1. July 2012 Supporting International Trade Rob Keller Head of UK Region, Trade Finance

2. 2 Supporting International Trade 1.Hong Kong – gateway to China 2.Trading considerations: risk, funding, visibility & control 3.Offshore Renmembi - CNH 4.CNH capabilities 5.RBS Corporate Global Account 6.UK Government Support Schemes for Exporters 7.Value added services for UK businesses 8.Further Help

3. 3 2000 US ASEAN Western Europe Latin America 264 167 138 154 283 102 92 91 Japan 29 37 121 177 5222 1722 China’s Exports China’s Imports 2010 Eastern Europe Central Asia 16 14 5 7 42 13 36 9 1 1 (In US$ bn) Hong Kong – a gateway to China – World’s 2 nd Largest Trading Nation Source: HKMA Website

4. 4 Trading Considerations: Risk, Funding, Visibility & Control 1) Risk Guaranteeing payment & performance (Letters of Credit, Collections, Bonds) 2) Funding Covering contract costs (Pre and post shipment finance) Funding goods purchase for sale (Import Loans) 3) Visibility & Control Initiating, tracking, executing trade online (Maxtrad)

5. 5 Growth of the offshore CNH Market Through trade and investments Trade settlement: Y1.7trn (Sep’11) 78% of total China-HK bilateral trade 6.3% of total China trade Deposits: Y622bn (Sep’11) 10.4% of HK’s total deposits 20% of HK’s total foreign$ depos 0.8% of China’s total deposits Bonds: Y191bn (Sep’11) 30% of HK’s total debt market (excl. EFN issues)

6. 6 Scope of CNH Services offered by RBS Hong Kong (1) Account Service  Any eligible enterprise located in Hong Kong and other regions outside PRC can open CNH account  Current and Saving accounts are available (3) Currency Exchange  Two ways conversion for trade settlement and non trade settlement  Available in Spot or Deliverable Forward (4) Remittance  Outward and inward CNH remittances in and out of PRC subject to PRC regulations and guidelines (2)Trade Finance  General trade services including Documentary Collections, Letter of Credits, Guarantees and etc.  Both Import and Export loans are feasible  Interest rate to be determined by banks on a commercial basis (5) Investment  CNH fixed deposits  Investment in CNH bonds issued in Hong Kong

7. 7 Global Account Any size of business can now take advantage of our global banking network In-country account in up to Hong Kong and 13 other countries – all from the UK. One bank, One relationship contact Access Online allows account visibility across the globe Cash management and trade finance products available locally

8. 8 Government Schemes for Exporters Objective: Help UK businesses to obtain funding for an export contract Risk sharing between the government and the banks Govt will take up to 90% of the risk Most popular schemes: Bonds and Guarantees Support Scheme Working Capital Support Scheme Letter of Credit Guarantee Scheme

9. 9 Value Added Services Buying machinery from abroad? Capital Import Finance : Asset financing with the protection of trade finance in one package. Need help collecting monies owed to you, from around the world? Debt Collection Minimise risk and spend less time completing documentation Document Preparation

10. 10 Further help Online: www.rbs.co.uk/international www.natwest.com/international Incl. Cashflow Calculator Offline: Guide to International Trade

11. 11 Appendix

12. 12 RMB Settlement Infrastructure – Overseas imports from PRC Enterprise 3. Remittance 4. CNAPS (China RTGS) 2. RMB Payments If necessary, HKD / USD  RMB 5. RMB Receivable Our RMB Corresponding Bank PRC Enterprise / Approved Mainland Designated Enterprise (MDE) 1. Goods Hong Kong Overseas Enterprise Beneficiary Bank in PRC

13. 13 RMB Settlement Infrastructure – Overseas exports to PRC Enterprise 4. Remittance 3. CNAPS (China RTGS) 2. RMB Payments 5. RMB Receivable Our RMB Corresponding Bank Remitting Bank in PRC 1. Goods Hong Kong Overseas Enterprise PRC Eligible Enterprise Trading considerations: risk, funding, visibility & control

14. 14 Potential Benefits to PRC Suppliers/Customers Risk ManagementTo match both payables and receivables in CNY to eliminate the risk of FX fluctuation and associated costs To avoid the risk of CNY appreciation against foreign currencies Efficiency improvement leading to quicker application of funds No FX verification required Quicker settlement of funds Faster Export Tax Rebate (provided the suppliers are approved Mainland Designated Enterprises) Improvement and Greater Transparency in Cost Structure To manage both production and sales in a single currency to eliminate the need for FX management To improve the overall cost structure and profit margin Funding EfficiencyCNY L/C issued with tenor over 90 days will not consume any foreign debt quota

15. 15 Potential Benefits to Overseas Buyers/Sellers Liquidity Management and Investment Diversification To hold and manage CNY liquidity outside of China under various funding and investment options To add CNY as an alternative currency to their portfolio Risk ManagementTo hold CNY to hedge for two-way import and export flows with China Increase ControlTo proactively and effectively manage FX transactions Increase Pricing TransparencyTo reduce potential markup from suppliers due to cost of FX Access to a wider buyer / supplier base Flexibility to settle trades in CNY will become a competitive advantage To access suppliers, who might have FX constraints