BIA: Export Documentary Credit activity has doubled in volume within one year.

Interview with Mme Yamina Chibab, Documentary Credits Manager, and Monsieur Gravade, her Deputy (SAB Infos – September 2008)

BIA is a French commercial bank and a subsidiary of two State Banks, Banque Extérieure d’Algérie and the Libyan Foreign Bank. These two banks are the leading banks in each of their respective countries, and are responsible for hydrocarbon contracts with importing countries (USA, Europe, Asia).

Specialising in the development of commercial financing flows between France, Algeria, and Libya since the 1980s, BIA is now extending its activities throughout the Mediterranean and the Southern Sahara region of Africa. Its capital of more than 158 Million Euros provides the significant means and financial stability to underpin its position as a European reference bank for trade between the two sides of the Mediterranean.

BIA has used the SAB system for its full range of activities since 2003.

The BIA clientele mainly comprises of Banks (about 250) and Companies (300). The banks are mainly Algerian or Libyan banks engaged in all areas of foreign trade, or else African or Middle Eastern banks.

BIA confirms Documentary Credits issued by all these banks. The Company clientele is made up of exporters to these countries and importers wanting to have a financial intermediary close to its suppliers.

Its activities focus upon Documentary Credits, Payment flows, Financing or Guarantees.

In 2008, Documentary Credit volumes rose to more than 2 billion Euros, for about 300 active files. Its keynote products are Export and Import Documentary Credits because trade mainly involves imported goods from companies in Algeria, Libya, and other countries throughout Africa and the Middle East. BIA does not concentrate only on French companies, also operating throughout Europe and Asia. BIA also guarantees flows between Algeria and Libya, which are now becoming more and more significant.

Documentary activity represents 50% of their net banking profits.

Key 2007 Data:

  • Total Balance Sheet : 750 M€
  • Net banking Profit : 18.9 M€
  • Staffing : 68 persons

Mme Chibab manages a full range of Documentary Back Office activities together with 7 other negotiators, all experts in their field, opening Documentary Credits, checking documents, and managing the general life-cycle (modifications, extensions, …). Goods financed through these Documentary Credits are very diverse in nature. They are not only manufactured goods, but also in a box manufacturing units (construction, maintenance, training), livestock and poultry for slaughter or breeding, cereal products, second-hand vehicles … anything required to create a Documentary Credit!

On average, these are 3-month transactions, in Euros, comprising of 2 drawings. Some files however have comprised of more than 120 drawings for maturities up to 3 years! Like their underlyings, amounts can be extremely variable from one transaction to another, ranging from a few thousand to several million Euros. Bank charges vary according to file size, from fixed prices for files less than 25K€ through to customised price structures.

The activity requires an in-depth analysis of the credit risk concerning counterparty banks and the risk of money laundering more prevalent when working with “less well-known” counterparties and countries. The Back Office works in close co-operation with the Risks Department and the Commercial Department at all stages of each file.

BIA has been a client contributor and a test site for the current Documentary Credits module. Today, the module offers a range of automatic features to assist teams in their daily work:

  • Integration of SWIFT MT7XX messages,
  • Generation of outward notification and modification messages,
  • Direct retrieval of data fields to avoid re-inputting, a classic source of error,
  • Integration of the module with limits management and accounting,
  • Display of settlements to be made in the next 48 hours and release of payment messages (MT103 & MT202)
  • Possibility to accrue management commissions.

Export Documentary Credit activity has doubled in volume within one year, reflecting well on the economic dynamism of Algeria, Libya and Middle Eastern countries, but also on the professionalism of the BIA teams!