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Trade Finance

Trade Finance

The bank seeks to creatively address financing gaps in the flow of goods and services between different parties in the various trade and related value chains. This is mainly for raw material acquisition and export promotion. Our products are tailored to the unique requirements of each transaction.

They include:

  • Structured Trade & Commodity Financing
  • Pre and Post shipment finance
  • Trade Service (Letters of Credit, Bank Guarantee, Bills on collection)

Trade services

In our trade services offering include;

(i) Letters of Credit

These are used to facilitate the importation or exportation of goods and services. They can also be used to finance local transactions and contracts. They could be either sight (payable upon receipt or presentation of shipping documents) or Usance (payable at an agreed future date).

Key Features and Terms

  • Denominated in both local and foreign currency.
  • Secured by cash, landed property, commodities, fixed deposits, first class bank guarantees, GOU bonds or corporate guarantees.
  • No interest on issued Letter of Credits.
  • Maximum Letter of credit of one year
  • Easy access to other credit products like Pre and post shipment Finance and structured trade and commodity finance.

Fees and commissions (charged on Letters of Credit)

  • Advising: 0.5%
  • Quarterly commission: 0.5%, swift Charge: USD 35
  • All other charges related to the transaction.

(ii) Bank Guarantees

The bank issues bid bonds, performance guarantees, advance payment guarantees and retention guarantees to support different contractors and service providers.

Key Features and Terms

  • Denominated in both local and foreign currency.
  • Must be secured by either cash, landed property, commodities, fixed deposits, GOU bonds or corporate guarantees.
  • No interest on issued guarantees
  • Maximum period of one year.

Fees and commissions (charged on Guarantee Amount)

  • Advising: 0.5
  • Quarterly commission: 0.5%, swift charge: USD 35
  • All other charges related to the transaction.

(iii) Bills on Collection

These facilities trade transactions between two parties with the importer and export banks acting as handlers for the payment and documents representing the goods.

They work similarly to letters of credit except that the bank does not give an undertaking for the documents or payment, but acts as a mere handler of the same. Payment can either be at sight or on agreed future date. They are usually used with another facility in place.

Fees and commissions (charged on bill amount)

  • Advising: 0.5%
  • Quarterly commission: 0.5%, swift charge: USD 35
  • All other charges related to the transaction.

Short term loans

(i) Secured Working Capital Loan

This is a short term loan offered by the Bank to finance the working capital component of a start-up project or an existing project.

Key Features and Terms

  • Maximum period of 18 months
  • Maximum grace period of six months
  • Denominated in local or foreign currency
  • Security in the form of collateral which could be fixed assets, fixed deposits, first class bank guarantees, GOU bonds, reputable corporate or a lien on stocks, held under collateral management.

(ii) Pre-shipment Finance

A short term loan facility offered by the bank to facilitate the purchase of inputs or production of goods for onward sale or export.

Key Features and Terms

  • Must be backed by contract in place or an export letter of credit from a first class bank.
  • Maximum tenor of 120 days (but can be revolved)
  • Denominated in local or foreign currency
  • Security for this can be fixed assets, fixed deposits, first class bank guarantees, GOU bonds, corporate guarantees or a lien on stocks held under collateral management.

Loans may be granted against a lien over goods held in a commercial or bonded warehouse owned by the client or the tax authority. The lien may be substituted or supplemented by additional security where necessary.

(iii) Post-Shipment Finance

The bank also offers short-term loans to importers for the purpose of settling payments that have matured before the importer has mobilized adequate financial resources to settle the same.

Key Features and Terms

  • Minimum tenor of 30 days
  • Denominated in local or foreign currency
  • Security in the form of collateral which could be fixed assets, fixed deposits, first class bank guarantees or stock held under collateral management.

(iv) Local Purchase of Bulk goods

Trade finance may also be granted to finance bulk purchase of goods on the local market. The product may be used by local distributors of locally manufactured goods or even goods imported by agents of specialized brands.

Structured Trade and Commodity Finance

The bank is able to uniquely structure facilities designed to meet the client’s specific business needs. These can be applied in relation to pre and post shipment financing as well as the local purchase of bulk goods.

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