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The Hatton National Bank (HNB) has launched two further additions to its Trade Finance Product range. First being the "Trade Facilitation Program with the European Bank for Reconstruction and Development (EBRD). The program was initiated by the Deputy General Manager (City and International) Rajendra Theagarajah with Hugh Baylis, Senior Banker, EBRD (Financial Institutions) based in London.

Explaining the purpose and benefits of this program Mr. Theagarajah said that the EBRD operates in 27 countries of the former Eastern, Central European and CIS Block. As this entire region is undergoing rapid change towards open economic reforms, EBRD has committed itself in adding value to the inter-regional and international trade flows associated with these countries. In essence EBRD will extend its guarantee to Letters of Credit (LCs), Standby Letters of Credit (SBLCs), Bid, Performance and Advance Payment Bonds, Other forms of Payment Guarantees, Bills of Exchange and Promissory Notes from issuing banks.

The Guarantee will extend up to 100% of the face value of the underlying Trade Finance Instrument. The agreement with EBRD will enable HNB to act as a "Confirming bank" and add its confirmation to any of these instruments favouring a local exporter. This will be of tremendous benefit to Sri Lankan exporters to the Central, Eastern Europe and former CIS in terms of payment protection.

For example local tea exporters to Russia may accept LCs or Bills of Exchange from any local bank in that country (as long as it is a "participating bank" under the EBRD Facilitation Program) and have it confirmed by HNB to protect itself against non-payment of the Russian Bank. The Euro 22 Bn Asset base and AAA Rating of EBRD will provide excellent protection against Commercial and Political Risk on Non-Payment by the Issuing bank from any of the 27 countries covered.

In another development, The Commodity Credit Corporation (CCC) of The United States Department of Agriculture (USDA) has approved a Credit Line for HNB to finance import of agricultural commodities form the US under the CCC's Export Credit Program GSM-102. This is part of the USD 35 mn allocated by USDA for Sri Lanka for the fiscal year 2002.

According to Mr. Theagarajah, any customer of the bank (Government Corporations, Departments or Private Companies) may avail themselves to Extended credit in US$ up to three years at very attractive rates of interest to finance import of agricultural commodities such as Raw Cotton, Wheat and Wheat Flour from the US. HNB will operate this line of credit in liaison with the Cobank, a US$24 billion US bank established in 1916 which specializes in delivering Financial Solutions to the agribusiness sector.

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