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Bullion Banking in the New World Order

Bullion Banking in the New World Order. Presented by: Ajay Mathur 24th April 2006. Contents. 1. Changing Business Dynamics. 2. Bullion Banking. 3. KYC / Due Diligence. 4. Sharing of info./Transparency. 5. Ask Questions. 6. Demand Explanation. 7. Be more involved in your business.

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Bullion Banking in the New World Order

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  1. Bullion Banking in the New World Order Presented by: Ajay Mathur 24th April 2006

  2. Contents 1. Changing Business Dynamics. 2. Bullion Banking. 3. KYC / Due Diligence. 4. Sharing of info./Transparency. 5. Ask Questions. 6. Demand Explanation. 7. Be more involved in your business. 8. Take New Initiatives. 9. Concluding Remarks.

  3. Changing Business Dynamics • The world order is changing . • It means business dynamics are changing - to accommodate newer ideas. • This entails changes in the way we do business. • Since changes are frequent, we need to be adaptable.

  4. Bullion Banking • Bullion Banking commenced in 1980s. • It has now expanded its scope: • Traditional financing of mining projects • Financing of Metal Inventory • Trading Positions • Exchange Traded Funds • In-process Manufacturing • Bridge Financing for many Industries

  5. KYC / Due Diligence • Days of secrecy are over. • KYC is not just a form-filling exercise. • We need to understand your business in much greater detail. • Group connections, ultimate beneficial owners, size/frequency of transactions. • Do you comply with regulations? • How do you handle large transactions?

  6. Sharing of Information/ Transparency • It enhances your credibility in the eyes of your suppliers and customers. • Prepare business plans/ projections & share them with your bank • For e.g. tell banks how a $50/oz rise in gold price overnight would affect your business and how will you deal with it. • Treat this as an investment.

  7. Sharing of Information / Transparency • Audited Financial Statements • Do stocks include gold borrowed against Guarantees? If not, are details part of notes? • Are stocks commensurate with your borrowings? • Have gold loans been used for gold purchases only? • Are borrowing & security details provided in notes?

  8. Ask Questions • Why is a bank asking for information? • Why should you comply with that? • Why is a facility structured in a particular way? For e.g. should you opt for a Trust Receipt facility on Gold or a S.T.Gold Loan? • Why are you signing a particular document? What purpose does it serve?

  9. Demand Explanation • All terms and conditions in writing, including the facility size and pricing. • Pricing should be specific such as “Base Rate/LIBOR + %” so that you know what can change it and how often.

  10. Be more involved in your Business • Banks learn from their customers. • Banks want their customers to perform well. • Think of newer ways of doing business and tell your bank about it. • Your old style has been successful. It may not, however, ensure success in future. • Invest your time and money on your future.

  11. Take New Initiatives • Support industry initiatives such as DMCC, GJG, WGC etc. as they are aimed at benefiting you. • Be a catalyst to change. • Think positively and provide constructive criticism. • Be futuristic and deal with steady partners (suppliers / FIs / banks) who can help you achieve your goals.

  12. Concluding Remarks • Past success is no guarantee for future success…. • …unless you change with the times.

  13. Thank You.

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