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CAB in Action

CAB in Action

International Markets: Reinstating and African Banking System

In 2005, with the election of Ellen Johnson Sirleaf (former World Bank executive) as president, Liberia entered a period of democracy. Following nearly a decade and a half marked by two destructive civil wars (1989 – 2003), this was a new era. Ms. Johnson Sirleaf won the presidential election again in 2011. However, to comply with the Liberian constitution, she had to relinquish her presidential post after the expiry of her second term. After 12 years of Ms. Johnson Sirleaf’s presidency and its concurrent stability, all eyes turned to the 2017 presidential election and who the people’s nextchoice would be.

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At the same time, the international financial system was experiencing an era of de-risking. And despite the years of democracy, Liberia – along with many other emerging markets – saw the retreat of most international correspondent banks. As a result, the country was left with limited access to international markets at a time when the Ebola humanitarian crisis created an urgent need to remit funds into the country.

In recent years, Crown Agents Bank has played a crucial role in re-opening the Liberian banking system to international markets. Working with Liberian banks – through an enhanced client due diligence-led approach – we helped to improve compliance systems, policies and procedures, to make them ‘bankable’ again.

One example of this has been our work with International Bank (Liberia) Limited. Following significant remediation, Crown Agents Bank is now proud to act as the International Bank’s key correspondent bank in all major currencies. Furthermore, our Trade Finance group worked with the Liberian bank to help finance the production of Liberian ballot papers for the 2017 Presidential Election.

Crown Agents Bank continues to engage closely with local counterparties in order to fully understand Liberian socio, political and economic trends – as well as global trends affecting international banking in the country

Empowering an International Charity to Make a Difference

Empowering an international Charity to make a difference – Crown Agents Bank enables the Charity to fund its projects and offices with a reliable supply of foreign exchange, including in many ‘exotic’ or illiquid local currencies.

CAB provides the organisation with the secure and competitively priced supply of foreign exchange it needs in a range of countries experiencing challenges. This longstanding relationship is built on a deep understanding of the development sector and commitment to serving some of the world’s most fragile regions in today’s climate of economic change & geopolitical uncertainty.

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Need: Access to Emerging Market Currencies

The Charity works in more than 120 countries and requires access to local currencies, wherever operations demand. The Charity receives the bulk of its funding and donations in OECD currencies – such as Euros, Sterling, US, Canadian and Australian dollars or Swedish Krone. But work in Ethiopia, for instance, would require access to the Birr – just as a project in Bangladesh would need supplies of the Taka or access to Leonies in Sierra Leone. Such exotic currencies are often hard to source locally at a competitive price and are not commonly traded on global markets.

The Crown Agents Bank Solution:

By leveraging our close working relationships with central banks and our extensive correspondent banking network in many of the smallest or challenged nations, CAB can often offer unrivalled access to illiquid markets. Our close relationships with local banks allow access to a wide range of currencies required by the official donor and charity sector. CAB has a long track record of facilitating foreign exchange transactions in countries for the Charity, from Colombia and Bolivia to Malawi and Gambia.

Need: A Timely Supply of Foreign Exchange

The Charity must also be able to depend on secure and timely supplies of FX for its projects worldwide. This is critical for funding emergency projects in response to a crisis or natural disaster – not to mention ongoing operations in far-flung locations, such as local country office maintenance and salaries, as well as charitable expenditure on health, education and nutrition work, campaigning and awareness raising.

The Crown Agents Bank Solution:

Crown Agents Bank’s close communication channels and access to local banks – facilitates the timeliness and reliability of FX flow. This also means the bank can provide quick quotes for all currency pairs, regardless of transaction size. The bank’s experienced treasury and operations teams work with local banks to pinpoint and mitigate potential problems. We have rigorous credit and operational processes to find the most appropriate partners in each jurisdiction to help ensure the timely and reliability of the Charity’s funding for its projects.

Need: Competitive Pricing for FX Transactions

Competitive pricing is of course crucial for the Charity, in order to minimise management and transaction costs and ensure that its resources are spent on ongoing operations rather than on FX fees. Yet buying such relatively uncommon currencies can be demanding and expensive. Fluctuation in the prices of commodities such as oil, political instability, corruption, terrorism, rising fiscal deficits and fluctuating demand in global trade can all contribute to currency volatility. For example while some developing economies across Africa have enjoyed relative currency stability, a number of African states have witnessed ignificant devaluations: the Charity values banking partners that have had significant experience and can navigate these volatile landscapes.

The Crown Agents Bank Solution:

A deep and broad network of banking relationships– along with direct access to a dedicated team of currency dealers, including exotic currency specialists – means that CAB has considerable insight on the best pricing for currency trades. By keeping a constant check on currency markets, CAB can offer competitive foreign exchange transaction pricing, which means the Charity is able to demonstrate to its funders that it provides value for money across their entire operations.

Our dedicated team of currency dealers and emerging market trading specialists have a deep and broad network of banking relationships which affords CAB considerable insight to the best pricing for different markets. By keeping a constant check on both liquid and scarcer currency markets, CAB can offer competitive foreign exchange transaction pricing, which means the Charity is in a better position to get value for money.

Need: An Understanding of Working in Challenging Environments

The Charity works only with banking partners that can uphold best practice in due diligence in order to work safely in challenging local environments, where political risk, conflict or other environmental issues may threaten the vital flow of funds from global money centres.

The Crown Agents Bank Solution

Crown Agents Bank has experienced, dedicated Anti-Financial Crime & Client Due Diligence teams making regular “on the ground” inspections to our focus markets to provide assurance that the safest possible suppliers are used for payment delivery.  CAB offers transparent reporting on risk, based on its strong local network of regulators, central banks, financial institutions and supply chain providers.

Need: Experience of the Development Sector

Development finance has its own unique challenges and opportunities. Meeting these challenges requires experience and understanding how to fund operations overseas in volatile regions and economies affected either by political, environmental or commodity-price risk.

The Crown Agents Bank Solution

Crown Agents Bank is intimately familiar with development finance, having worked for nearly two centuries in our focus markets. Relationship managers understand the unique and particular challenges facing NGOs, multilateral donors, supra-nationals, aid and relief agencies and charities. In order to offer the complete transaction banking package, from reliable international payments to transparency reporting, CAB draws on the expertise a range of currency settlement, treasury, payments and cash management experts.

“ The opportunity to source foreign exchange at competitive prices is, no doubt, key. But equally, if not more important, is that vital supplies of exotic currencies actually reach our offices – in some of the most demanding regions of the world – reliably and on time. That’s why it’s important to have proactive banking partners that are ready to jump into action, pick up the phone and speak with the local bank directly should any potential problems arise. It is important that Crown Agents Bank knows and understands NGOs and the wider development sector– this is a vital area of finance from which some banks shy away.”

Senior Executive, International Charity

Trade Finance: Facilitating Trade in Our Focus Markets

Need: Letter of Credit (L/C) Confirmation Facilities

A local African Bank saw reduced support from a number of its international correspondent banks due to regional de-risking and other factors. This resulted in their clients struggling to obtain Letter of Credit confirmation facilities and fund imports.

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The Crown Agents Bank Solution:

By leveraging its knowledge and experience in the country and by taking the time to understand the Bank’s business, Crown Agents Bank was able to offer an L/C confirmation facility based on a number of key structural enhancements that enabled the African bank to continue its L/C business.

Need: Letter of Credit (L/C) Confirmations

A UK based SME manufacturer had been exporting to many African countries for a number of years. During that time, the SME has been able to obtain working capital finance from its UK bank, based on the security of incoming L/Cs from its clients’ banks in Africa.  However, recently the UK bank had reduced the number of smaller banks in Africa who’s L/C’s it was willing to confirm, curtailing it’s ability to provide working capital to the SME.

The Crown Agents Bank Solution:

Due to its experience in the region and relationships with a wide range of local commercial banks, Crown Agents Bank was able to offer L/C confirmations for some of the African banks that had been de-risked. CAB were thus able to facilitate the export of SME’s products to its customers in Africa.

We are passionate about financial inclusion and empowering our clients to make a difference.

Client Due Diligence - Financial Inclusion

CAB’s  Financial Inclusion Agenda – Reconnecting Economies to the International Payments & Trade Ecosystems

Overcoming the Ebola crisis and commodities price collapse in the recent past, this West African country has proved to have a resilient economy. It’s financial sector has grown considerably and as of December 2016, the country has a reasonable number of licensed commercial banks. However, like many commodity based economies, the country remains dependent on imports. The financial sector plays a critical role facilitating trade transactions through international payments and trade finance instruments.

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Need:

Small countries in the Caribbean and Africa amongst other regions have been casualties of de-risking, the global trend of correspondent banks exiting markets due to anti-money laundering (AML), compliance and profitability challenges.  Consequently, local commercial banks in this West African nation were cut off from the global financial system; international payments services were terminated, leaving businesses unable to import goods due to inability to pay overseas suppliers.

The Crown Agents Bank Solution:

Crown Agents Bank, an expert in the region, has taken a leadership role in reconnecting small and medium sized economies to the global markets.  CAB’s compliance led approach tackles the challenge of adherence to international AML regulations.  We worked with this country’s banks to build their AML compliance capacity through on-site consultation visits and early in 2017, CAB completed AML compliance projects with a number of local commercial banks.

Experienced Anti-Financial Crime Officers from CAB performed an AML gap-analysis for a number of local banks through review of compliance policies, procedures and operational staff interviews.  This intensive evaluation resulted in a gap-analysis report which indicated where the institutions’ then level of AML activities were in relation to the international standards required by clearing banks.  The CAB AML compliance team provided the commercial banks’ with insight that informed their required business transformation projects. The transformation projects included new AML procedures, implementing IT systems, staff training and upgrading client Due Diligence information management.  This rigorous approach resulted in many of the commercial banks now operating to full international AML compliance standards.

At this transformation milestone, CAB was able to reconnect a number of banks to international payments and trade ecosystems, facilitating international payments and trade with overseas suppliers. CAB’s engagement had a network effect; our partnership with commercial banks expedited financial sector reform and is enabling international trade to expand and develop.

We are passionate about financial inclusion and empowering our clients to make a difference

Pensions & Payroll Services - Executing Excellence

Execution Excellence
Crown Agents Bank carried out a review of the life certification programme for a UK pension fund. The pension fund had in excess of 4,600 pensioners living overseas and wanted to ensure that the chances of over-payment was minimised. While the majority responded and over 1,000 needed reminding, some pensioners were deemed too frail to complete the certification – therefore Powers of Attorney were sought.

We managed the process ceasing payments to minors who had become adults and those that had passed away. We also suspended payments where no communication was received. The annual saving achieved by Crown Agents Bank for our client was over £500,000 per year.

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