Different financing objectives, geopolitical risks and interest rate changes as well as currency fluctuations often create obstacles that can endanger the completion of an agreement. However, with the right banking partner, these challenges can be transformed into opportunities. Raiffeisen Bank International experts discuss how these needs can be met, using a real world scenario. Please take note of the non-responsibility clause at the end of this advertisement.
A difficult scenario
Imagine that you are an Austrian exporter about to conclude a significant agreement with a Serbian client, providing a food processing machine worth 10 million euros. Your objective is simple: secure payment in EUR according to the delivery calendar. Meanwhile, your Serbian partner would like to have attractive long -term funding. How do these requirements and objectives meet?
In today’s world, risks are global. “Geopolitical developments can have large -scale effects in all regions, including central and eastern Europe,” said Evgeniya Sharkova of Rbi Trade Finance. “In addition to the risks of counterpart and policies, the parties to the commercial contract can face the risks of FX and interest rate,” adds Martina Zimmerl, RBI Capital Markets. In the end, exporters are looking for new ways to create additional competitive advantages. “By organizing long -term financing solutions for their customers, exporters can make a more attractive agreement for potential importers,” explains Sanin Merdžan, RBI Export Finance.
Secure your transactions
As an exporter, your main concern is to ensure the safety of payments. “According to the various RBI commercial financing solutions, the export letter of credit (LC) is the first choice of our scenario,” explains Sharkova. “The LC could be issued either by our own subsidiary bank in Serbia or by one of the many partner banks that we have in the country.”
“If you wish to accelerate payment under LC, the LC Upas (USANCE payable to the export credit letter) could be a good way to fill the period until the long -term financing covered by ECA is set up,” explains Sharkova. With UPAS LC export, the importer’s bank issues an LC with a delayed payment and a maximum total tenor of up to 360 days. For higher safety, RBI confirms the LC issued by the local bank. Thus, the exporter will reduce the risk of counterpart by taking the risk of payment of first class of RBI instead of the risk of a local bank or a local importer.
One of the main characteristics of the UPAS LC export is that the exporter will receive his payment under the LC at sight, which means when presenting the compliant shipping documents. This special reduction form under an LC offers the exporter the possibility of improving its cash flows and optimizing its assessment.
At the same time, the UPAS LC export offers the importer an obligation to reimburse prolonged reimbursement towards the issuing bank. By offering longer payment conditions, the exporter strengthens his negotiation position with the customer. The interest of the deferred payment period under this structure must be supported by the importer.
With the LC and the financing covered by the following ECA, the exporter is able to mitigate the risks of counterpart and political risk. In addition, payment is received under the contract in EUR according to the agreed calendar. His Serbian partner, on the other hand, obtains funding in EUR at an attractive cost. This multi-product solution provides an ideal bridge between LC and ECA funding.
Boost your competitive advantage
RBI offers long -term attractive CEA funding solutions such as the buyer’s credit purchase line and RBI for financing Austrian / European imports of investment goods from 2 million euros guaranteed by the Austrian export credit agency “OEKB” or any other European export credit agency (ECA).
“For our particular scenario, once the customer has managed to successfully take the internal RBBI risk and credit exams, we granted a 10 million euros credit from the Guarantee Buyer of 10 million euros,” explains Merdžan. “This solution gives the liquidity of the exporter and a competitive advantage, while the importer benefits from long -term attractive financing terms due to the coverage of the commercial and political risks of ECA supplied to the lender as well as a rapid execution, which helps them to manage their cash flow more effectively.”
In addition, exporters benefit from the possibility of having production risks covered, adding an additional safety layer to their operations. “During the supply of financing solutions in addition to the supply agreement, exporters can improve their competitiveness on the world market,” said Merdžan.
On the other hand, this arrangement allows importers to preserve their own banking lines for other commercial needs, offering them greater financial flexibility and debt capacity. In addition, ECA warranty costs can be funded, which makes it easier to financial the importer’s financial burden.
Risk management FX and interest rate
“Although in our scenario, the monetary risk can be of minor relevance at first glance, because the RSD is a managed FX rate, a risk remains for the importer because it has concluded a long -term financing contract in EUR and obtains income in the RSD,” notes Zimmerl. “The objective of the importer is to rely on stable exchange rates and interest rate strategies to effectively manage risks and optimize financial operations in Serbia, ensuring resilience in a difficult economic landscape,” she explains. “This is why it is so important to have a partner who understands both the world situation and the macro, the market and the political environment in the field.”
Local experts of the RBI subsidiary, the Raiffeisen Bank Serbia bank, closely monitor the impact of American tariff policies, as well as national risk factors. Aleksandra Maksimovic, head of the Treasury and the Investment Bank at Raiffeisen Bank Serbia, notes: “Despite all the challenges, economic deceleration is still not confirmed in difficult data, although it should be seen in the coming quarters given the slowdown in the economy of Euro areas. “”
Future loan reimbursement coverage
“The question of whether the risk of EURRSD FX finally depends on the opinion of the respective customers on the market as well as on its internal coverage policies,” explains Zimmerl. Given the nature still in development of the FX Forward market in Serbia, coverage is generally intended for shorter tenors. “For example, the importer could buy three months and six months’ attackers and additional matters to the deadline to cover reimbursements for future loans,” she said. On the other hand, as the FX rate is managed and the IR differentials are positive, the importer can choose not to cover the FX risk at the moment and to monitor the situation using a strong local partner, such as Raiffeisen Bank Serbia.
Exposure management to interest rates
Interest rate exchanges (IRS) are vital tools to manage exposure to interest rates, allowing parties to exchange payments at fixed and floating rate. They stabilize cash flows by converting variable rate debt into a fixed rate or vice versa debt, which potentially potentially reducing borrowing costs. In the case of the Serbian importer, which takes long -term financing in EUR, RBI would advise the risk of interest rate via an IRS. “Our subsidiary bank in Serbia offers interest rate coverage from notional amounts of EUR 500,000, with tenors from one to ten years old, under a local master agreement,” explains Zimmerl. In addition to the offers mentioned by Raiffeisen Bank Serbia, it should be noted that RBI is able to offer full coverage solutions, advice and expertise also structuring on other CEE markets, thus supporting customer activities in the region. A close and honest communication with the customer is vital, because the IRS and other derivatives are complex financial instruments which offer risks and chances. It is important that the customer has a clear understanding of the functioning, risk and chances of these financial instruments.
Transparent support thanks to a cross collaboration
RBI’s integrated approach combining various products and solutions, such as expertise in trade financing, export financing and capital markets offers full support adapted to the needs of our customers. Its ECE competence through subsidiary banks distinguishes RBI, offering personalized solutions. “We adapt to market changes, constantly improving our services to provide resilient financial solutions to changing geopolitical and economic landscapes,” explains Zimmerl. With robust risk mitigation strategies, RBI helps customers navigate volatile markets confidently, ensuring competitiveness and security.
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Advertising: This advertisement is provided only as non -binding information. The information contained therein is neither an offer nor a recommendation or a financial analysis. They do not replace individual investment advice on the purchase and sale of financial instruments or to make any investment decision. Be aware that financial investments, as the target of this advertisement, have financial risks, including the total possible loss of invested capital. The information provided here also does not constitute tax or legal advice. The budgetary and legal treatment of investments depends on your personal situation. You are firmly advice on requesting professional financial, tax and legal advice before making any investment decision. Note that any cover involves derivatives, which are complex financial instruments and are not easy to understand. Investment in derivatives results in the risk of a total loss of invested capital and in certain circumstances may require the obligation to provide additional capital. This information is therefore only sent to professional customers and to eligible counterparts in the context of MIFID II. Please also note that information on past performance is not a reliable indicator on real future performance.