(精品)risk-control-in-LC.ppt
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1、Trade SeminarTrade Seminar Risk Control in LC Documents CheckingRisk Control in LC Documents Checking Standard Chartered BankStandard Chartered Bank19 August 200419 August 2004Presented by:KY ChanPresented by:KY ChannDiscrepancies?nMajority of discrepancies would finally be accepted nBut why some ar
2、e still unpaid?What causes LC unpaid?What causes LC unpaid?nPerformance-seller failed to deliver the goodsnTransaction-goods failed to arrive at destination and/or to clear customsnPaymenta.Non-acceptance buyer failed to accept goods shippedb.Commercial credit buyer unwilling or unable to pay c.Poli
3、tical government policy,war,strikes,etcd.Foreign exchange transfer availability of foreign exchangee.Foreign exchange rate fluctuation buyer refused to pay due to unfavorable forex changeRisks of International TradeRisks of International Trade Identification&Management of Identification&Management o
4、f Foreign Trade ExposureForeign Trade ExposureSeller RiskManaged By1.Merchandise Acceptance RiskSample Certificate2.Non payment-Commercial RiskConfirmed LCCredit Insurance3.Cancellation-Amendment RiskSale ContactIrrevocable LC4.Sovereign RiskCredit Insurance5.Own Country Risk -6.Transit RiskMarine/C
5、argo Insurance7.Exchange Proceed RiskForward contractLocal Currency Bill8.Interest RiskInterest Rate Swap Identification&Management of Identification&Management of Foreign Trade Exposure(Foreign Trade Exposure(ContCont)Seller RiskManaged By9.Cost Escalation RiskEx-factory quoteCredit InsuranceFreigh
6、t Risk Policy 10.Liquidity Need (Pre/Post Performance)Packing Loan Red Clause LCLC Negotiation /Confirmed LCCredit Insurance11.Buyers Credit NeedAcceptance/Negotiation/Deferred Payment LC12.3rd Party Local Assurance Need Cross Border Litigation Risk Non-recourse Funding Need Confirmed LC13.3rd Party
7、 Assurance NeedIrrevocable LC from Issuing BankBuyer RiskManaged By1.Non-Shipment/Delivery Performance Bond2.Merchandise quality i.e.wrong deliveryInspection by own agent or 3rd party(i.e.Societe Generale de Surevillance)Export Quality Control Acts,etc 3.Price FluctuationSale Contact(where possible)
8、Identification&Management of Identification&Management of Foreign Trade Exposure(Foreign Trade Exposure(ContCont)Document CheckingDocument CheckingnBank deals with documents but not goods,services or other performance to which documents may relate.Therefore,checkers competence is important in docume
9、nt checking process.nA checker must adhere to UCP500 with reasonable care and acquaint himself/herself with the different features and purpose of various documents.nChecker should follow the below guidelines during document checking:-Completeness-Correctness-Consistency-Care-Common sense-Conformity-
10、Compliance-Credit vs Contract-Conditions without stating documents-Completion of checking-Clauses of disclaimerDocument Checking(Document Checking(ContCont)nToo exhaustive checking on immaterial items will carry risks:-Delay processing turnaround-Dispute-Financial loss-Reputation Document Checking(D
11、ocument Checking(ContCont)How to control Document How to control Document Checking Risk?Checking Risk?nChecker competence-Conduct skill assessment-URC/ISBP-Common sensenUnderstanding/knowledge of customers-KYC-Close communication with Relationship ManagersnInternal communication to enhance business
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