Credit Europe Bank NV Forfaiting and Loan Trading Activities
Credit Europe Bank started its Global Forfaiting and Loan Trading business in 1997 and is today one of the major players in this area. As an indication of our early commitment to this niche field of banking, we were one of the first to join the International Forfaiting Association, which was later renamed as the International Trade and Forfaiting Association (www.itfa.org). In addition, Credit Europe Bank is a member of the Loan Market Association (LMA) - (www.lma.eu.com).
The Global Forfaiting and Loan Trading department trades in a wide range of instruments, such as syndicated loans, promissory notes, bills of exchange, letters of credit, Islamic finance agreements, silent-risk confirmations as well as corporate loans.
Please note that we are always eager to add new countries to our portfolio, so feel free to approach us by email at LoansandForfaiting@crediteurope.nl with propositions for new countries in which we could service you in some way.
Credit Europe Bank is one of the most active players in the hard currency LMA structured loans to the financial institutions sector. The bank enters deals either by primary participation as an original lender or by purchase via the secondary market from other banks.
Forfaiting is a method of trade finance whereby Credit Europe Bank purchases, on a without-recourse basis, debt obligations arising from the supply of goods and/or services.
In a forfaiting transaction, the exporter agrees to assign its rights to claim for payment of goods or services delivered to an importer under a contract of sale in return for a cash payment from Credit Europe Bank. In exchange for the payment, Credit Europe Bank takes over the exporter’s debt instruments and assumes the full risk of payment by the importer. The exporter is thereby freed from any financial risk in the transaction and is liable only for the quality and reliability of the goods and/or services provided.
Forfaiting is a tailor-made financing solution designed according to the needs of the exporter
- 100% financing of the goods without recourse to the importer.
- The debt is usually evidenced by Bills of Exchange, Promissory Notes or a Letter of Credit, Stand by L/C
- Payment is guaranteed by a local bank in the form of aval, bank guarantee, l/c confirmation etc.
- Amounts financed can range from US$100,000 to US$100 million or more.
- Interest rates can be agreed on a fixed rate, although they can also be arranged on a floating interest-rate-bearing basis.
- Fast conclusion of transactions.
- Tailor-made financing solutions.
- Simple documentation requirement.
- Relieves the exporter of administration and collection problems.
The advantages of forfaiting for the exporter:
- Since the transactions are without recourse, they fully eliminate political, transfer and commercial risk for the importer.
- Forfaiting protects the exporter from future interest rate increases or exchange rate fluctuations.
- It gives the ability to the exporter to provide longer payment terms and yet receive the proceeds cash.
- It enables the exporter to do business in countries where the country risk would otherwise be too high.
- The balance sheet of the exporter does not carry accounts receivable, bank loans or contingent liabilities.
- No administrative and legal expenses that normally accompany other financing arrangements.
- The importer receives additional credit through forfaiting from the supplier/exporter.
- Country risk
- Bank risk
The advantages for the investing bank:
- Maximum use of credit lines; not directly used credit lines can be utilised in the forfaiting market.
- Liquid assets; in case of need, the credit lines can be freed in a short time.
- Attractive yield; trade-related assets have better returns than syndicated loans.
- Ease and simplicity of documentation; simple and quite uniform documentation which eliminates legal costs each time and makes fast bookings possible.
- Flexibility in terms of tenor: transactions may vary from 6 months to 5 years.
Credit Europe Bank NV
The Netherlands - Head Office
Financial Institutions Team
1101 CJ Amsterdam
Tel.: +31 (0)20 35 76 300
Fax: +31 (0)20 35 76 301