RISK MANAGEMENT SOLUTIONS

Transcription

1 RISK SOLUTIONS

2 COLLATERAL AND BASEL II COMPLIANCE The Basel Committee has released a detailed set of requirements dealing with bank reserve requirements and risk-weighting in relation to international commodity finance transactions. Basel ll, the new version of the Basel Accord has now significantly changed the regulations in the entire trade finance industry. The intention of the Accord is to encourage banks engaged in commodity financing transactions to adopt robust and comprehensive policies and procedures for the inspection, control, and valuation of commodities, in order to qualify as Advanced Internal Ratings Based transactions. SGS is following closely the evaluation of the Basel Committee proposals in the commodity finance sector, and has tailored its Collateral Management Services to enable its clients to mini-mize the critical Loss Given Default (LGD) component, in order to achieve the lowest possible risk weighting in collateralized commodity financing transactions.

3 GLOBAL COMMODITY TRADE AND FINANCE REQUIRES DESIGNED RISK SOLUTIONS FROM A RELIABLE PARTNER Since the year 1878, SGS has been a dependable provider of risk management solutions to participants in the international trade of commodities throughout the world. With the objective to reduce risks, specific products have been designed for producers, refiners, commodity traders, distributors and financing banks. In the immediate future, the operational and regulatory needs of participants in these markets will require robust and reliable risk management tools that are efficiently provided with unquestioned professional and financial integrity. SGS is committed to fulfilling this need. Throughout its network, SGS understands the local and global trade in commodities and has the resources to assure dependable inspection, monitoring and collateral management services, providing control and custodial services throughout the flow of a commodity. Our unique network brings you, not only to each port or distribution center, but also to remote storage and processing locations through-out the world. The objective of our services is to assure that the financed commodity is physically available to banks and purchasers in the quantity and quality required.

4 RISK SOLUTIONS IN THE TRADE FINANCE INDUSTRY TAILORED TO INDIVIDUAL TRANSACTIONS The foundation of all physical commodity and export pre-payment financing transactions is the assured availability of the commodities in the quality and quantity required to repay advances. Depending on the circumstances of the individual transaction, one or more of the following risk management solutions are recommended: SGS COLLATERAL SERVICES CMA SGS acts as the custodian of the commodities and takes continuous, and exclusive possession of them from the time the securization is requested, until the commodities are sold or exported. The commodities will be held either in a SGS warehouse, in an independent warehouse contracted by SGS, or in the plant or warehouse owned by the producer and leased to SGS. The objective of Collateral Management Services is to assure the availability and physical control of the commodities, and to enable the bank or purchaser to acquire clear legal title to the commodities as owner or pledgee, by virtue of the possession of the commodities. SGS MONITORING SERVICES SMA Where the financing party does not require strong control over the Good by a third party, but rather wants to ensure traceability of the Good along the supply chain, SGS can provide either continuous monitoring services, or periodic spot inspection services to witness the movement, care and condition of the commodities. In case of damage or misapplication of the commodities, the parties concerned are enabled to take prompt remedial action. Certification of quantity and quality by SGS can also assist in the collection of insurance claims in the event of any loss or damage to the commodities due to fire, flood, theft, or other accidental cause. Depending on the local laws, SGS will issue documents of title (warrants/cd) or non-negotiable receipts to the commodities under its exclusive possession and control. It can further assist the bank or purchaser to obtain local legal opinions confirming the legal validity of its status as pledgee or owner of the commodities held by SGS as its custodial agent.

5 SGS DOCUMENT TRUSTEE SERVICES Commodities under monitoring are often fast moving operations involving multiple storage, processing, and transport points, in each case accompanied by the issuance and release of storage and transport documents. In order to assure the continual validity of the bank's or trader's legal claims to the commodities, these documents should be issued to the principal, or be in negotiable form. This results in high administrational costs, and is often impractical if the documents are required to be presented locally to allow for the movement and transportation of the commodities. In such cases, SGS can serve as the Document Trustee for the purpose of holding the documents in local safekeeping, and assuring that the documents are timely presented for authorized movements until the commodities are exported. SGS PRICE VALUATION SERVICES Regardless of the type of risk management services employed, the bank or purchaser will require frequent reports of the quantity, quality, type, location and value of the commodities in storage, processing, or transport. Timely and comprehensive inspection reports are critical to the monitoring of the borrowing base, and the ability to call for additional collateral as needed in the event of; changes in market value, change due to the inherent vice of a commodity or losses in general. SGS is able to value said commodities by checking quantity and quality on a weekly or other agreed basis and compare them in accordance with local published indices, or other market related data acceptable to the financer. ACCESSORY SGS SERVICES SGS is the world's largest commodity inspection company with 650 offices and over 50,000 employees in 140 countries, including virtually every major port and commodity producing region around the globe. Clients of SGS Risk Management Services have the benefit of 350 commodity testing laboratories, and skilled inspectors to verify commodity quality and values, compliance of the commodities with international standards and contract specification, compliance with processing and packaging, and compliance with export and import requirements. In short, SGS is an outstanding and reliable source of local industry knowledge and commodity know how for banks providing financial services to producing countries. Whether oil, agricultural or mineral commodities, SGS can provide prompt and cost effective risk management solutions to complex trade and quality/quantity related requirements.

6 GLOBAL PROCEDURAL UNIFORMITY AND UNIQUE RISK MITIGATION THROUGH OUR COMMITMENT TO QUALITY ISO CERTIFICATION SERVICES SGS Collateral Management and managing the quality of service provision: SGS has continually strived to meet the requirements of its clients worldwide. Since 1999, SGS Collateral Management Service has developed its own system for managing the quality of service provision, in order to guarantee its clients rapid and efficient service. This system, which is modified on an on-going basis to take the latest market requirements into account, is used both in the main office and in the various SGS offices located throughout the world. This means that our clients will have their transactions handled in the same way and be issued with the same documents subject to local legal specifications regarding documentation. This harmonisation of documents and the rules and practices of SGS Collateral Management is not only due to our company s on-going concern to ensure that clients receive the same service whichever SGS office they contact, but also, and above all, to control the risks of each transaction by establishing strict rules and procedures and informing all the offices in the world of them. ENDING OPERATIONS DELIVERY OF GOODS SECURIZATION OF GOODS RECEIPT OF GOODS CUSTOMER HUMAN RESOURCES QUALITY SERVICE INITIAL CLIENT INQUIRY STUDY OF FEASIBILITY SETUP Focused on client needs, this system defines, for each key step of the transaction, the way of conducting any intervention on our part. This system is complemented by regular audits which enable us to make sure that working methods are constantly harmonised, and which limit the risks inherent in each transaction. Moreover, a company like SGS, which ensures that the highest quality standards are adhered to throughout the world on a daily basis in fields which are as complex as they are varied, is duty bound to scrupulously respect the aforementioned standards. For this reason, SGS is amongst the 600,000 establishments worldwide which have been certified ISO 9001, 2000 compliant, having had the corresponding certification and audit undertaken by an independent body.

7 WITH MORE THAN 50,000 EMPLOYEES, SGS PROVIDES A UNIQUE NETWORK COMPRISING OVER 1000 WITH BRANCHES 59,000 AND EMPLOYEES, LABORATORIES SGS PROVIDES WORLDWIDE. A UNIQUE NETWORK COMPRISING OVER 1000 BRANCHES AND LABORATORIES WORLDWIDE. PRESENCE OF OF CM SERVICES: ASIA ASIA China China India India Indonesia Philippines Philippines Malaysia Malaysia Myanmar Myanmar Singapoore Vietnam Singapoore Vietnam EMEA EMEA Albania Croatia Albania France Croatia UAE France Jordan UAE Kyrgyzstan Jordan Poland Kyrgyzstan Russia Poland Turkey Ukraine Russia FOR FURTHER INFORMATION AND FOR CONTACT FURTHER DETAILS, INFORMATION PLEASE GO AND TO CONTACT DETAILS, PLEASE GO TO Turkey AFRICA Ukraine Angola AFRICA Algeria Benin Angola Bissau Algeria Cameroun Benin Congo Bissau Egypt Cameroun Gambia Congo Ghana Egypt Guinea Ivory Coast Gambia Kenya Ghana Liberia Guinea Madagascar Ivory Mali Coast Kenya Mauritania Liberia Morocco Madagascar Mozambique Nigeria Mali CONTACT: Contact: SOFT COMMODITIES SOFT COMMODITIES Jean-Christophe BEL: Jean-Christophe jean-christophe.bel@sgs.com BEL: jean-christophe.bel@sgs.com Benoît SILIE: Claude benoît.silie@sgs.com Riedo: claude.riedo@sgs.com Fax: Fax: Mauritania Morocco Senegal Mozambique Sierra Leone Nigeria South Africa Senegal Tanzania Sierra Togo Leone Uganda South Africa Tunisia Tanzania Togo AMERICA Uganda Argentina Tunisia Brasil Chili AMERICA Guatemala Argentina Uruguay Brasil Haiti Guatemala Uruguay Haiti HARD COMMODITIES Hard Alexandre COMMODITIES HIRSCH: Alexandre alexandre.hirsch@sgs.com HIRSCH: alexandre.hirsch@sgs.com Anna CATTANEO: Fax: anna.cattaneo@sgs.com Fax:

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