Trade Finance provides:
- Mitigation of commercial and financial risks of the parties (in the period between delivery of goods and receipt of payment);
- Securing the performance of obligations to the counterparty;
- Reduction of expenses for deferred payment;
- Optimization of financial flows;
- Opportunity to negotiate better commercial terms and conditions.
Trade finance instruments of UniCredit Bank enable both parties of the contract to benefit from high credit ratings as well as the reputation of UniCredit Group that help to ensure the reliability and security of settlements in commercial operations.
UniCredit Group has wide expertise in Central and Eastern Europe. An international network of representative offices and branches enables UniCredit Bank to engage partner banks quickly and cost-effectively in international transactions both inside and outside the Group.
Trade finance
Specialists of UniCredit Bank provide highly professional services and consultancies under various types of Guarantee and Letter of Credit transactions including financing
Letter of Credit is an obligation of a Bank to effect payment to the beneficiary (recipient of funds) against presentation of documents complying with the Letter of Credit terms.
UniCredit Bank effects L/C transactions under domestic contracts payable in rubles as well as export and import contracts of customers.
Working Capital finance (WoCa)
UniCredit Bank provides Working Capital Financing for the clients in the form of discounting of Letters of Credit with deferred payments.
Discounting:
- allows the buyer to receive or increase the deferred payment period;
- is carried out within the limit approved for the buyer by the Bank;
- has a pre-known price of financing which can be included in the price of the goods (in general, bank financing is cheaper than redeployment the Supplier's own funds);
- provides financing to the Supplier without increasing credit debt
- improves the Supplier turnover rates.
Contact information:
Trade Finance and Factoring Products Sales
Russia, Moscow, 119034, Prechistenskaya nab. 9
E-mail:
The Letter of Credit provides a balance of interests:
- the Supplier can be confident in receiving payment after delivery of the goods;
- the Buyer is confident that payment will not be made until the Supplier provides supporting documentation;
- payment decision is made by an independent party upon the results of verification of the documents for compliance with the terms of the Letter of Credit;
- Bank’s obligation under the Letter of Credit is legally independent from the contract.
Letter of Credit used as an appropriate alternative to advance payments and settlements based on an open account terms, which makes it possible to conclude contracts on mutually beneficial conditions.
In addition, Letter of Credit as a payment method is popular because of:
- the possibility of opening a Letter of Credit using the documentary line (without cash cover);
- ability of combination with other instruments;
- the possibility of deferred payment for the Buyer (and its discounting by the Bank on request of the Supplier).
Domestic Letters of Credit
- Settlements between residents of the Russian Federation;
- Transactions only in Russian rubles;
- Amount of Letter of Credit may be fixed in foreign currency with payment in rubles using an agreed exchange rate;
- Settlements by means of domestic Letters of Credit might be effected almost under all contracts: these might be contracts for the sale of goods, provision of services, real estate assets (including payments under mortgage deals with participation of the Bank), securities, shares, etc.;
- Settlements between legal entities and with the involvement of individuals alike;
- Settlements for third parties' liabilities (members of the same financial group);
- Domestic Letters of Credit are subject to the legislation of the Russian Federation and regulations of the Central Bank of Russia.
Customers who purchase goods on the territory of the Russian Federation may be interested in financing on the basis of Letters of Credit, opened in the commercial limit: UniCredit Bank makes payment under the Letter of Credit without using the Buyer’s funds, who is given a deferred payment condition.
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Letters of Credit in foreign trade
Letters of Credit are widely used in foreign trade because the Supplier (Exporter) usually wants to have an additional third-party payment obligation with a high credit rating to reduce economic and political risks. Creditworthiness and reputation of UniCredit Bank allows both parties to achieve their key interests in international settlements.
Import letters of credit
UniCredit Bank issues Letters of Credit on behalf of importers if the client provides collateral or cash cover acceptable to UniCredit Bank.
In most cases for financially stable clients UniCredit Bank sets documentary credit limits, which allows importers to apply for letters of credit without diversion of own funds until the date of payment.
Clients can contact their relationship manager in UniCredit Bank on matters relating to such limits.
UniCredit Bank provides financing through a loan to an importer at the payment date under the Letter of Credit (loan could be provided in euros, US dollars or Russian rubles)
On request of UniCredit Bank the foreign bank can provide financing through:
- granting deferral of payment under «at sight» Letters of Credit;
- discounting of Letters of Credit with deferred payment condition (providing early payment to exporter).
Export letters of credit
It is of considerable importance for the exporter to receive a Letter of Credit through a bank that is well known, since there is always the risk of a Letter of Credit being counterfeited or opened by a non-existent bank. This can happen if a Letter of Credit is sent directly by mail (bypassing the bank) so that the beneficiary has no opportunity to verify its genuineness.
With its large overseas network of correspondent banks, UniCredit Bank is able to provide clients with advice and recommendations on ways to conduct a transaction and about specific overseas banks. The bank advises, pays (honours) and, if the exporter requires, confirms incoming Letters of Credit issued by other banks in favour of Russian exporters.
As a Nominated bank under a Letter of Credit (the bank to honor the L/C), UniCredit Bank checks the presentation of the documents for the compliance with the L/C terms and notifies the issuing bank of the results. Payment will be made immediately after receiving funds from the issuing bank.
Confirmation of a Letter of Credit constitutes an obligation on the part of UniCredit Bank (in addition to the obligation of the issuing bank) to make payment against documents that fully conform to the respective terms and conditions of the Letter of Credit.
Payment will be made immediately after the documents are recognized as compliant, regardless of the decision of the issuing bank.
Usually confirmation of the Letter of Credit is required if there are high political and/or economic risks in the country of issuing bank.
In addition, UniCredit Bank transfers Letters of Credit that involve intermediaries.
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Guarantee is an obligation of a Bank to pay to the beneficiary against a demand from the beneficiary accompanied by supporting documents (if they are required by the guarantee terms) in case of violation of the contract obligations by the principle.
Bank guarantees have a wide field of application, as they provide security for either payment or other Client’s obligations, stipulated by the contract, relevant legislation, tender conditions or other types of relations between the parties.
UniCredit Bank provides services related both to foreign trade and to settlements inside Russia.
Guarantees in favor of foreign beneficiaries can be issued in form of Stand-by Letters of Credit or counter guarantees.
UniCredit Bank issues guarantees only in the Head Office in Moscow (9 Prechistenskaya emb.)
Guarantees could not be issued by any other branches of UniCredit Bank or its operational offices. UniCredit Bank does not work with any intermediary organizations in terms of issuing guarantees.
Attention! Any offers of assistance in obtaining guarantee of AO UniCredit Bank come from the scammers! We do not work with agents or intermediaries.
Guarantees issued under the 44-FZ Federal Law and the 223-FZ Federal Law (in the part of procurement from the small and medium-sized enterprises) are included in the Register of bank guarantees.
For guarantees issuance and authenticity verification you can apply only to:
- Head office of AO UniCredit Bank (119034, Moscow, Prechistenskaya emb., 9)
- Contact email: guarantees@unicredit.ru
- Tel: +7 495 258-72-58; +7 495 258-65-13
Advantages of bank guarantees:
- bank guarantee is independent from the main contract;
- depending on the conditions, bank guarantee may provide for both payment on first demand or against a set of supporting documents;
- bank guarantees help in getting more favorable contract conditions, participation in tenders, simplification of formalities in interaction with state authorities, removal of security deposit requirements, collateral without diversion of own funds.
Based on the requirements of legislation and regulatory documents of federal agencies Russian domestic guarantee business is developing significantly nowadays.
UniCredit Bank issues guarantees in favour of:
- Customs authorities: UniCredit has a 1st category limit defined by Russian Federal Customs Service;
- Tax authorities: UniCredit is a guarantor authorized by Ministry of Finance of the Russian Federation;
- Federal service for regulation of the alcohol market (Rosalcoholregulirovanie): the Bank has an approved limit for guarantees issuance;
- State Customers under Federal Law 44-FZ: UniCredit is a guarantor authorized by Ministry of Finance of the Russian Federation.
Our employees can help clients with drafting individual texts of guarantees taking into account the terms and conditions of each contract. They also provide our Clients with all necessary information.
Guarantees types
1. Guarantees issued on application of the buyers
Payment Guarantee
This guarantee ensures fulfillment of the buyer’s payment obligations as provided for in the contract. It is based on the terms of payment under the contract and covers the risk of default (or delay in payment) of the buyer.
Sub-types of payment Guarantee:
- Loan repayment guarantee
- Guarantees in favor of the State bodies of the Russian Federation (customs, tax and etc.)
2. Guarantees issued on application of the sellers
2.1. Bid Bond (Tender Guarantee)
The bid bond is a guarantee securing obligations of the tender or auction participants towards purchasers or contractors, namely:
- not to recall their bids within the bid validity;
- in case of successful bid, to sign a contract with the purchaser/contractor and to provide the latter with appropriate performance security.
The amount of bond ranges from 1% to 5% оf the total value of the prospective contract.
2.2. Advance Payment Guarantee
This is a guarantee for the refund of an advance payment made under the terms of the contract in the event that the seller fails to deliver goods or perform works. The guarantee is normally come into force at the date of crediting the advance to the seller’s account in the guarantor bank. The guarantee amount could be decreased as the seller performs his contractual obligations covered by the advance.
2.3. Performance Bond (Performance Guarantee)
The performance bond is a guarantee securing the proper performance of the seller’s contractual obligations. It is usually up to 10% оf the total contractual value and may be decreased as obligations are performed. Such guarantee can also secure seller’s obligations within the warranty period, stated by the contract.
Stand-by Letter of Credit
The stand-by letter of credit follows the L/C layout, but constitutes an obligation of the same nature as a bank guarantee. Payment under a stand-by Letter of Credit takes place only in case of default in performing underlying transaction.
Stand-by Letter of Credit as well as guarantee can ensure the fulfillment of different obligations: payment, return of advance, contract execution, etc.
It may be used only in cross-border deals (but not in domestic ones).
Legal framework for operations with bank guarantees is different from framework for standby Letters of Credit.
Bank guarantees are subject to the national legislation in the country of the guarantor or beneficiary (f.ex. the Civil Code of the Russian Federation) or the Uniform Rules for Demand Guarantees of the International Chamber of Commerce.
Stand-by Letters of Credit comply with the Uniform Customs and Practice for Documentary Credits or the International Stand-by Practices of the International Chamber of Commerce.
Cross-border Buyer’s Credit
It's a tied loan covered by international Export Credit Agencies (ECA) extended by UniCredit Group to Russian borrowers to finance their imports of capital intensive goods and services. Depending on the category of the imported goods, repayment tenor under such loans can reach 10 years. Size of the facility is limited to 85% of the contract value and could be increased subject to relating ECA approval for the amount of ECA premium (up to 100%) and for the local costs in the amount not exceeding 30% of the contract value.
In addition could be provide medium-term credit facility to finance advance payment of min 15% of the contract value.
Main advantages of the Buyer’s Credit are competitive pricing and long tenor of financing.
ECA-covered loan
It's a tied loan provided by AO UniCredit to Russian borrowers to finance payment under import contract with international suppliers of capital intensive goods and services. Such credit facilities are funded by ECA-covered special tied financing provided by foreign financial institutions. Terms and conditions of such loan are similar to the conditions of Cross-border Buyer’s Credit.
Advantages of this product are long financing term and competitive pricing conditions. Additional benefit of such loan is a possibility for the borrower to stay within the domestic legal field.