ABC International Bank (ABCIB), the London subsidiary of Bahrain’s Arab Banking Corporation, is acknowledged as a niche regional specialist, supporting trade transactions with goods either heading to, or from, the Middle East & North Africa (Mena) region.

Yet the bank’s US$654mn bilateral non-recourse receivables financing, with an annual throughput in excess of US$1bn, signed by Land Rover Exports in September 2007 involves 32 emerging and developed markets spanning five continents.

Back in December 2005 Land Rover approached ABCIB with an urgent need – a non-recourse receivables facility on five dealers in five countries in the Mena region.

“We are Mena specialists,” says Jeff Fallon, European head of exporter marketing at ABCIB in London. “So we were able to put together a deal in two-to-three weeks. The transaction operated smoothly, so Land Rover approached us with a further five dealers this time also including two from non-Mena countries. Impressed by the ease of operation, Land Rover then asked ABCIB if it could consider a global facility – this time with no fewer than 52 dealers in 32 countries. ABCIB took up the challenge, and the facility was extended accordingly – now a revolving facility of up to US$654mn.

“We were now comfortable with the structure and day-to-day operational management of the facility, and our deepening relationship with Land Rover meant we were able to take the leap and significantly widen the range of jurisdictions.”

The deal represents the largest trade financing ever undertaken by Land Rover, with the first drawdown of US$150mn the company’s single largest ever drawdown from a trade financing.

The revolving facility has a maximum tenor of 180 days on drawings, with each drawing being repaid in full at maturity. The crucial risk mitigant is a backstop credit insurance policy from Euler Hermes.

“The credit insurance helped to speed up the due diligence process,” says Fallon, “especially as the credit insurer had in-depth knowledge and experience of each of the 52 dealerships – a great help in our own internal due diligence process.”

Indeed, the deal remains a complex one in its execution, covering up to 200 shipments each month.

Yet the essential worthiness comes from the partnership between Land Rover and ABCIB. A deep level of trust was built on previous transactions, in record time. And that led to the parties being able to push each other’s boundaries.

“In the end they would not have undertaken a receivables discounting on such a scale without the track record of the earlier Mena-based deals, and we would not have strayed so far from our geographic heartland without the fact we were dealing with a counterparty of the stature of Land Rover,” says Fallon. “Banks often talk about partnership but rarely in trade finance do you see it in action with quite such extensive and positive results.”

Deal Information:




Land Rover Exports Ltd
Amount: Up to US$654mn
Arranger: ABC International Bank (ABCIB)
ECA: Euler Hermes
Tenor: 180 days
Date signed: September 2007