Trade Finance and Documentary Operations
Trade finance is traditionally one of the bank’s priority development areas. As in previous years, its main tasks in this area, apart from maintaining the portfolio quality and controlling risks, remain finding more partners and expanding the product line to meet the needs of its customers, improving terms for confirming letters of credit, financing and servicing due to large business volumes.
The main competitive advantages of the bank are a broad global network of partners, high credit ratings, experience and professionalism of the staff, a customer-oriented approach, and the high quality of its services. They allow the bank to service different global trade flows and offer customers the most attractive terms using the entire range of trade and export finance tools. As a result, the bank is traditionally among the leaders of the trade finance market with the reputation of a professional and trustworthy financial institution.
Assisting corporate customers in penetrating foreign markets, the bank found new trade finance partners in 2019, in particular in Egypt, Saudi Arabia, Korea and Uzbekistan, where it successfully made transactions using such instruments as unsecured confirmed letters of credit and guarantees.
In 2019, the bank resumed its interbank business, which involved assuming foreign bank risk (confirming export letters of credit with discounting and post-financing, issuing guarantees against counter-guarantees, issuing reimbursement undertakings, interbank loans). The bank’s main counterparties were its traditional partners – the largest banks in Belarus and Kazakhstan.
Based on 2019 results, the bank was recognised as the most active confirming bank in Russia under the Trade Finance Support Programme of the International Investment Bank.
In 2020, the bank plans to increase its presence by diversifying counterparties in its target markets.
In 2019, as part of the expansion of its trade finance product line, the bank launched a new product - international non-recourse factoring, which is a very promising and high-demand instrument in the international market. The bank is expanding its international factoring customer portfolio, developing and finalising products, implementing transactions under the one-factor/two-factor model, including with the participation of an export insurance agency, and further strengthening and developing cooperation with factors from different countries that are part of Factors Chain International (FCI), of which the bank has been a member since 2018. Based on 2019 results, the bank was ranked among the top 5 international factoring companies by the Association of Factoring Companies (AFC), with a RUB 0.42 bln portfolio.
Since 2018 MKB has been actively participating in state export support programmes and is an authorised bank under:
- the Ministry of Economic Development of Russia’s programmes (as approved by Russian Government Decree No. 620 dated 16 May 2017),
- the Ministry of Industry and Trade of Russia’s programme (as approved by Russian Government Decree No. 191 dated 23 February 2019),
- the Ministry of Agriculture of Russia’s programme (as approved by Russian Government Decree No. 512 dated 26 April 2019).
As part of the implementation of these programmes, the bank cooperates closely with the ministries responsible for their implementation, and with the Russian Export Center (JSC), it contributes to the development of new support programmes, and to changing existing programmes based on requests and comments of existing and potential customers of the bank.
When organising export financing, the bank consults its customers in many aspects by explaining modern risk management instruments and cash flows, helping formulate the terms of export contracts, and often participating in negotiations for their execution, thus contributing to the optimisation and standardisation of export projects.
When implementing subsidised transactions, the bank acts on a “one stop shop” basis and provides customers with a full range of services from initial consulting, preparing the customer for entry into the programme and ensuring that the transaction is included in the register of subsidised transactions, to providing direct support for the loan and bringing the customer’s position with regard to subsidising mechanisms to the attention of the subsidy programme administrators.
The bank actively cooperates with banks and other institutions in different parts of the world to service the international trade flows of its customers.The key partners of the bank in short-term and long-term finance include world-renowned financial market leaders such as Citibank, JPMorgan Chase, Societe Generale, Credit Agricole, ING Bank N. V, Commerzbank AG, Bayerische Landesbank, Landesbank Baden-Wurttemberg, Raiffeisen Bank International AG, Credit Suisse AG, UBS AG, Intesa Sanpaolo S. p. A., UBI Banca, UniCredit Group, KBC Bank, Industrial and Commercial Bank of China, Korea Eximbank, HSBC Bank plc and others.
The bank is accredited by most export credit agencies, ready to provide insurance coverage for its long-term finance transactions, such as Hermes (Germany), SACE (Italy), COFACE (France), EKN (Sweden), OeKB (Austria), EDC (Canada), KUKE (Poland) and FINNVERA (Finland).