Article

by Mark Ford

Road shows, conferences, seminars, workshops, interactive training sessions and all manner of other initiatives were on offer to provide documentary credit specialists with the knowledge they need to work with the new version of the Uniform Customs and Practice for Documentary Credits (UCP 600), which came into effect on 1 July 2007.

Some banks started the awareness-raising process earlier than others. Several tapped into the deep pool of knowledge of the letter of credit professionals who participated in the arduous task of framing the new rules and procedures.

How effective the sum total of UCP 600 awareness- and knowledge-raising events will be remains to be seen. The quality of training may have varied, and no doubt the introduction of the new rules is a "work in progress", since unforeseen issues with the latest international framework for documentary credits are bound to emerge in the months after the implementation date.

Favourable responses

Responses to some initiatives have been favourable. One participant working in the oil and gas sector described an April seminar on UCP 600 organized by Standard Chartered Bank in the UAE as "a unique opportunity to learn about the technical aspects of the UCP 600 rules that will assist us in preparing ourselves for the imminent changeover".

Moreover, the attendance of senior bank staff at UCP 600 events underlined the importance major financial institutions attach to the new rules and procedures. When Citibank in Bangladesh organized a workshop on UCP 600, Khondoker Rashed Maqsood, Director and Head of Global Transaction Services, and Abrar A Anwar, Director and Head of Corporate Banking, turned up to support the interactive session led by Moinul Huq, Citibank's Head of Trade Product and Sales.

Deutsche Bank was quick off the mark in September 2006 when it launched its UCP 600 workshop programme. The bank told DCInsight that it had carried out over 80 workshops on UCP 600 in countries around the world to over 6,000 participants.

"Our corporate clients who attended the workshops represented a wide range of industries, such as trading companies, manufacturers and logistic companies," explains David Meynell, director of Product Management, Trade Finance for Financial Institutions, who explains that some workshops targeted banking professionals.

"We provided seminars to a large number of local banks. We also conducted extensive internal training for all the trade service, trade product and trade sales staff," says Meynell.

Global initiative

Standard Chartered Bank says its seminar programme on the new rules for the L/C community in Gulf Cooperation Council (GCC) member states also targeted both banking sector and commercial L/C users. The GCC bloc - Bahrain, Kuwait, Oman, Saudi Arabia and the UAE - as well as the wider Middle East has experienced doubledigit annual L/C growth over recent years and is seen as a key location for raising UCP 600 awareness.

Another bank active in the GCC area is BNP Paribas, which staged a conference on UCP 600 at the Abu Dhabi Hilton. A presentation focused on the changes in the new rules and explained practical measures to be taken into consideration by businesses using documentary credits.

Michael Pereira, country head of BNP Paribas UAE, explained why the conference was important to the bank: "Trade Services remains one of the cornerstones of our activities in the Gulf region ... our Trade Centre in Dubai is the largest amongst BNP Paribas Trade Centres in Europe and the Middle East." Perereira said the bank wanted to be amongst the first in the UAE to arrange a conference on the new rules so that corporate clients could "discuss the UCP 600 changes and their impact on their regular trade business".

Asia, the region that writes the most L/C business in the world, is naturally a strategic location for raising UCP 600 awareness. "The first round of UCP 600 seminars in Asia took place in September 2006 in Beijing and Shanghai for China, Hong Kong, Singapore and India with over 400 client attendees," says Roger Packham, regional head of Trade Finance, Asia Pacific, at Deutsche Bank.

"We felt it was important to inform our clients about the upcoming changes in the UCP so that they can be ahead of the curve. We also ran additional events in Malaysia, Indonesia, the Philippines, Vietnam, Thailand, Taiwan, Korea, Sri Lanka and the Middle East with over 2,500 participants," he explains.

Areas where L/Cs are used less have also seen banks actively flagging the importance of the new rules and procedures. "This is truly a global initiative by Deutsche Bank," says David Meynell. In addition to Asia and Middle East, the bank also conducted workshops across the US, Europe and Africa.

In Chicago, JP Morgan Chase has been telling exporters and logistics support firms dealing with L/Cs about changes to UCP 600. In London, the British Bankers' Association (BBA) convened a high-level briefing on the new UCP 600 to provide staff in BBA member banks responsible for trade finance with an overview of the main changes and key insights on what these changes will mean for the sector.

Leveraging expertise

The plethora of UCP 600 awareness events was bound to vary in terms of their quality. An official ICC UK seminar on UCP 600 perhaps suggests a benchmark against which other offerings can be tested. The May seminar featured a full house of technical speakers, all of whom were members of the ICC UK Committee on Banking Technique and Practice, as well as recognized trade finance practitioners or trade experts. The Committee had also spent the last three and a half years participating in the drafting and review process of the new rules and procedures, so their speakers could claim to have an in-depth understanding how the new articles evolved. The official seminar also identified a wide range of other professionals to whom training needs to be directed - transport providers and other service providers integral to the movement of and security over the goods. Clearly, buyers, sellers and service providers - such as forwarders, carriers, customs brokers, insurers and others - all need to know about the new rules.

Speakers

Standard Chartered Bank's seminar for GCC bankers and business people leveraged the expertise of someone intimately familiar with the new UCP 600. Gary Collyer, Technical Adviser to the ICC Banking Commission and Chair of the UCP 600 Drafting Group, was the featured speaker. "It was useful obtaining this information direct from a person who was actively involved in the preparation of the rules," one seminar participant said. Gary Collyer was also involved with HSBC Bank Middle East's string of seminars on UCP 600 in the region, which travelled from Riyadh through to Jeddah, Abu Dhabi, Dubai, Cairo, Manama and finally Doha on 20 May.

Doha's Commercialbank, meanwhile, organized an international trade seminar on "Best practice in UCP 600" led by Irish banker and a member of the ICC Banking Commission, Vincent O'Brien.

It's not over yet

Kersi Patel, regional head for International Trade Business for HSBC, said he wanted to raise awareness of the changes before the new rules came into effect, but cautioned that any notion that training and awareness raising are about to end should be scotched. Standard Chartered Bank says its work with Gary Collyer will continue until mid-February 2008, while Deutsche Bank executives, even though their clients appear keen on the new rules and procedures, recognize that learning to live with UCP 600 is a work in progress.

David Meynell of Deutsche Bank concurs with the need for continued training after the implementation date: "The bank will be assessing market response closely, especially in the initial year after UCP 600 goes live, to respond to market forces in each region. We consider this crucial in our role as a global trade bank and for close follow-up with our clients," he concludes.

Mark Ford's email is markford@gotadsl.co.uk