ACE CE GLOB GLOBAL DEP DEPOSITORY C OL AL C ON ROL S ERVI OR B AN - - PowerPoint PPT Presentation

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ACE CE GLOB GLOBAL DEP DEPOSITORY C OL AL C ON ROL S ERVI OR B AN - - PowerPoint PPT Presentation

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ACE CE GLOB GLOBAL DEP DEPOSITORY C OL AL C ON ROL S ERVI OR B AN ANKS , T , T RAD ERS & S S UPPLIER OLLAT ATERAL ONTROL ERVICES FOR RADERS IERS PE | | ME MENA | | EURAS URASIA | | WE RICA | | EAS RICA | | SOU RICA | | SOUTH AS ASIA | |

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SLIDE 1

ACE CE GLOB GLOBAL DEP DEPOSITORY

COL

OLLAT ATERAL AL CON ONTROL ROL SERVI ERVICES FOR OR BAN ANKS, T

, TRAD

RADERS ERS & S

SUPPLIER

IERS

WWW.ACE-GROUP.NET

EUROPE PE |

| ME

MENA |

| EURAS

URASIA |

| WE

WEST AF AFRI RICA |

| EAS

AST AF AFRI RICA |

| SOU

OUTHER HERN AF AFRI RICA |

| SOUTH AS

ASIA |

| FAR

AR EAS AST |

| LAT

ATAM AM

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SLIDE 2

COLLAT

ATERAL AL CONTROL SERVICES

 Transactional financing structures necessitate either full ownership with stock carried on the Lender’s balance sheet or registered possessory pledge over collateralized stock (dependent on Legal requirements per country)  Ownership evidenced by stock confirmations in form of a Warehouse Receipt  A thorough understanding of demand or supply dynamics in each operating country.  Commodity Risk: Storage dynamics, Price, Quality , Weight and Quantity  SCF Product Solutions covers the entire supply chain from Off taker, Transport to destination, Processor, Producer (foreign and/or local)  Comprehensive All risks Cargo Insurance covers risk of ownership in storage and in transit Plus Misappropriation plus FOG and FOQ  Comprehensive PI and Fraud from the Collateral Controller  Adequate Middle Office to ensure accurate monitoring of market prices, stocks and portfolio management

Str uc tur e d Co

Commodit dity F

inanc e F undame ntals

2

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COLLAT

ATERAL AL CONTROL SERVICES

Thes ese c e com

  • mmodi

modity mark rkets h have e th thei eir ow

  • wn pec

peculiar f fea eatu tures, includi ding:

  • Seasonal fluctuations in prices,
  • Differential in prices of different grades, weight and quality of a given kind of commodity,
  • "Differential" of the same grade, weight and qualities in different marketing centres, and
  • Hazards of deterioration in value during storage due to time, quality and weight .
  • The problem of unpredictable timing of deliveries due to inland transport and port congestion.
  • The risk of deterioration in the quality of the commodity to which the sales contracts are related

Transa nsact ction

  • n Pe r

for manc e Risks

3

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COLLAT

ATERAL AL CONTROL SERVICES

Thes ese c e com

  • mmodi

modity mark rkets h have e th thei eir ow

  • wn pec

peculiar f fea eatu tures, in inclu ludin ing : g :

  • The risk of volatility of the price of the commodity even when the desired quality is unchanged
  • Disparities in the quantity and weight of the commodity
  • Adequacy of insurance to cover the goods whilst in storage and in transit and which can be claimed in convertible currencies offshore
  • The legal risks involving inadequate commercial law legislation and insufficient legal systems to ensure collateral controls during the value chain
  • Risks arising from logistical problems from transport system failures, poor storage facilities, etc

Transacti tion P Perfor

  • rmance Ri

Risks ks ( (con

  • ntd

td.. ..)

4

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COLLAT

ATERAL AL CONTROL SERVICES

International trade, distribution of goods and trade finance activities often require control over the underlying collateral based on the purpose of the loan, the shipping documentation, jurisdictional, legal and insurance requirements, Inventory and the receivables located in the country of import or export. ACE GLOBAL DEPOSITORY (ACE GLOBAL) is a leading Collateral Control organisation and provides sophisticated collateral control services using adequate credit support tools relevant in respect of field warehousing, collateral management, secured distribution, certified inventory control services and certified accounts receivable services, as well as field audits, inspection, monitoring, all to an international clientele. Our team comprises of operational experts , bankers, credit support personnel, legal advisors, financial officers and chartered accountants supported by the physical presence and field expertise of a worldwide network of trained inspectors, providing unique service in the field of international collateral risk management. Through its world-class systems and staff, ACE GLOBAL is able to identify and secure the weak links in value chains – or design whole and entirely secured value chains for the account of its partners in any location.

5

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ATERAL AL CONTROL SERVICES

Vision

  • n, M

Mission a and Objecti tives

Ou Our V Vis isio ion To be the best comprehensive risk management partner in the commodity value chain Ou Our M Mis issio ion To provide custom-tailored commodity value chain solutions to stakeholders worldwide with superior end to end risk management services Our O Object ctives es

  • To create a liquid and fully secured warehouse receipts market and promote commodity financing
  • To provide comprehensive and effective collateral control and risk management services
  • To provide accurate, timely and objective transactional loan protection to enhance and support our client's loan decision-making
  • To provide accurate and continuous third party monitoring, audit, inspection and reporting to stakeholders
  • To provide assistance to stakeholders for collection of commodity based tax and duty revenue.
  • To provide KYCC due diligence and Creditor Advisory services
  • To provide loss prevention and management services through Credit Shield
  • To provide Inventory Appraisal, Credit Support Risk assessment and alternate financing solutions
  • To provide legal and training services on financing goods and managing commodity value chains

6

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ATERAL AL CONTROL SERVICES

ACE GL ACE GLOB OBAL AL – A S Snaps pshot

  • t

FACT ACTS

  • Present in 40 countries worldwide
  • Provide asset Management to 172 financial institutions
  • Total assets in excess of US$ 9 billion
  • More than 4,800 employees

HIS ISTORY RY

  • ACE GLOBAL, an international Collateral Control Company created in 1996 to assist :

 Banks, Financial Institutions to mitigate their transactional risks inherent in local, regional and international trade.  Emergent Countries to make safe the revenues from taxes and special taxation

  • ACE GLOBAL commenced its operations in Uganda in 1996. End of this year, ACE

GLOBAL was present in 5 countries mainly in Southern and East Africa.

  • From 1999 to 2008, ACE GLOBAL extended its activities in 17 countries
  • Since 2009, ACE GLOBAL continued its expansion with 22 new offices.
  • ACE GLOBAL perspective is to open soon more in Eastern Europe and Central Asia.
  • Currently own laboratories in 5 countries and are expanding/investing in new laboratories.
  • International Certification : Manual ISO 17020: 2011 duly prepared and distributed.

Internal Audit underway pending certification. GAFTA & FOSFA members. 7

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ATERAL AL CONTROL SERVICES

Histor y of the ACE GL OBAL ’s De ve lopme nt

Fo Format ativ ive Phas ase In Init itial ial E Expan ansion

  • n P

Phas ase Secon

  • ndar

dary Expan ansion

  • n P

Phas ase Recent E Expans ansion

  • n P

Phas ase Consol

  • lidat

idation ion an and d Optim imizat ation ion Founded in 1996 in Uganda 1999-2008 Creation of London operations and Geneva Branch - 2008 2009-2012 (Creation of Dubai Headquarters) Future Development Operat atin ing i in S Sout uthern an and d East st A Afri rica: 5 5 countries Operat atin ing m main ainly i in 1 17 c countries Operat atin ing m main ainly i in A Asia: ia: 1 17 c coun untries Main inly in, in, West Afric ica, a,MENA an and d Eas astern Euro rope Foc

  • cus on
  • n

Uganda Tanzania Kenya Sudan Zambia Switzerland Ivory Coast Nigeria Togo Ghana Cameroon Mali Bissau Guinea Liberia Senegal Sierra Leone India Ethiopia South Africa Singapore Brasil Argentina UAE Pakistan Turkey Benin Rwanda Egypt Indonesia Mozambique Zimbabwe Angola Burundi Djibouti Gambia Mauritania Morocco Thailand Vietnam Saudi Arabia Estonia Ukraine Russia Latin America Performance Risk management and Controls Technology and Process Control

8

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ATERAL AL CONTROL SERVICES

ACE GL ACE GLOB OBAL AL - Ope perati tion

  • ns

Operat ation ion through A ACE sub ubsidiar idiaries, af affiliat iates an and d as associat ates Operat ation ions t through A Agents 1. Angola 2. Argentina 3. Benin 4. Brazil 5. Burundi 6. Cameroun 7. Cote d’Ivoire 8. Dubai (UAE) 9. Djibouti 10. El Salvador 11. Ethiopia 12. Egypt 13. Gambia 14. Ghana 15. Guinea-Bissau 16. India 17. Indonesia 18. Kenya 19. Liberia 20. Mali 21. Mauritania 22. Mozambique 23. Morocco 24. Nigeria 25. Pakistan 26. Rwanda 27. Senegal 28. Sierra Leone 29. Singapore 30. South Africa 31. Sudan 32. Switzerland 33. Tanzania 34. Thailand 35. Togo 36. Turkey 37. Uganda 38. Vietnam 39. Zambia 40. Zimbabwe 1. Australia 2. Belgium 3. Bulgaria 4. Bangladesh 5. Canada 6. Ethiopia 7. Estonia 8. France 9. Germany 10. Greece 11. Italy/Chypre 12. Jordan 13. Libya 14. Lebanon 15. Mexico 16. Mauritius 17. Madagascar 18. Portugal 19. Romania 20. Saudi Arabia 21. Spain 22. Syria 23. The Netherlands 24. Tunisia 25. Russia 26. Ukraine 27. USA 28. Venezuela

9

Co Comp mpany i inco corporation un under proce cess Bahrain Saudi Arabia Panama Kingdom of Lesotho Romania

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ATERAL AL CONTROL SERVICES

ACE ACE GL GLOB OBAL AL : : Op Operat erating M g Model del

ACE GL OBAL

GT AS SA Ge ne va ACE Dub a i

We st Afric a 13 c o mpa nie s E a st Afric a 7 c o mpa nie s So uthe rn Afric a 5 c o mpa nie s Middle E a st 3 c o mpa nie s Asia 6 c o mpa nie s E ura sia 1 c o mpa ny L a tin Ame ric a 3 c o mpa nie s

Operating model

10

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ATERAL AL CONTROL SERVICES

ACE GL ACE GLOB OBAL AL – Organ Organiza zation St Stru ruct cture e - Grou

  • up
  • ACE GLOBAL operates under a Matrix reporting structure with both geographic and functional reporting.
  • Regional country managers report to the CEO and the regional functional managers(e.g. CSO, TSSM) report to the Group Head of the function (Group

CSM, Group TSSM).

  • Dual reporting ensures governance is independent of the business.

11

Executive Board Chief Executive Officer Group CFO & HR Group Legal Manager Group Technical Services Support Manager Group Credit Support Manager Group Relationship Manager

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ATERAL AL CONTROL SERVICES

12

ACE GL ACE GLOB OBAL AL – Organ Organiza zation St Stru ruct cture-Re Regiona

  • nal
  • Management team comprises of experts in Relationship Management, Credit, Logistics, Legal, Finance and Inspection with several decades of

experience in their respective domain.

  • Expertise is present at Local, Regional and Global level. Regions are led by veterans in this business and provide leadership to respective

countries.

  • Management team is supported by the physical presence and field Inspection commodity expertise.

Chief Executive Officer Regional Country Manager East Africa Regional Country Manager West Africa Regional Country Manager Southern Africa Regional Country Manager Eurasia MENA Asia LATAM

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ATERAL AL CONTROL SERVICES

ACE GL ACE GLOB OBAL AL – Organ Organiza zation St Stru ruct cture e - Local cal

  • Each country has a dedicated team of experienced Relationship, Credit Support, Technical Services, Legal and Finance Managers led by the Country

managers who are experienced in this business.

  • The operations on the field headed by TSSM are managed and supervised by local personnel e.g. (Inspectors, Supervisors, Analysers, etc...). Similarly the

Credit Support Managers (who recommend deals, issue WHR, manage RO and issue Reports) are local staff.

13

Regional Country Manager Country Manager Finance Manager Legal Manager Technical Services Support Manager Credit Support Manager Relationship Manager

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ATERAL AL CONTROL SERVICES

ACE GL ACE GLOB OBAL AL - Colla

  • llate

teral C l Con

  • ntr

trol

  • l Services

ACE GLOBAL provides a “One-Stop Shop” across the commodity value chain.

ACCS

Cro p F ina nc e

  • T

a nks/ Silo s

  • Shipping
  • Ra il
  • Pipe line s
  • Re fine rs
  • Mills
  • Crushe rs
  • F

a c to rie s

  • Bre we rie s
  • T

a nks/ Silo s

  • Shipping
  • Ra il
  • Pipe line s
  • Distrib utio n
  • E

nd Use rs E xisting re la tio nship

14

T a x a nd Duty c o lle c tio n Local/Region al Producers Transport/Lo gistics Transformers Transport/Lo gistics Exporters/ Importers Traders Countries

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COLLAT

ATERAL AL CONTROL SERVICES

ACE GL ACE GLOB OBAL AL – Solu

  • luti

tion

  • ns

Fin Finan ancial S ial Structurin ing servic ices Commerc mercial E l Engineering servic ices Operatio ional R Ris isk Man Manage ageme ment s servic ices Genera ral S l Servi vices es

  • Structured Trade and

Commodity Financing

  • KYCC services
  • Commodity profile
  • Contract Farming Services
  • Trade Flow Facilitation
  • Commodity Pricing
  • Supervising Aid management
  • Field Warehousing
  • Collateral Management
  • Secured Distribution
  • Certified Inventory Control
  • Certified Accounts Receivable Services
  • Monitoring
  • Field Audit and Inspection
  • Consultancy
  • Advisory
  • Legal
  • Training

15

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ATERAL AL CONTROL SERVICES

ACE GL ACE GLOB OBAL AL BUSI SINES ESS PR PROCESS OCESS & & OVER OVERVIEW EW

16

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ATERAL AL CONTROL SERVICES

ACE ACE GL GLOB OBAL AL & & Lenders enders - Syner Synergi gies

17

ACT ORS SUPPL IE R L OCAL AGE NT PORT E XPORT E R OF F

  • T

AKE R ST E PS

De live ry o f Ra w Ma te ria l

Wa re ho using Pro c e ssing Wa re ho using

T ra nsit

Wa re ho using L

  • a ding

E xpo rt/ Shipm e nt

Re c e iva b le s

T YPE OF F I NANCI NG

Raw Mate r ial F inanc ing Wor king Capital F inanc ing (T

  • lling)

E xpor t Pr

  • duc t F

inanc ing Re c e ivable F inanc ing

E XPORT GRADE PRODUCT WARRANT S

COL L AT E RAL

RAW MAT E RI AL WARRANT S SHI PPI NG DOCUME NT S

RISKS

Supplie r Pe rfo rma nc e Qua lity/ Qua ntity/ We ig ht

Supplie r/ Pro c e ssing Pe rfo rma nc e

Ca rrie r Pe rfo rma nc e

T e rmina l Pe rfo rma nc e

Ca rrie r Pe rfo rma nc e

PAYME NT

MIT IGANT S

ACE SUPE RVI SON MONI T ORI NG ACE COL L AT E RAL MANAGE ME NT 1st Cla ss Offta ke r o r Se c ure d Pa yme nt I nstrume nt Pla nt Ma na g e me nt / T e c hnic a l Assista nc e E xpo rte r/ Ca rrie r E xpe rtise , Re puta tio n & T e c hnic a l Suppo rt

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ATERAL AL CONTROL SERVICES

18

ACT CTORS SUPPLIER LOCA CAL A AGEN ENT PORT RT EXPO PORT RTER OF OFF-TAKER

STE TEPS Delivery of Raw Material Warehousin g Processi ng Warehousin g Transit Warehousing Loading Export/Shipmen t Receivables

TYPE O E OF FINANC NCING NG Raw Materia rial F Fin inancin ing Work

  • rking C

Capit ital F Fin inancin ing (To Tolling ng) Expor

  • rt P

Prod roduct F Fin inancin ing Rece ceivab vable Financ ncing ng EXPORT GRADE PRODUCT WARRANTS COLLATER ER AL AL RAW MATERIAL WARRANTS SHIPPING DOCUMENTS

RISKS KS

Supplier Performanc e Quality/Quantity/Wei ght Supplier/Processing Performance Carrier Performance

Terminal Performance

Carrier Performance

PAYMENT

MITIGANTS ACE SUPERVISON MONITORING ACE COLLATERAL MANAGEMENT 1st Class Offtaker or Secured Payment Instrument Plant Management / Technical Assistance Exporter/Carrier Expertise, Reputation & Technical Support

Lender’s CONVENTIONAL SCOPE ACE GLOBAL’s SCOPE ACE ACE GL GLOB OBAL AL & & Lenders enders - Syner Synergi gies

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ATERAL AL CONTROL SERVICES

19

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ATERAL AL CONTROL SERVICES

20

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ATERAL AL CONTROL SERVICES

Financ Financing and and Structuring Op Opportunit itie ies – ACE CE GLO GLOBAL S L Ser ervices es

21

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ATERAL AL CONTROL SERVICES

Risk Ar e a Risk L ike ly Cause Pr e ve ntative ac tion

  • 1. Co mmo dity 1. Gra de / Qua lity infe rio r

1. Misre pre se nta tio n 2. I nc o rre c t a sse ssme nt 3. I na de q ua te ha ndling pro c e dure s 4. We ig hb ridg e no t c a lib ra te d a c c ura te ly 1. I nspe c tio n b y Co lla te ra l Ma na g e r 2. Ana lysis b y inde pe nde nt la b o ra to ry 3. Ca lib ra tio n o f e q uipme nt b y Co lla te ra l Co ntro lle r 4. I nte rna tio na l sta nda rds use d fo r a na lysis 5. Ce rtific a te o f we ig ht a nd Ana lysis issue d b y Co lla te ra l Co ntro lle r

  • 2. Mo isture

1. I nspe c te d inc o rre c tly 2. Me a sure d inc o rre c tly 3. E xpo sure to e le me nts prio r to lo a ding 4. Clima tic c o nditio ns 5. I nfe rio r Sto ra g e c o nstruc tio n 1. Co lla te ra l Co ntro l E ng ine e rs issue Ce rtific a te o n Sto ra g e struc ture 2. Sto ra g e Ag re e me nt de fine s re spo nsib ility 3. I nsura nc e Co ve r 4. Ce rtific a te o f Ana lysis issue d b y Co lla te ra l Co ntro lle r

  • 3. I

nse c t infe sta tio n 1. Misre pre se nta tio n 2. I nc o rre c t inspe c tio n 3. I nfiltra tio n 4. I nfe rio r Sto ra g e c o nstruc tio n 5. c ro ss c o nta mina tio n 6. Pro ximity o f infe ste d lo ts 1. Sto ra g e Ag re e me nt de fine s re spo nsib ility 2. I nsura nc e Co ve r 3. I nspe c tio n b y Co lla te ra l Co ntro lle r o n fo rtnig htly b a sis 4. F umig a tio n o n re c o mme nda tio n fro m Co lla te ra l Co ntro lle r

  • 4. De fe c tive

title / c o unte rfe it title do c ume nts/ Bo rro we rs re puta tio n 1. F ra ud b y Supplie r/ Sto re r 2. Co mmo dity sto le n 3. Dispute o ve r o wne rship o f c o mmo dity 1. Ba nk ho lds o rig ina l do c ume nts o f title 2. Sto ra g e a g re e me nts with sto re rs 3. Supplie r wa rra nts full title 4. Supplie r is a lso sto re r in ma jo rity o f c a se s 5. Co untry Ma na g e r thro ug h K YCC will de te rmine the Cre dib lity o f the b o rro we r

  • 5. we ig ht sho rta g e

1. I na de q ua te e q uipme nt 2. fra ud/ sto re r de via ting g o o ds 3. we ig htsc a le no t c a lib ra te d 4. Silo sc a le s no t c a lib ra te d 5. Ba d ha ndling fa vo ring spilla g e 1. upda te d c a lib ra tio n c e rtific a te 2. Co untry Ma na g e r will c he c k fo r po ssib le b y-pa sse s 3. Co untry Ma na g e r will re q ue st re g ula r te st we ig hing 4. we ig hing unde r surve illa nc e o f L

  • c a l Co lla te ra l Ma na g e r o n

b e ha lf o f ACE GL OBAL 5. Co untry Ma na g e r to issue pro te st le tte r

  • 6. he a ting & se lf

c o mb ustio n 1. De fe c tive lig htning o n b o a rd ve sse l ho lds 2. to o hig h mo isture 3. fre sh g o o ds 4. po o r ve ntila tio n 5. la c k o f fo llo w up 1. c he c k o n ve sse l e le c tic de vic e s 2. mo isture te sting o n a rriva l 3. re g ula r te mpe ra ture te sting 4. pro pe r a nd a de q ua te ve ntila tio n 5. Co untry Ma na g e r re g ula r mo nito ring 6. I nsura nc e c o ve r

  • 7. da ma g e to the

g o o ds 1. ma lic io us 2. F

  • rc e ma je ur

3. le a ka g e / wa te r infiltra tio n 4. b a d sto ra g e c o nditio ns 1. pe rma ne nt pre se nc e o f L

  • c a l Co lla te ra l Ma na g e r o n b e ha lf o f

ACE GL OBAL 2. pro pe r inspe c tio n o f wa re ho use 3. I nsura nc e c o ve r

Risk Mitigation approach

22

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ATERAL AL CONTROL SERVICES

Risk Ar e a Risk L ike ly Cause Pr e ve ntative ac tion

  • 2. Co mmo dity Sto ra g e
  • 1. L
  • ss o f c o mmo dity

1. L a c k o f c o ntro ls 2. I nc o mpe te nt pe rso nne l 3. Co llusio n b e twe e n Co lla te ra l Ma na g e r & Sto re r 4. F

  • rc e Ma je ure

5. We ig ht re c o rding inc o rre c t 6. Sto re d to o lo ng - c o mmo dity spo ile d 1. Co lla te ra l Co ntro lle r inde pe nde nt c o ntro ls ve rific a tio n 2. T he L e nde r I nsura nc e c o ve r 3. Co lla te ra l Co ntro lle r q ua ntity & q ua lity c e rtific a te s re ta in a s pro o f o f va lue a nd e xsista nc e 4. Sto ra g e pe rio d limite d to 12 mo nths

  • 2. Da ma g e to Co mmo dity

1. Sto ra g e fa c ilitie s sub sta nda rd 2. Ma npo we r re q uire me nts ina de q ua te 3. T he ft o r Misa ppro pria tio n 4. F

  • rc e Ma je ure

5. Spo nta ne o us Co mb ustio n 1. Co lla te ra l Co ntro l E ng ine e rs Re po rt 2. Sto ra g e a g re e me nt de fine s re spo nsib ility 3. I nsura nc e c o ve r 4. Co lla te ra l Co ntro lle r re g ula r inspe c tio ns

  • 3. Sto re d c o mmo dity

infe c te d/ c o nta mina te d with dise a se - Ba nk se lls to e nd use r with sub se q ue nt c la im fo r da ma g e s 1.

  • 1. I

nse c t infe sta tio n 2.

  • 2. F

ung i c o nta mina tio n 3.

  • 3. mo uld

4.

  • 4. Pro ximity o f infe ste d lo ts

1. Ba nk ha s ta ke n o ut insura nc e (Pub lic L ia b ility ) 2. Co untry Ma na g e r re g ula r inspe c tio ns 3. Re fuse pro ximity / Pro pe r se pa ra tio ns 4.wa re ho use no t c o ve re d b y insura nc e 1. wa re ho use insura nc e no t pro pe rly c he c ke d 2. pre mium no t pa id 3. insure d va lue to lo w 4. De duc tib le to hig h 1. Pro pe r c he c k o f insura nc e Po lic y 2. Co nfirma tio n fro m unde rwrite r tha t pre mium ha s b e e pa id

Risk Mitigation approach

23

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ATERAL AL CONTROL SERVICES

Risk Ar e a Risk L ike ly Cause Pr e ve ntative ac tion

  • 3. Sto re r
  • 1. No n pe rfo rma nc e to

ma inta in a nd sto re the c o mmo dity 1. F ina nc ia l fa ilure 2. Sto ra g e fa c ilitie s sub -sta nda rd 3. Ma npo we r no t q ua lifie d to ma na g e sto ra g e 4. Cha ng e s in sta tuto ry limita tio ns 1. Co lla te ra l Co ntro lle r le a se s Sto ra g e / wa re ho use 2. Sto ra g e a g re e me nt with sto re r sta te s tha t the L e nde r is the o wne r o f the c o mmo dity 3. F ull c o mmo dity insura nc e c o ve r ta ke n b y the L e nde r

  • 4. Cre dit
  • 1. No n-pe rfo rma nc e o f

pa yme nt 1. Clie nt una b le to pa y / inso lve nc y 2. E c o no mic do wnturn 3. Ca sh flo w diffic ultie s/ fina nc ia l distre ss 4. Che q ue no t c le a re d 1. Cre dit a ppro va l o n o ff-ta ke r, a nnua l c re dit re vie w 2. Co mmo dity he ld a t disc o unt to ma rke t va lue fo r I ntrinsic Va lue 3. T he L e nde r o wns c o mmo ditie s 4. No ne L e nde r a c c e pte d c lie nts must first e ithe r pre se nt b a nk g ua ra nte e d c he q ue s o r pa yme nt to b e c le a re d

  • 5. Co mmo dity Va lue

(Sa le )

  • 1. Dro p in pric e o f c o mmo dity

1. Ove rsupply 2. E c o no mic Do wnturn 1. Ba c k to Ba c k Sa le a nd Purc ha se a g re e me nt. 2. He dg e purc ha se pric e o r use a ppro pria te disc o unting mo de l 3. Use a ppro pria te disc o unting mo de l, institute trig e r pric e le ve ls

  • 6. Co mmo dity Va lue

(Purc ha se )

  • 1. I

nc o rre c t c a lc ula tio n o f c o st b y c lie nt

  • 2. I

nc o rre c t c a lc ula tio n o f purc ha se pric e b y Ba nk 1. I na b ility o f c lie nt to c a lc ula te a nd inc lude a ll c o sts a c c ura te ly 2. Disc o unt mo de l fla we d 1. Ba nk to re vie w a ll o rde rs a nd c a lc ula tio ns 2. Ge ne ric Disc o unting Mo de l - Any va ria tio ns to b e a ppro ve d b y Ba nk line ma na g e me nt

  • 7. Pric ing

1. Una c c e pta b le re turn o n Ca pita l 2. Cha ng ing inte re st ra te s 1. I nte re st ra te c ha ng e 2. Cha ng e in sta tuto ry re q uire me nts 3. F unding a sho rt te rm a dva nc e with lo ng -te rm funds 1. Ra te linke d to Prime 2. F unding to b e de te rmine d b y ma na g e me nt

  • n a c a se b y c a se b a sis

3. Atte mpt to lo c k in ra te with a sho rt te rm instrume nt 4. Ge ne ric Disc o unting Mo de l - 3% he dg e

  • 8. Ope ra tio na l (Ba nk)

1. F ra ud / Misa ppro pria tio n 2. I na de q ua te c o ntro ls 3. Sta tuto ry 4. Do c ume nta tio n 5. Administra tio n 6. I nfo rma tio n T e c hno lo g y 1. I na de q ua te inte rna l c o ntro ls 2. Bre a kdo wn in b a sic c o ntro ls 3. Cha ng e s to Ac t a nd Re g ula tio ns 4. Do c ume nta tio n no t le g a lly b inding 5. Administra tive b urde n to o b ig fo r a dministra tive de pa rtme nt 6. Admin syste m inc o mpa tib le 1. Se g re g a tio n o f dutie s 2. Audit func tio ns (I nte rna l & E xte rna l) 3. Appro ve do c ume nts thro ug h L e nde rs L e g a l de pa rtme nt 4. Re vie w a dmin pro c e dure s 5. I nc re a se c a pa c ity to ha ndle wo rklo a d 6. Struc ture d T ra de & Co mmo dity F ina nc e syste m de sig ne d to mitig a te a sso c ia te d risks

Risk Mitigation approach

24

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COLLAT

ATERAL AL CONTROL SERVICES

Risk Ar e a Risk L ike ly Cause Pr e ve ntative ac tion

  • 9. I

nsura nc e

  • 1. F

unding pro vide d witho ut a de q ua te insura nc e o n Ba nk

  • wne d c o mmo dity
  • 2. I

nsura nc e Co una b le to me e t its o b lig a tio ns

  • 3. L
  • w c la ss c o mpa ny

1. I nsura nc e ina de q ua te 2. I nsura nc e no t in pla c e 3. I nsure r o ve r e xte nde d 4. wro ng va lue insure d 5. to o hig h de duc tib le 6. I nsura nc e Co mpa ny No t re lia b le 1. Re c o g nise d insura nc e c o mpa ny to b e use d 2. Ba nk to mo nito r insura nc e pre miums 3. Othe r I nsura nc e Co mpa nie s to b e a ppro ve d b y Ba nk 4. de dic a te d pe rso n to fo llo w ma rke t 5. de dic a te d pe rso n to re vie w insura nc e

  • 10. T

a xa tio n

  • 1. No t a ta x b a se d tra nsa c tio n

Risk Mitigation approach

25

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COLLAT

ATERAL AL CONTROL SERVICES

Legal egal ap apprai raisal

ACE GLOBAL conducts its own legal due diligence in respect of bespoke services offered viz. – Field Warehousin ing: is essentially a method whereby a borrower’s trading assets are used as security at the borrower’s own premises for a loan or financing. It is a security instrument which enables the borrower, to deliver to the Bank legally valid documents of title and to grant a possessory pledge over goods stored in the borrower's own plant, mill, refinery or warehouse via the legal principle of Bailment. In order for a field warehouse and the lien created thereby to be recognized as valid, the possession of the Collateral Controller must be “exclusive, notorious and continuous.” All the ACE GLOBAL operating procedures have been devised to comply with this standard. – Coll llate teral Man anagement: Under Collateral Management operations, the storage premises are owned and operated by an independent third party without the influence of the borrower. Field Warehousing and Collateral management agreements hence differ inter alia, on the basis of the ownership, control and release mechanism within storage facilities. Under collateral management it is therefore essential to devise a methodology for maintaining control, custody and possession and for effecting release, all of which binds the third party to the Collateral Controller as per the mechanism agreed by the Bank. In such Collateral Management Operations, it is this third party which is the original goods father in respect of such goods i.e. on behalf of the owner of the goods which first deposits the goods with the third party for storage. – Se Secu cured Dis istrib ibut ution

  • n Se

Service ces: This a specialized type of Field Warehousing developed to service the needs of suppliers of commodities who wish to retain ownership of the inventory they supply, or to have a possessory lien on the goods till such time that payments are received in full against such inventory, and to regulate the delivery of the inventory to the Buyer. This service has been developed by ACE GLOBAL to service both the Suppliers’ needs as well as the Buyers’ needs and the Agreement is adjusted accordingly based on the operational requirements.

26

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COLLAT

ATERAL AL CONTROL SERVICES

L e gal appr aisal

ACE GLOBAL conducts its own legal due diligence in respect of bespoke services offered viz. – Certi rtified Inve ventor

  • ry Con
  • ntrol
  • l This is a service used by companies who would like to avail financing from banks but not by pledging their stocks specifically for this financing. Under

Certified Inventory control, the company, ACE GLOBAL and the bank enter into a tripartite agreement. Since no lease is taken under Certified Inventory Control (as compared with field warehousing), the agreement provides that ACE GLOBAL shall have full right of ingress and egress to premises where inventory is stored, and that ACE GLOBAL shall have access to any

  • f the company’s inventory records which are necessary to render its service. The banker has ACE GLOBAL’s certificate to the extent that its reports are accurate and that the assets being

controlled will not fall below an agreed minimum level. ACE GLOBAL will deliver to the Bank periodic reports and inventory certificates as and when required by the Bank. – Certi rtified Accou

  • unts Rec

ecei eivable Se Service ces : A company’s book debts may be worth as much or even more than the stocks so any monitoring ACE GLOBAL provides would be enhanced by their inclusion. This can be done by employing many of the same techniques used in Certified Inventory Control. ACE GLOBAL’s survey for example, would include the handling of book debts as well as stocks. ACE GLOBAL then examines the company’s books, verifies the balance if necessary, prepares an ageing analysis and includes its findings on the first Collateral Control Certificate and all changes on the subsequent Certificates – St Stock ck Mon

  • nit

itor

  • ring and Ins

nspection

  • n Se

Service ces : Under this Arrangement, the Bank appoints ACE GLOBAL to monitor and inspect the physical and where required, the documentary handling

  • f the Goods. ACE GLOBAL provides these services for the account of the Bank and the role of ACE Global is solely one of logistical monitoring and inspection. In order for ACE

GLOBAL to be responsible or liable for the condition, quality, management or control of the Goods, ACE GLOBAL will adopt the more appropriate Collateral Control Agreements and not a Stock Monitoring Agreement. .

27

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COLLAT

ATERAL AL CONTROL SERVICES

Im Impor porta tant De Definiti tions:

  • “Ba

Bailm lment” t” means the transfer of the possession of Goods by the owner (bailor) to another (the bailee) which shall thereafter maintain notorious, continuous and exclusive possession of all the Goods, for particular purposes such as hiring, financing, pledge of goods, and the delivery of Goods for carriage, safe custody or repair. – Notorious possession is evidenced by numerous conspicuous signs placed by ACE GLOBAL at the storage premises.; Continuous and exclusive possession is assured by the fact that ACE GLOBAL has one of its employees or agents or representatives on duty at all times when the premises are unlocked and that anyone permitted to enter the premises does so only at the will of ACE GLOBAL or with its consent. – The foregoing steps accomplish an effective change in the possession of the goods and premises. Thereafter, warehouse receipts may be issued at the borrower’s premises in respect of Goods stored therein just as though they were in any public warehouse and the constructive possession of the Goods is maintained by ACE GLOBAL for and on behalf of the bank throughout the duration of the financing and till the goods are released.

  • “Ful

Full Outt tturn Guar uaran antee / FO FOG” shall mean the insurance coverage extended to differences and shortages in quantities of any Goods under specific terms and conditions.

  • “Ful

“Full Outt tturn Qual ualit ity / FO FOQ” shall mean the insurance coverage extended to defects and differences in quality parameters and/or specifications in any Goods under specific terms and conditions.

  • "Mis

isap appropriat iatio ion“ shall mean unauthorised, fraudulent or dishonest appropriation or use, or unexpected or unforeseen or unexplained loss of the Goods under collateral management / Field Warehousing and /or monitoring and/or storage supervision by ACE-GLOBAL and shall, inter alia, include the risk association with fraud, defalcation, misapplication, embezzlement, fraudulent transfer of ownership from the insured interest and dispossession thereof (except that which solely results from a governmental intervention).

28

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SLIDE 29

COLLAT

ATERAL AL CONTROL SERVICES

ACE GL ACE GLOB OBAL AL – Prof

  • fession
  • nal L

l Liabili lity In Insurance Cove

  • ver
  • To indemnify the insured against legal liability, costs or expenses arising out of insured’s
  • peration
  • Area covered : Worldwide
  • Limit of liability : $ 50 million (per event / per occurrence)
  • No claims made on PI since inception (17 years)

29

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COLLAT

ATERAL AL CONTROL SERVICES

ACE GLOBAL: B Break k dow

  • wn of
  • f Turnov
  • ver by servi

vice of

  • ffer

ered

30

79% 5% 14% 2% FWSA/CMA Inspection Monitoring/SMA Stock Audit 77% 5% 16% 2% FWSA/CMA Inspection Monitoring/SMA Stock Audit

2011 2011 2012 2012

slide-31
SLIDE 31

COLLAT

ATERAL AL CONTROL SERVICES

31

ACE GL E GLOBAL: C Comm

  • mmod
  • dity wi

wise B Break down of

  • wn of glob

lobal b business

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SLIDE 32

COLLAT

ATERAL AL CONTROL SERVICES

E3C 3C - Enhanced C Credit C t Com

  • mmod
  • dity

ty C Con

  • ntr

trol

  • l

32

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SLIDE 33

COLLAT

ATERAL AL CONTROL SERVICES

  • Real time access to the location
  • Weight, quality and quantity of the commodity
  • Single point of interface between the

lender and the value chain

  • Enabling the lender to monitor asset based and asset conversion lending through

market to market evaluation Spans the entire value chain beginning with the post harvest stage and encompasses the processing & movement of commodities with lenders. It gives lenders comfort through:

E3C 3C - Enhanced C Credit C t Com

  • mmod
  • dity

ty C Con

  • ntr

trol

  • l

33

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SLIDE 34

COLLAT

ATERAL AL CONTROL SERVICES

  • Guarantees / Certifies the Collateral
  • Facilitates end-to-end (Value Chain) Trade

Finance

  • Facilitates Collateral Transfer
  • Risk Assessment
  • Escrow Agent Facilities
  • Facilitates Settlement on Exchanges –

guaranteed delivery system

  • Issues of Electronic Warehouse Receipts
  • Mitigates Performance Risk
  • Supports parastatal bodies’ revenue collection

Its Core Functions:

E3 E3C - A Uniq ique ue S Sol

  • lut

ution t to

  • mit

itiga gate Per Performance R Ris isk & & Sec ecur ure T Tran ansactions

34

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SLIDE 35

COLLAT

ATERAL AL CONTROL SERVICES

ACE GLOBAL: E E3C 3C and appr pprov

  • val pr

l proc

  • cess

35

C

RSM, TSSM, CSM, and LM: prepare the specific check list TSSM: Conduct storage location inspection FM: Receive Transaction Details and prepare cost sheet RSM: Prepares CPS and CSAR with CSM/TSSM RSM: creates and Initiates deal in E3C, Upload CPS, CPL, KYCC, CSAR, Term Sheet and RSMR LM: Uploads draft contract and related legal docs

Approved

CM: Amends and send back to GCSM RSM: Receive Indicative Term Sheet/ Complete ACE Global Bank Questionnaire/Prepare KYCC LM: Prepare CPL, Legal Opinion and Draft contract CM: Approval request RCM: Approval request

Approved

GCSM: Reviews & Analyses deal

Approved

Refer back GTSSM: Reviews & Analyses deal

Approved

Refer back CM: Amends and send back to GTSSM GLM: Confirms final draft contract, Local LM uploads docs. GFM: Reviews and Analyses deal CM: Amends and send back to GFM

Approved

Refer back GLM: Assess deal

Approved

Refer back CM: Amends and send back to GLM GRSM: Reviews and Approves GHR: Approves and notifies CEO CEO: Approves or Rejects deal

Approved SO: Notifies CM of Deal Approval by allocating back the deal to the CM.

CM: Allocate deal to CSM CSM: Assigns Deal to CSO and TSM, who in turn allocates deal to a supervisor and inspector Deal is now active and in Execution

*Please note, deal can only be rejected at the group level LEGEND: RSM: Relationship Manager LM: Legal Manager CSM: Credit Support Manager CSO: Credit Support Officer TSSM: Technical Support Services Manager FM: Finance Manager CM: Country Manager RCM: Regional Country Manager SO: Security Officer G: Group

Refer back CM: Amends and send back to CEO

slide-36
SLIDE 36

COLLAT

ATERAL AL CONTROL SERVICES

ACE – Ke Key P Proc

  • cesses
  • Site Inspection
  • Know Your Client’s Customer and all stakeholders (including transporter, storer and processor) for each transaction
  • Deal specific Commodity Profile
  • Warehouse Inspection
  • Each service is broken into three steps:

– Pre Deal and Deal Approval process

  • Design sequence of events
  • Identify risks and mitigants from Bank point of view

– Execution

  • Maker /Checker concept with approvals by CSM

– Administration and Reporting

  • Independent issuance of WHR and RO
  • Independent reporting and tracking
  • Loan justification
  • Mandatory Credit Support approval

36

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COLLAT

ATERAL AL CONTROL SERVICES

ACE GL ACE GLOB OBAL AL: E3 E3C C Deal eal L Lif ife Cyc e Cycle

  • 1. Deal Creation
  • 2. RM Checklist
  • 3. TSS Checklist
  • 4. CSM Checklist
  • 5. Legal Checklist
  • 6. FM Costsheet
  • 7. RM –

Documentation

  • 8. TSS – Risk Matrix
  • 9. CSM – Deal

Structuring

  • 10. Legal – Contract
  • 11. CM Approval
  • 12. Group Level

Approvals and Checklist Finalization SO – Allocation TSS, CSM – Allocations Execution

37

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SLIDE 38

Contac ts

WWW.ACE-GROUP.NET

38

MENA ACE GLOBAL DEPOSITORY DMCC, DUBAI, UAE TEL : +971 4 4539758 TEL : +971 4 4539759 email: info@ace-group.net EUROPE GLOBAL TRADE ADVISORY SERVICES SA, GENEVA, SWITZERLAND TEL: +41 22 919 9111 email: info@gta-services.net EURASIA ACE GLOBAL TURKEY GOZETIM HIZMETLERI A.S., ISTANBUL, TURKEY TEL: +90 216 474 17 55 email: onur.kal@ace-group.net SOUTHERN AFRICA ACE GLOBAL ZAMBIA LIMITED, LUSAKA, ZAMBIA TEL: +260 211 291768 TEL: +260 211 294711 email: dora.nyambe@ace-group.net EAST AFRICA ACE GLOBAL UGANDA LIMITED, KAMPALA, UGANDA TEL: +256 414 233 973 TEL: +256 414 348 425 email: amos.tumwesigye@ace-group.net WESTERN AFRICA ACE – AUDIT CONTROL AND EXPERTISE C.I, ABIDJAN, COTE D’IVOIRE TEL: +225 20 25 48 50 email: daouda.gon-coulibaly@ace-group.net