Given the case study "Selecting a Trade Banker", Technon had three choices to provide them with international trade finance expertise, they were: First Trade Bank USA, Canada Trade Finance Bank, and UK International Bank. Answer the following questions: a) State one positive and one negative attribute each of those three banks would have acting as a potential service provider to Technon. (3 marks) b) Which bank would you choose and why? (1 mark) International Trade Finance Selecting a Trade Banker EC Sparda-Bank VRO Sparda-Bank Banking on Relationship Technon International is a Canadian high-technology development firm, focused on emerging technologies in wireless communications. Technon sources components from China and has offshore programming activities in India covering certain functionality. The company is excited about a recent breakthrough in wearable tech, a new 5G enabled wristband. Technon has several Canadian and international patents to protect its proprietary technology, and has developed some strong non-disclosure agreements for use with its various suppliers and business partners. A small company established in Saskatchewan, Canada, Technon has been doing most of its commercial banking through a local credit union (small, local, membership-based bank); however, the company recently received several interesting inquiries about exporting its latest innovation, and realizes it needs to develop a relationship with a financial services provider with international banking and export finance expertise. Technon has narrowed its options to three possible providers: a Canadian bank with solid credentials in trade finance, a leading U.K.-based global trade bank and a mid-tier U.S. regional bank that has expressed interest in supporting the company's expansion to the United States. Technon is incorporated in Canada, and has quickly achieved annual sales in the USD 500,000 range, with strong margins and conservative growth projections of about 10 percent per year. If export sales are factored into the projections, Technon believes that growth rates in the 15 to 20 percent range are achievable, depending on the markets targeted. Asia is especially promising, given its level of investment in wireless technology and the high rate of adoption of wearable wireless technology among some consumer segments. The Options Technon recognizes the need to take its banking relationship to a new level in terms of international capabilities. It continues to be loyal to the credit union which helped it to grow and expand, and does not wish to completely cut ties; however, it is clearly time to seek an institution with proven international capabilities. Canadian Trade Finance Bank (CTFB) Canadian Trade Finance Bank is a large financial institution and one of the top two providers in Canada. The bank has solid trade finance credentials and maintains a high level of expertise as well as a full set of product and service offerings, which make it a viable player in the trade finance space. Preliminary discussions suggest to Technon that its business might be too small for CTFB to give it the type of advisory attention it currently requires. On the other hand, CTFB pricing was clear and competitive, and Technon derived some comfort from dealing with a local financial institution. CTFB did indicate that it would expect to become Technon's primary banker. UK International Bank (UKIB) UK International Bank is a globally-recognized leader in international finance, global banking and trade finance. The UKIB account representative in Canada indicated that the bank could offer any variation of trade finance available in the market, had extensive correspondent relationships (including large country and bank lines of credit) and could likely cover any transaction that Technon would pursue in the foreseeable future. UKIB also offers a unique solution to open account and supply chain finance. UKIB is recognized as having several world-class specialist teams in various areas, including high technology, and has unrivalled contacts in Asia, which could prove interesting to Technon in terms of future expansion. UKIB is a premier financial institution, with pricing to match. Technon executives wonder about the dynamics of a small-town company dealing with a global financial institution. UKIB recognizes that it is a foreign institution operating in Canada and does not expect Technon to terminate its existing banking relationship. First Trade Bank USA (FTB) First Trade Bank USA is a regional financial institution and mid-tier U.S. bank with trade finance operations and capabilities centred around the U.S. Midwest, and no Canadian presence to date. FTB has had good success as a niche provider of trade services and has strong relationships with several Canadian businesses seeking to establish operations in the U.S. It offers an adequate range of trade products, though Technon perceives that its advisory capabilities are limited The Need Technon has identified several major needs and expectations in terms of international and trade finance banking products and services. In addition to extending additional credit in support of planned international expansion, it seeks to establish a relationship with a financial institution that understands the challenges of an SME expanding its international reach. The company expects to deal in both import and export transactions, in a combination of documentary letter of credit and open account transactions. Its primary markets will be the United States, China, India and possibly a foray into the European Union through Ireland. Technon requires significant support in terms of advisory services and transactional guidance. The company also wishes to control overall banking costs, while ensuring access to adequate financing (including pre-export financing), as well as the option to offer competitive financing options to its overseas buyers. FITT 2 International Trade Finance The Challenge You are a consultant retained to advise the CFO of Technon on the financial aspects of the company's international activities. Consider the company and its business, probable nature of its international activities over the medium term, specific transactional needs, as well as the three candidate banks and their respective offerings. Learning Outcomes This case study relates to the following learning outcome from the course International Trade Finance: Explain the range of products and services provided by various models of export credit agencies and how they can support organizations in their international trade transactions. Given the case study "Selecting a Trade Banker", Technon had three choices to provide them with international trade finance expertise, they were: First Trade Bank USA, Canada Trade Finance Bank, and UK International Bank. Answer the following questions: a) State one positive and one negative attribute each of those three banks would have acting as a potential service provider to Technon. (3 marks) b) Which bank would you choose and why? (1 mark) International Trade Finance Selecting a Trade Banker EC Sparda-Bank VRO Sparda-Bank Banking on Relationship Technon International is a Canadian high-technology development firm, focused on emerging technologies in wireless communications. Technon sources components from China and has offshore programming activities in India covering certain functionality. The company is excited about a recent breakthrough in wearable tech, a new 5G enabled wristband. Technon has several Canadian and international patents to protect its proprietary technology, and has developed some strong non-disclosure agreements for use with its various suppliers and business partners. A small company established in Saskatchewan, Canada, Technon has been doing most of its commercial banking through a local credit union (small, local, membership-based bank); however, the company recently received several interesting inquiries about exporting its latest innovation, and realizes it needs to develop a relationship with a financial services provider with international banking and export finance expertise. Technon has narrowed its options to three possible providers: a Canadian bank with solid credentials in trade finance, a leading U.K.-based global trade bank and a mid-tier U.S. regional bank that has expressed interest in supporting the company's expansion to the United States. Technon is incorporated in Canada, and has quickly achieved annual sales in the USD 500,000 range, with strong margins and conservative growth projections of about 10 percent per year. If export sales are factored into the projections, Technon believes that growth rates in the 15 to 20 percent range are achievable, depending on the markets targeted. Asia is especially promising, given its level of investment in wireless technology and the high rate of adoption of wearable wireless technology among some consumer segments. The Options Technon recognizes the need to take its banking relationship to a new level in terms of international capabilities. It continues to be loyal to the credit union which helped it to grow and expand, and does not wish to completely cut ties; however, it is clearly time to seek an institution with proven international capabilities. Canadian Trade Finance Bank (CTFB) Canadian Trade Finance Bank is a large financial institution and one of the top two providers in Canada. The bank has solid trade finance credentials and maintains a high level of expertise as well as a full set of product and service offerings, which make it a viable player in the trade finance space. Preliminary discussions suggest to Technon that its business might be too small for CTFB to give it the type of advisory attention it currently requires. On the other hand, CTFB pricing was clear and competitive, and Technon derived some comfort from dealing with a local financial institution. CTFB did indicate that it would expect to become Technon's primary banker. UK International Bank (UKIB) UK International Bank is a globally-recognized leader in international finance, global banking and trade finance. The UKIB account representative in Canada indicated that the bank could offer any variation of trade finance available in the market, had extensive correspondent relationships (including large country and bank lines of credit) and could likely cover any transaction that Technon would pursue in the foreseeable future. UKIB also offers a unique solution to open account and supply chain finance. UKIB is recognized as having several world-class specialist teams in various areas, including high technology, and has unrivalled contacts in Asia, which could prove interesting to Technon in terms of future expansion. UKIB is a premier financial institution, with pricing to match. Technon executives wonder about the dynamics of a small-town company dealing with a global financial institution. UKIB recognizes that it is a foreign institution operating in Canada and does not expect Technon to terminate its existing banking relationship. First Trade Bank USA (FTB) First Trade Bank USA is a regional financial institution and mid-tier U.S. bank with trade finance operations and capabilities centred around the U.S. Midwest, and no Canadian presence to date. FTB has had good success as a niche provider of trade services and has strong relationships with several Canadian businesses seeking to establish operations in the U.S. It offers an adequate range of trade products, though Technon perceives that its advisory capabilities are limited The Need Technon has identified several major needs and expectations in terms of international and trade finance banking products and services. In addition to extending additional credit in support of planned international expansion, it seeks to establish a relationship with a financial institution that understands the challenges of an SME expanding its international reach. The company expects to deal in both import and export transactions, in a combination of documentary letter of credit and open account transactions. Its primary markets will be the United States, China, India and possibly a foray into the European Union through Ireland. Technon requires significant support in terms of advisory services and transactional guidance. The company also wishes to control overall banking costs, while ensuring access to adequate financing (including pre-export financing), as well as the option to offer competitive financing options to its overseas buyers. FITT 2 International Trade Finance The Challenge You are a consultant retained to advise the CFO of Technon on the financial aspects of the company's international activities. Consider the company and its business, probable nature of its international activities over the medium term, specific transactional needs, as well as the three candidate banks and their respective offerings. Learning Outcomes This case study relates to the following learning outcome from the course International Trade Finance: Explain the range of products and services provided by various models of export credit agencies and how they can support organizations in their international trade transactions