Trade finance

International trade and project finance, including certified instruments, are a priority activity for INVESTBANK and its Tsentral branch in Moscow.

Primary purposes and advantages of international trade and project financing:

- Opportunity to provide financing amounting to 80% to 100% of the value of a commercial contract;

- Increased profitability of foreign trade deals due to receipt of inexpensive resources of necessary duration;

- Reduced commercial and financial risks during foreign trade operations;

- Selection of optimal payment conditions based upon specific features of each deal;

- Possible increased volume of deliverables in import-export operations;

- Based upon client preference, repayment of trade financing loans may be lump sum following the term of the loan agreement or by collection of the needed loan repayment amount during the entire period of financing.

The bank offers all types of trade finance:

- Documentary collection

- Documentary letter of credit

- Bank guarantee.

Collection is a documentary operation to receive payment or bill of acceptance.

Example document flow schedule under payment collection:

1. Signing of commercial contracts

2. Delivery of goods to sellers and presentation of documents by sellers to the bank in accordance with instructions

3. Dispatch of documents to the bank of the importer

4. Payment or bill of acceptance of documents by importer

5. Translation of funds to exporter in accordance with received instructions and release of documents to importer

This form of payment assumes trust and stable partnerships between trade partners—the seller is does not receive an ironclad guarantee of payment—therefore, the most popular types of trade finance are documentary letters of credit and bank guarantees, which combine the interests of both seller and buyer.

A letter of credit is a solid bank commitment to issue payment to the beneficiary upon completion of subsequent terms of the letter of credit and submittal of supporting documents specified in the terms of the letter of credit to the bank.

Example document flow schedule with payment by installment under a letter of credit to an importer client of our bank:

1. Commercial contract

2. Issuance of a letter of credit by INVESTBANK with post-financing payment or payment by installment

3. Letter of credit advising and confirmation by foreign bank

4. Unloading of goods and presentation of export letter of credit in foreign bank

5. Execution of letter of credit by foreign bank and payment to exporter within the framework of the loan issued by INVESTBANK.

6. Repayment of loan by importer

7. INVESTBANK fulfills payment conditions received from foreign bank upon repayment of loan

As needed, an export insurance agent from the country of the exporter is invited to participate if issuing a guarantee to the confirming bank to minimize risk to the latter.

In addition, INVESTBANK is able to act as a confirming bank within limits set by other banks for export letters of credit issued on behalf of its clients or clients of correspondent banks.

Bank guarantees are yet another universal instrument of trade finance and represent an obligation of the bank to produce payment to the beneficiary of the guarantee upon initial demand in accordance with observation of guarantee terms. Bank guarantees provide an obligation of the principal before the beneficiary as a guarantee within a foreign trade contract.

Primary types of foreign trade guarantees:

- Payment guarantee

- Guarantee of return of advance payment

- Performance bond

- Bid bond

Depending on the respective national laws of participants in a deal, a standby letter of credit—which is analogous to a bank guarantee—may replace a direct guarantee.

Based on deal specifics, Investbank offers direct bank guarantees with first-class international banks upon INVESTBANK counter-guarantee.

Please contact us at the following locations to obtain additional information regarding trade finance:

- INVESTBANK department of correspondent relations and interbank payments in Kaliningrad, Tel, (4012) 572-405

- INVESTBANK department of financial institutions and international trade finance at Tsentrall branch in Moscow, Tel: (495) 411-68-11

We are ready to answer any question and provide consultative assistance in regard to foreign trade contracts and settlement.

INVESTBANK rates for trade financing