greater than 75% of the export
contract’s value
 Maximum Term: 2 years – no minimum term.
Benefits:
 Increases the bank’s credit capacity for working
capital facilities where we may have limited
appetite
 May free up credit limits for other purposes

14. Natwest and UK Export Finance
14
 We have strong relationships with UKEF at all levels that can assist in getting favourable and timely decisions
 Our client and origination teams work closely with the UKEF national advisory team and together deliver expertise
that can help
 Our credit and middle office teams have a tried and tested operating model with UKEF that delivers smooth and
effective delivery
Background
Capabilities
Market
Position
 The RBS Group has played a key development role with UKEF since concept discussions began in 2009
 We helped shape the Scheme for initial launch both bilaterally with UKEF and in the British Banker Association
(BBA)
 As an early adopter supporting more customers than any other bank, we have driven changes resulting in scheme
improvements
 The RBS Group are the first UK bank to close deals under all UK government programmes
 The RBS Group is the UK market leader supporting more customers than any other bank with over 40% market
share*
Supporting UK businesses and their exporting activity
Source: (*) UKEF Factsheet September 2014 based on value of export contracts supported.

15. UK Export Finance
15
“Natwest’s understanding of the UKEF schemes was fundamental to
unlocking the pre-shipment finance we needed to fund these contracts. They
were equally effective when it came to completing the UKEF application
process. The support provided by RBS has given the company the
confidence to undertake more export contracts in countries that were
previously considered difficult to operate within.”
Angelo Luciano, MD at Expert Tooling & Automation
“NatWest introduced us to the UK Government’s Bond Support
Scheme…They understand UKEF and its schemes inside out. The team has
an equally detailed understanding of our business and wants us to succeed.
With these applications, they were able to assess all the what-if scenarios and
variables to deliver a solution that eliminates the barriers and frustrations
associated with sourcing working capital.”
Terry Clough, MD at FMA Process Engineering
“If RBS hadn’t helped us secure a guarantee
under the UKEF Bond Support Scheme, we
could not have accepted the order. It’s as
simple as that…The team’s professionalism
was exemplary.”
John Roth, Chairman of Jorin Ltd.
“Despite the challenges, the strength of our
relationship with the NatWest team and its
capabilities won the day. The team moved
heaven and earth to unlock the cash flow we
need to sustain our success.”
Alan Peel, Managing Director at ALTEK
Europe Ltd.
“NatWest understands the export trade cycle and it
understands the Middle East market. Significantly, it also
understands how the UKEF Bond Support Scheme can help
a business like Cambridge Glasshouse to unlock essential
working capital and grow its export revenues.”
Steve Hinch, FD at Cambridge Glasshouse
“You are dealing with
experts who really
understand the subject.
These schemes are first-
class and connecting with
the right people is
essential to accessing
them.”
Tim Robinson, MD at
FlexEJ Ltd.
Why choose Natwest to support your export activity?
“Without NatWest’s detailed understanding of the UK
Government’s export support schemes, we would not have
secured this order. It’s as simple as that. Thanks to the
Bank’s expert guidance, we are now about to sign several
other export contracts that are even bigger than this one.”
Andrew Williams, Group MD at FJ Holdings Ltd.
ANY PROPERTY USED AS SECURITY, WHICH MAY INCLUDE YOUR HOME,
MAY BE REPOSSESSED
IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR OTHER DEBT
SECURED ON IT.
Security may be required. Product fees may apply. Over 18s only.