Written evidence from Royal Bank of Scotland
EXECUTIVE SUMMARY
- As a global leader in International Trade Finance,
RBS has an important role to play in promoting exporting among
UK companies. Our trade finance products help UK companies to
better manage their risks and provide funding to support their
overseas trade.
- RBS is working closely with ECGD and UKTI to
promote international trade. Most recently we have partnered with
the UKTI for their Doing Business in Asia events across
the UK encouraging local businesses to consider exporting to emerging
markets. We will also be hosting a seminar with the British Exporters
Association on finding new markets focusing on Central and Eastern
Europe later this year.
- We support the aims of the Government's consultation
on the Trade White Paper. We too believe that there are a number
of practical barriers to increasing international trade - not
least the fact that firms are not aware of the potential opportunities
and benefits of doing business internationally, or have the appropriate
skills and knowledge to do so effectively.
- We have recently launched a campaign called Finding
New Markets to encourage exporting among UK SMEs offering
free online training to help them to better understand export
finance and inform them of the products and services available
to them. We have set up a new International Trade Hotline to advise
and support potential exporters who are keen to export but lack
the knowledge to do so with confidence. As part of our campaign
we are also proactively contacting businesses we believe have
export potential to discuss their needs.
- We believe that we are well placed to help increase
UK business exports. We have the largest team of Institute of
Export CITA qualified international trade advisers in the UK and
have been voted the "Best Bank for Trade Finance" and
the "UK's Best Global Trade Finance Provider" by our
customers in 2010 by Global Finance and Euromoney respectively.
INTRODUCTION
1. Many UK based companies are looking to expand
export activity in order to grow their businesses. However, selling
into new international markets brings increased risks which can
often act as a significant deterrent. Through our international
trade products and services, coupled with our global network we
are able to help businesses to better manage their risks. Recently,
we have been promoting our capabilities to encourage more UK businesses
to consider exporting.
2. RBS has an international network of branches
covering 40 countries; the majority of the world's trading economies,
and operations that handle over two million transactions annually.
We can help deliver efficient working capital solutions for businesses
trading across the globe. We have a dedicated international advisory
team within our Global Transaction Services Department to ensure
that UK companies can trade efficiently whilst managing their
associated risks. RBS is a leading provider of global payments
world-wide and has the largest team of CITA qualified International
Trade Advisers of any UK bank
3. Over the past 12 months over 600,000 UK businesses
have used RBS to make cross-border payments. Additionally, in
the first ten months of 2010, we helped structure in excess of
54,000 international trade transactions by supplying Letters of
Credit, Documentary Collections and Bonds and Guarantees. A large
proportion of these were to new and emerging markets, with a value
of c. £3.5 billion. The majority of these transactions, by
volume, were supporting our SME customers. We have been voted
the "Best Bank for Trade Finance" and the "UK's
Best Global Trade Finance Provider" by our customers in 2010.
PROMOTING EXPORTS
4. Recent research commissioned by RBS demonstrated
that two thirds (69 %) of businesses surveyed believe that now
is a good time to increase overseas trading. A very similar proportion
of businesses (68%) also recognise that export activity will be
key to the UK's economic recovery.
5. The survey highlighted a number of barriers
preventing businesses from realising exporting potential. Understanding
the financial tools to fund export trade was an issue, with 59%
admitting the sector is ill-informed. For example, 45% of respondents
agreed that Asia presents the biggest opportunity for UK businesses,
however only 11% fully understood how to trade in that market.
This is important as forecasts show that whilst UK GDP is expected
to grow by 2% in 2011, China's growth is expected to be 9.6%;
India's 8.4% and Indonesia's 6.2%. Over half of respondents (58%)
stated that easy access to advice from experts in overseas trade
would give them more confidence in exporting abroad.
6. In response, NatWest and RBS have taken a
number of steps to make it easier for businesses to increase export
activity. We are offering improved access to expert advice with
the introduction of a new international trade hotline. We have
also introduced free online training courses to help businesses
manage risks when trading overseas in new markets. To encourage
more businesses to begin exporting, we have been contacting export-ready
customers to discuss their needs and to help them make the most
of international trading opportunities.
7. We have a range of export products available
to customers including Letters of Credit which offer protection
against payment default. We have the ability to confirm letters
of credit from over 1800 banks in over 80 countries. We also offer
bad debt protection through our invoice finance products. We can
offer pre and post shipment finance to aid cashflow. In addition
we offer Documentary Collections, Bonds & Guarantees and standby
Letters of Credit. We have promoted these services widely, including
in direct mail to customers, advertising in key trade publications
and in the media.
UKTI AND ECGD
8. We believe that more can be done to make SMEs
aware of how trade finance solutions can help their business.
We are continuing to work with BIS and HMT through the BBA Taskforce
to look at ways we can promote exporting and improve the products/support
available to UK companies. Exports are not able to be supported
by the current EFG programme due to state aid considerations and
the Taskforce has been looking at ways exporting companies can
be supported.
9. Since the early 1990s the support that the
Government's Export Credit Guarantee Department (ECGD) provides
to UK exporters has reduced. This has been due to a number of
reasons, not least because of the privatisation of its short term
trade credit insurance operation which was responsible for supporting
the bulk of exports covered by ECGD. Since that time, ECGD has
been viewed as having limited relevance to the majority of exporters
and the risk of exporting now falls largely onto the exporting
company - or their bank. This has meant that for some smaller
companies, exporting can be a difficult and time-consuming process.
10. The focus of ECGD has, since the changes
of the early 1990s, shifted away from smaller businesses and towards
more large scale project related contracts. As a result, ECGD
has a more limited product range relative to other ECAs in advanced
economies and smaller companies can have difficulties understanding
the ECGD products and services which may be available to them.
11. In recent years however, ECGD has been changing
and has been keen to engage with industry on supporting UK exports,
including those from smaller companies. We have worked closely
with ECGD on their Letter of Credit Guarantee Scheme and although
the scheme has not yet been widely used we believe that with increased
awareness of the scheme among companies and staff will mean that
it does have potential to deliver benefits to UK companies in
future. We have also been working with ECGD on the development
of Bonds Support and Pre-shipment Finance cover which may provide
another way for the Government to help underpin UK exports. We
would encourage the continuation of the recent trend of more active
engagement and product development for this market.
12. We have also been working in partnership
with the UKTI Asia Task Force to host a series of regional events
throughout 2010 and into 2011. These events promote to UK business
the breadth of opportunities in key Asian markets through a programme
of Doing Business in Asia: Meet the Experts events around
the UK. These practical events bring together expertise from across
the UK and Asia with the aim of galvanising more UK companies
to do business in the region. These events include, speeches,
market clinics and managing risk/trade finance drop-in clinics.
13. RBS is involved in these because of our significant
strengths in Asia. We are present in 11 countries in the region,
employing over 13,500 staff and servicing over 75,000 accounts.
We offer a full range of financial solutions in the currencies
of Australia, China, Hong Kong, India, Indonesia, Japan, Korea,
Malaysia, Singapore and Thailand.
14. As part of these UKTI events, we have been
delivering seminars focusing on how businesses can manage risk
and cash flow when trading with Asia. This session helps businesses
to better understand how trade finance and other international
banking solutions can be used for effective risk management, to
provide funding and to ensure better visibility and control over
financial aspects of business seeking to expand internationally.
The session aims to help businesses appreciate the full range
of trade finance, international cash management and invoice finance
solutions that can help protect and collect cash as trade business
grows. It is aimed at companies of all sizes who currently or
plan to trade in Asia.
15. RBS Group Senior Management have also taken
part in UK trade delegations. Most recently our Group Chairman
was part of the Chancellor's financial services delegation to
China. We believe these trade delegations help to demonstrate
Government support for UK business overseas and provide a valuable
way to strengthen trade links between the UK and key overseas
markets. The delegations are well organised and offer opportunities
to meet key influencers and business people in markets that are
important for the growth of the UK businesses.
WHITE PAPER
CONSULTATION
16. We support the aims of the Government's consultation
on International Trade. We too believe that there are a number
of practical barriers to increasing international trade - not
least the fact that firms are not aware of the potential opportunities
and benefits of doing business internationally, or have the appropriate
skills and knowledge. Through our Finding New Markets campaign
we hope to bridge this gap and welcome any future Government support
for export promotion campaigns.
January 2011
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