Forfaiting provides non-recourse financing of trade receivables for exporter clients, typically secured against standby/documentary letters of credit or sovereign and large/multinational corporate payment instruments (promissory notes/bills of exchange). Deferred payment financing terms available to exporters/suppliers can range between 1-5 years thereby providing a complementary commercial financing and non-payment/country default risk solution in addition to official export credit agency (ECA) financing terms/requirements.

PRODUCT CATEGORY

•Forfaiting under a usance L/C

As applied by the customer, Bank of China Sydney Branch purchases non-recourse outstanding accounts receivable confirmed/undertaken by the issuing bank under the negotiation, acceptance or deferred payment L/C.

•Forfaiting under a sight L/C

Under sight negotiable L/C, Bank of China Sydney Branch, as the nominated negotiating bank, purchases accounts payable of the issuing bank without recourse upon strict examination to ensure that documents are consistent with L/C.

•Forfaiting under D/A

Under the D/A (documents against acceptance), at the customer’s request, Bank of China Sydney Branch purchases the accepted commercial drafts avalised by a bank without recourse.

•Forfaiting under the credit insurance (non-recourse Rong Xin Da)

For the export trade covered by export credit insurance, Bank of China Sydney Branch purchases outstanding claims against documents, export credit policy and claim transfer agreement without recourse.

•Forfaiting guaranteed by IFC or other international organizations

As the Global Trade Finance Program Agreement participant (as a confirming bank) of the IFC, ADB, EBRD and IDB, Bank of China Sydney Branch, with guarantees of international organizations, purchases outstanding claims from customers without recourse.

FEATURES

•Purchase without recourse. Bank of China Sydney Branch purchases accounts receivable without recourse to secure customer’s accounts receivable.

•Mitigate risks. Customers transfer such risks as nation risk, credit risk, exchange rate risk and interest rate risk to the Bank with the purpose to mitigate risks.

•Not occupy the customer’s credit line. One advantage of forfaiting is that it doesn’t occupy the customer’s credit line. The customer can still get financing from the Bank without credit line or with insufficient credit line.

•Increase working capital. Customers obtain 100% financing, turning the future accounts receivable into current cash flows so as to avoid capital occupation and increase cash flow.

•Optimize the financial statements. Customers can reduce accounts receivable and improve cash flows without increasing liabilities, so that the financial statements can be optimized.

•Bank of China boasts high-quality professional talents specializing in forfaiting products, as well as rich forfaiting operation experience, centralized management and operation models. Representative of Bank of China serves as Non-executive Board Director of International Forfaiting Association (IFA) and Chairman of Northeast Asia Committee.

•Bank of China offers a broad range of forfeiting products, free from limitation of settlement methods. The financing credit instruments are flexible, including not only L/C but also bills of exchange/ promissory notes, outstanding claims guaranteed by payment guarantee/standby L/C, outstanding claims guaranteed by export credit insurance. It also provides personalized solutions depending on specific circumstances.

•Relying on extensive branches and agency network, Bank of China has a superior capability of risk tolerance. Bank of China is the first Chinese bank joining the trade finance program of four global trade organizations like IFC, ADB, EBRD and IDB as a confirming bank and the bank has presently extended relevant business across emerging markets in Asia, Africa and Latin America through close cooperation with these international organizations. The financing terms are flexible, providing not only the short-term financing (less than one year), but also mid- and long-term financing (three to five years or even longer).