International Trade Finance: A Practitioner's Guide

9781855644427: International Trade Finance: A Practitioner's Guide
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Today's trade financier is constantly having to cope with the intricacies of trade deals, each one unique in its own way. This 145-page book acts as an invaluable guide to successful trade finance. Across 11 chapters it details practical issues involved in the successful utilisation of trade finance techniques including: forfaiting, ECA financing, guarantees, letters of credit, countertrade, commodity finance, and fraud detection. In addition it contains a number of standard documentation specimens never before compiled in one volume.

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About the Author:

Howard Palmer is head of trade and commodity finance and the assistant general manager of RZB (Austria) in London. He is the author of Correspondent Banking (Euromoney Publications 1990) and Bank Risk Analysis in Emerging Markets (Euromoney Publications 1998) and numerous professional articles.

As a law graduate of Kent University in Canterbury, Howard began his career in banking, and now specialises in trade and forfaiting in emerging markets. He has travelled extensively as one of Euromoney's and DC Gardner's consultant lecturers, presenting trade finance programmes to thousands of bankers in over 25 countries.

As adviser to banks, trade financier, marketing officer, lawyer, and teacher, Howard is uniquely placed to record both the global developments in international trade finance, and as a senior practising banker, to participate in its many markets on a daily basis.

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Characteristics of contemporary trade finance

Every banker likes to feel that his or her departmental area of expertise has been the subject of most innovation and product development and the offices in which the solutions were found to the major financial issues of the day. Trade finance cannot lay claim to a glamorous past or the most column inches in a financial press aimed at the investment banker but it has certainly experienced, in the last decade, dramatic changes in its operational risk environment on a global scale and some of the most profound and interesting solutions to the perennial problem of helping exporters and importers conduct business in a volatile world.

To the trade finance practitioner of the 1970s, todays trade financing has become a completely different industry. Then, the business of trade finance was viewed as a short-term, low-risk and commission earning option which provided a steady if predictable flow of funds to banking systems locked into comfort zones and easy profits. It was short term because the principal investment was the sight or acceptance letter of credit (where 90-day financing seemed a long-term deal) and low-risk because of the goods in transit between buyer and seller provided a self-liquidating cushion to the banks in their position as assignees. Control and security were its basic principals. Its reliance on heavy documentation and the checking of reams of invoices, packing lists and bills lent it an unexciting and rigid air.

All parties to the transaction were primary players - that is importer, exporter, and their banks - all of whom were a part of a transaction that left little to chance. The basis was trust in custom and third parties such as the ICC and ships masters and any problems, usually of a documentary nature, were solved by the banks away from the public eye.

Then everything changed, countries became bankrupt and rescheduled or defaulted on promises made under trade finance instruments where previously a bank's word was sacrosanct.

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