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Risk Management Solutions © 01/2008 Sgs SGT_0166_Collateral_EN_Impose:Mise en page 1 27.2.2008 11:16 Page 1 WWW.SGS.COM RISK MANAGEMENT SOLUTIONS © 01/2008 SGS. All rights reserved. rights All SGS. 01/2008 © SGT_0166_Collateral_EN_Impose:Mise en page 1 27.2.2008 11:16 Page 2 COLLATERAL The Basel Committee has released a WITH MORE THAN 50,000 EMPLOYEES, SGS PROVIDES A UNIQUE NETWORK COMPRISING OVER 1000 detailed set of requirements dealing BRANCHES AND LABORATORIES WORLDWIDE. MANAGEMENT with bank reserve requirements and risk-weighting in relation to international AND BASEL II commodity finance transactions. COMPLIANCE Basel ll, the new version of the Basel Accord has now significantly changed the regulations in the entire trade finance industry. The intention of the Accord is to encourage banks engaged in commodity financing transactions to adopt robust and comprehensive policies and procedures for the inspection, control, and valuation of commodities, in order to qualify as Advanced Internal Ratings Based transactions. SGS is following closely the evaluation of the Basel Committee proposals in the commodity finance sector, and has tailored its Collateral Management Services to enable its clients to mini-mize the critical Loss Given Default (LGD) component, in order to achieve the lowest possible risk weighting in collateralized commodity financing transactions. PRESENCE OF CM SERVICES: ASIA AFRICA China Angola Senegal India Algeria Sierra Leone Philippines Benin South Africa Malaysia Bissau Tanzania Myanmar Cameroun Togo Singapoore Congo Uganda Vietnam Egypt Tunisia Gambia EMEA Ghana AMERICA Albania Guinea Argentina Croatia Ivory Coast Brasil France Kenya Chili UAE Liberia Guatemala Jordan Madagascar Uruguay Kyrgyzstan Mali Haiti Poland Mauritania Russia Morocco Turkey Mozambique Ukraine Nigeria FOR FURTHER INFORMATION AND CONTACT: CONTACT DETAILS, PLEASE GO TO SOFT COMMODITIES HARD COMMODITIES WWW.SGS.COM Jean-Christophe BEL: +41 22 739 93 03 Alexandre HIRSCH: +41 22 739 93 54 [email protected] [email protected] Benoît SILIE: +41 22 739 97 08 Anna CATTANEO: +41 22 739 93 38 benoî[email protected] [email protected] Fax: +41 22 739 98 08 Fax: +41 22 739 98 08 SGT_0166_Collateral_EN_Impose:Mise en page 1 27.2.2008 11:16 Page 4 GLOBAL ISO CERTIFICATION SERVICES GLOBAL SGS Collateral Management and CUSTOMER PROCEDURAL managing the quality of service COMMODITY provision: ENDING INITIAL CLIENT INQUIRY UNIFORMITY MANAGEMENT TRADE AND AND UNIQUE SGS has continually strived to meet the OPERATIONS HUMAN RESOURCES STUDY OF FEASIBILITY FINANCE REQUIRES DELIVERY OF GOODS requirements of its clients worldwide. SECURIZATION OF GOODS QUALITY SERVICE RISK MITIGATION RECEIPT OF GOODS MANAGEMENT SETUP Since 1999, SGS Collateral Management DESIGNED RISK THROUGH OUR Service has developed its own system MANAGEMENT COMMITMENT for managing the quality of service provision, in order to guarantee its clients SOLUTIONS FROM TO QUALITY rapid and efficient service. Focused on client needs, this system defines, A RELIABLE PARTNER for each key step of the transaction, the way MANAGEMENT of conducting any intervention on our part. This system, which is modified on an on-going basis to take the latest market requirements into account, is used both This system is complemented by regular in the main office and in the various SGS audits which enable us to make sure offices located throughout the world. that working methods are constantly This means that our clients will have harmonised, and which limit the risks their transactions handled in the same inherent in each transaction. way and be issued with the same documents subject to local legal Moreover, a company like SGS, specifications regarding documentation. which ensures that the highest quality standards are adhered to throughout the This harmonisation of documents and world on a daily basis in fields which are Since the year 1878, SGS has been a Throughout its network, SGS understands the rules and practices of SGS Collateral as complex as they are varied, is duty dependable provider of risk management the local and global trade in commodities Management is not only due to our bound to scrupulously respect the solutions to participants in the international and has the resources to assure dependable company’s on-going concern to ensure aforementioned standards. For this trade of commodities throughout the inspection, monitoring and collateral that clients receive the same service reason, SGS is amongst the 600,000 world. With the objective to reduce risks, management services, providing control whichever SGS office they contact, but establishments worldwide which have specific products have been designed for and custodial services throughout the also, and above all, to control the risks of been certified ISO 9001, 2000 compliant, producers, refiners, commodity traders, flow of a commodity. Our unique each transaction by establishing strict having had the corresponding distributors and financing banks. In the network brings you, not only to each port rules and procedures and informing all certification and audit undertaken by an immediate future, the operational and or distribution center, but also to remote the offices in the world of them. independent body. regulatory needs of participants in these storage and processing locations markets will require robust and reliable through-out the world. risk management tools that are efficiently provided with unquestioned professional The objective of our services is to assure and financial integrity. SGS is committed that the financed commodity is physically to fulfilling this need. available to banks and purchasers in the quantity and quality required. SGT_0166_Collateral_EN_Impose:Mise en page 1 27.2.2008 11:16 Page 3 RISK MANAGEMENT SGS DOCUMENT SGS PRICE VALUATION SERVICES ACCESSORY SGS SERVICES TRUSTEE SERVICES Regardless of the type of risk SGS is the world's largest commodity SOLUTIONS IN THE Commodities under monitoring are often management services employed, the inspection company with 650 offices and TRADE FINANCE fast moving operations involving multiple bank or purchaser will require frequent over 50,000 employees in 140 countries, storage, processing, and transport points, reports of the quantity, quality, type, including virtually every major port and INDUSTRY TAILORED in each case accompanied by the issuance location and value of the commodities in commodity producing region around the TO INDIVIDUAL and release of storage and transport storage, processing, or transport. Timely globe. Clients of SGS Risk Management documents. In order to assure the and comprehensive inspection reports Services have the benefit of 350 commodity TRANSACTIONS continual validity of the bank's or trader's are critical to the monitoring of the testing laboratories, and skilled inspectors legal claims to the commodities, these borrowing base, and the ability to call for to verify commodity quality and values, The foundation of all physical commodity documents should be issued to the additional collateral as needed in the compliance of the commodities with and export pre-payment financing principal, or be in negotiable form. This event of; changes in market value, international standards and contract transactions is the assured availability results in high administrational costs, and change due to the inherent vice of a specification, compliance with processing of the commodities in the quality and is often impractical if the documents are commodity or losses in general. SGS and packaging, and compliance with quantity required to repay advances. required to be presented locally to allow is able to value said commodities by export and import requirements. In short, Depending on the circumstances of for the movement and transportation of checking quantity and quality on a weekly SGS is an outstanding and reliable source of the individual transaction, one or more of the commodities. or other agreed basis and compare them local industry knowledge and commodity the following risk management solutions in accordance with local published indices, know–how for banks providing financial are recommended: In such cases, SGS can serve as or other market related data acceptable services to producing countries. Whether the Document Trustee for the purpose to the financer. oil, agricultural or mineral commodities, of holding the documents in local SGS can provide prompt and cost effective safekeeping, and assuring that the risk management solutions to complex trade documents are timely presented for and quality/quantity related requirements. authorized movements until the SGS COLLATERAL SGS MONITORING commodities are exported. MANAGEMENT SERVICES CMA SERVICES SMA SGS acts as the custodian of the Where the financing party does not commodities and takes continuous, and require strong control over the Good by exclusive possession of them from the a third party, but rather wants to ensure time the securization is requested, until traceability of the Good along the supply the commodities are sold or exported. chain, SGS can provide either continuous monitoring services, or periodic spot The commodities will be held either inspection services to witness the in a SGS warehouse, in an independent movement, care and condition of the warehouse contracted by SGS, or in the commodities. In case of damage or plant or warehouse owned by the producer misapplication of the commodities, the and leased to SGS. parties concerned are enabled to take prompt remedial action. Certification of The objective of Collateral Management
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