International Trade Finance – Procedures & Practice

Course Overview:

Participants will learn how to identify customer needs and recommend appropriate product solutions, as well as assess various risks to both bank and customer in international trade transactions. They will also gain an ability to explain and identify ways of mitigating that risk and carry out the processes involved in documentary collections, documentary letters of credit and contract guarantees.

The course will also address the purpose and application of the various International Chamber of Commerce rules and practices, identify customer needs for finance of exports/imports and explain the features and benefits of each method.

Course Content:

Role of Banks in International Trade Incoterms 2010 and Methods of Settlement
 Overview of the banks involvement and, in particular, the advantages/disadvantages to Importer/Exporter in the use of Incoterms 2010 and in the main methods of settlement.

Key characteristics of Commercial Documents
 Invoices
 Marine/Ocean Bills of Lading
• Title, negotiability and transfer
• Control over goods
• Delivery of goods
 Charter party bill of lading
 Multimodal Transport Document
• Title/Negotiability/Transfer
• Control over goods
• Delivery of goods
 Air Transport Document
 Road, Rail or Inland Waterway Transport Documents
 Insurance Policy/Certificate
 Certificate of Origin
 Certificate of Inspection

Export/Import Documentary Collections
 Relationship between Principal and Remitting Banker
 Relationship between Correspondent Banks (agency arrangements)
 Legal and practical issues regarding the duties of the remitting bank
 Liability of the banks involved
 Conditions for release of documents
 Conditions for transfer of funds
 Difficult areas of risk:
• Partial payments
• Avalising
• Consignment of goods to banks
• Release of goods on trust
 Use of Letters of Trust/Letters of Hypothecation
 Procedures for Protest and underlying risks
 Complexities of the Uniform Rules for Collection ICC 522

Documentary Letters of Credit – Introduction
 Banker/Customer Relationship
 Risk factors when issuing letters of credit
 The autonomy of letter of credit operations (Independence Principle)
 Contract between Applicant and Issuing bank - reducing risk
 Legal opinion on contractual issues


Instructions to issue/amend credits
 The importance of the application form (legal issues)
 Front-end electronic systems (bank/applicant)
 Workability of the credit

Introduction to the International Chamber of Commerce UCP 600 Rules:
 (structure and obligations under documentary credits;
 standard for examination of documents; discrepant documents, waiver and notice;
 the UCP transport articles;
 transferable credits and other issues; and
 changes at SWIFT for UCP 600

Examination of documents
 The standard for examination of documents
 Key elements of the main articles of UCP 600
 Processing non-compliant documents as issuing bank
 Processing non-compliant documents as Nominated/Confirming Bank
 Risks arising from non-adherence to UCP 600
 Legal cases and ICC Banking Commission opinions
 Bankers duties and rights
 Analysing irregularities in documents
• The current position on 'original' documents
 Fraudulent documents
• How banks and their customers become victims of documentary fraud
• Are you financing trade or fraud?
 Case studies on difficult issues affecting payment and rejection of documents

International Standard Banking Practice ISBP 681
 What constitutes an “alteration” or “addition” to a document, when and how should these be authenticated?
 How should documents be signed, if this is not explicitly stated in the credit?
 How should one handle typing errors on documents regarding the name and address, different addresses of same company, etc.?
 Must trade terms, such as Incoterms, appear on the invoice?
 What is the “face” of a transport document and should a practitioner examine the reverse side to determine the name of carrier, description of the journey, etc.?
 What is a full set of insurance documents, a copy vs. an original, endorsements, and the effective date?

Instructions to advise credits
 Obligations and Risks associated with the Advising Bank
 The use of the Bill of Exchange in Letters of Credit
 Fraudulent Credits

Application of the Uniform Rules for Bank-to-Bank Reimbursement ICC 725
 Rationale
 Concerns
 Familiarisation of articles, including: types, parties, issuance, documents and presentation

Related issues
 Release of goods connected with Credits against Indemnities issued or countersigned by banks
• Steamship guarantee/indemnities
• Airway releases and delivery orders
• Letters of Indemnity
• Liabilities
• The form of the Letter of Indemnity
• Counter Indemnities
 Assignment of Proceeds
 Case studies based on opinions of the ICC and legal judgements






Specialised Letters or Credit
 Standby Letters of Credit
 Transferable
 Back-to-Back
 Risks
 Advanced worked example
 Red Clause Credits
 Revolving & Reinstatement Credits

Contract Bonds and Guarantees
 Types of guarantees:
• Tender/bid bonds
• Performance bonds
• Retention money guarantees
• Advance payment guarantees
• Maintenance guarantees
• Bail bonds
• General guarantees
• Surety bonds
• Indemnities/counter guarantees
 Risk Assessment
 Wording of Guarantees
 International Banking Practices
 Uniform Rules for Demand Guarantees 758
 Problem Claims and Insurance against Unfair Calling.
 Expiry and Cancellation
 Case studies

Delivery:	Classroom
Regions:	London
Category:	Corporate Finance