VIII. TRADE AND PROJECT FINANCING BRIEF DESCRIPTION OF BANKING SYSTEM There are numerous banking offices located throughout the country, with nearly 1,100 banks and 14,000 branches performing commercial services. Among the most important are the Banca Nazionale del Lavoro, Banca Commerciale Italiana, Banco di Roma, and the Banco di Napoli. These banks are a principal source of credit information. Numerous U.S. banks perform banking services in Italy through branches, subsidiaries, or representatives. Many American banks can also provide their commercial customers with bank reports on an overseas buyer as well as provide assistance on letters of credit and foreign exchange. Banks in Italy that have the authority to participate in foreign exchange usually have a U.S. correspondent. Foreign currency transfers and foreign-exchange transactions must be channeled via authorized intermediaries (the Bank of Italy, the Italian Foreign Exchange Office, and authorized banks). The larger banks in Italy have branches in one or more U.S. cities. A number of large U.S. banks have a branch office in Italy, usually in Milan. The Bank of Italy, Italy's central bank, is widely respected both nationally and internationally as a non-political overseer of the Italian economy responsible for controlling inflation and balance of payments pressures. U.S. banks with offices in Italy include Bankers Trust, Chase, Chemical, Citibank, Continential Bank, Morgan Guaranty Trust, Republic National Bank of New York and Bank of America. Commercial Banks primarily are responsible for short term credit. FOREIGN EXCHANGE CONTROLS AFFECTING TRADING Italy has no restrictions on the amount of foreign exchange instruments, currency, or checks which may be brought into the country. Normally, lire 1 million may be taken out of the country, but any amount declared on entry may be reexported. Italian exchange regulations are issued by the Italian Exchange Office (Ufficio Italiano dei Cambi--UIC), Via Quattro Fontane 123, Rome 00184, under authority of the Ministry of Foreign Trade. Foreign exchange may be sold or acquired from the Bank of Italy or any of the banks authorized by the Bank of Italy. In practice, all commercial banks are authorized to conduct foreign exchange transactions. Dollar currency, travelers checks, and, in some cases, personal checks, may be exchanged at banks, exchange offices, and authorized tourist offices and hotels. Major credit cards are accepted with proper identification. It is best to first confirm what form of payment is accepted. WHAT IS GENERAL FINANCING AVAILABILITY Italy has a well-developed banking and credit system with numerous corresponding U.S. banks. The Italian banks are subject to close government supervision since the granting of credit and the administration of savings are considered functions of "national interest." The establishment of a new bank or the opening of a branch of an existing bank must be authorized by the Bank of Italy, the central bank of Italy. The Italian banking system consists of two sectors: a commercial banking sector, which primarily accepts demand and short-term deposits, and a "special credit institutes" sector. Short-term financing for foreign and domestic firms is available from the commercial banking sector, including branch offices of many U.S. banks. The special institutes generally specialize in particular types of investment finance, for example agriculture, industry, real estate, housing, and credit. The principal institutes for medium- and long-term industrial credit are the Istituto Mobiliare Italiano (IMI), Banca di Credito Finanziario (Mediobanca), and Ente Finanziario Interbancario (EFIBANCA). U.S. firms desiring to finance major portions of their capital investment outside the United States may find capital available in the Eurodollar market. Several major U.S. banks have branches in Italy, principally in Rome and Milan, to assist in financing capital investment. HOW TO FINANCE EXPORTS/METHODS OF PAYMENT When providing the Italian buyer with a price quote, American firms most frequently provide a quote that includes packing costs, insurance, and freight. This is called the c.i.f. price. The average Italian business representative can then usually determine the charges for customs, taxes, and local transportation to arrive at the final landed cost to importer. The customary terms of sale in Italy are either cash or net. Sales made on cash terms call for payment before delivery, on delivery, or shortly after delivery -- usually within 10 days from the date of delivery. A 2 to 5 percent discount is made for payment of the full amount of the transaction at the end of the specified period from 1 to 4 months from the date of the invoice. The length of the period depends on the com- modity involved, the credit standing of the buyer, and the motivation of the seller. A period of up to 2 years is often allowed for payment of capital goods, store equipment, trucks, and similar heavy equipment. Italian firms indicate that some American suppliers are too rigid in their payment terms and have thus lost business to other suppliers because of their rigidity. Financing is considered as much a competitive factor as the product itself, the delivery date, or after-sales service. While some U.S. manufacturers request payment upon receipt of the goods, more successful sellers are offering terms allowing settlement of the account from 60 to 120 days following receipt of the order. The use of irrevocable letters of credit for the Italian market has declined appreciably in recent years. Although such instruments are still required by American exporters, especially when the Italian customer's credit reputation is not well known, the growing reluctance of Italian firms to provide letters of credit has required American exporters to utilize other methods to assure payment or lose the sale to other suppliers in the competitive Italian market. The Italian businessperson is reluctant to pay a high fee for a letter of credit when other suppliers or means of payment are available. American firms have put to greater use the export credit insurance and guarantee programs available through the Foreign Credit Insurance Association (FCIA). Information on specific Italian firms is available from the U.S. Department of Commerce through its World Traders Data Reports Service. American banks also provide credit information service as well as private agencies. Just as the terms of any sales offer should be presented in a clear and detailed manner, shipments should conform to the contract and to any samples which may have been sent to the Italian importer. Special attention should be given to the prompt observance of agreed delivery schedules, as prompt delivery may be a decisive and possibly an overriding consideration of the importer in placing additional orders. When shipping on letter of credit, all terms specified on the letter of credit must be strictly observed. If the terms are no followed, the letter of credit may not be honored by the bank. TYPES OF AVAILABLE EXPORT FINANCING AND INSURANCE As a member of the G-7 group of countries, Italy as a market for U.S. exporters does not warrant any special USG credit assistance. The network of Italian banks with branches in the U.S. (Banca Nazionale del Lavoro, Credito Italiano, Banca Commerciale Italiana, Monte dei Paschi di Siena, Banca di Roma, CARIPLO, etc.) will offer limited export credit assistance. Similarly, large U.S. banks and/or local banks located in the exporter's state can offer factoring, exchange fluctuation hedging and limited exporter's credit services. The EXIM bank and FCIA consider Italy a low political risk country. Italy is classified as a "rich" country under the OECD rate classification. Small business exporters may obtain assistance under the SBA's Export Revolving Line of Credit (ELRC) loan program. PROJECT FINANCING AVAILABLE Several programs exist to help finance exports. The following export financing programs may be of interest to a U.S. exporter: - The Small Business Administration (SBA) provides financing for the establishment, operation, or expansion of a small business, including firms engaged in exporting. the SBA's Export Revolving Line of Credit Guarantee Program provides pre-export financing for sales and for foreign market development. SBA also has a program in cooperation with the Export-Import Bank of the United States (Eximbank) to participate in loans to small firms. - The Export-Import Bank of the United States (Eximbank) is an independent U.S. Government agency that helps to finance the sale of U.S. goods and services to foreign buyers. Eximbank can provide loans directly to foreign buyers, provide U.S. suppliers and their banks with credit risk protection, or originate direct financing. Eximbank has regional offices located in New York, Chicago, Hous- ton, Miami, and Los Angeles. - The Foreign Credit Insurance Association (FCIA) is a private sector association of insurance companies. The FCIA acts in conjunction with, and as an agent for, Eximbank to cover export sale repayment losses due to political or commercial causes. - The Overseas Private Investment Corporation (OPIC) assists U.S. private investment to promote the economic and social progress of developing countries. Programs include political risk insurance, special insurance coverage for natural resource projects, leasing, and contractor's risks. - The International Bank for Reconstruction and Development (IBRD), under the World Bank Group, promotes development of member countries mainly by extending conventional loans for specific high-priority projects. LIST OF BANKS WITH CORRESPONDENT U.S. BANKING Below is a listing of Italian banks with correspondent branch offices in the U.S. Istituto Bancario San Paolo di Torino S.p.A. Piazza San Carlo 156 10121 Turin Tel: 39-11-5551 Fax: 39-11-555-6650 245 Park Avenue, Suite 3500 New York, NY 10022 Tel: (212) 692-3000 Fax: (212) 599-5303 Banca di Roma Via Marco Minghetti 17 00187 Rome Tel: 39-6-670-71 1 Wall Street New York, NY 10005 Tel: (212) 607-6300 Fax: (212) 952-0445 CARIPLO - Cassa di Risparmio delle Provincie Lombarde S.p.A. Via Monte di Pieta' 20121 Milan Tel: 39-2-886-61 Fax: 39-2-886-62326 10 E. 53rd Street New York, NY 10022 Tel: (212) 832-6622 Fax: (212) 527-8777 190 S. LaSalle Street, Suite 2890 Chicago, IL 60603 Tel: (312) 444-1500 Fax: (312) 444-1501 Banca Nazionale del Lavoro BNL S.p.A. Via V. Veneto 119/A 00187 Rome Tel: 39-6-470-21 Fax: 39-6-470-28445 25 E. 51st Street New York, NY 10019 Tel: (212) 581-0710 Fax: (212) 713-1683 Banca Comerciale Italiana S.p.A. Piazza della Scala 6 20121 Milan Tel: 39-2-88501 1 William Street New York, NY 10004 Tel: (212) 607-3500 Fax: (212) 809-2124 555 S. Flowers Street, Suite 2400 Los Angeles. CA 90071 Tel: (213) 624-0440 Fax: (213) 624-0457 Banca di Napoli S.p.A. Via Toledo 177/178 80132 Naples Tel: 39-81-791-1111 Fax: 39-81-552-5809 277 Park Avenue New York, NY 10172 Tel: (212) 872-2400 Fax: (212) 644-8246 Credito Italiano Direzione Centrale Piazza Cordusio 20123 Milan Tel: 39-2-88621 375 Park Avenue New York, NY 10152 Tel: (212) 546-9600 500 S. Grand Avenue, Suite 1600 Los Angeles, CA 90071 Tel: (213) 622-2787 Monti dei Paschi di Siena Piazza Salimbeni 3 53100 Siena Tel: 39-577-294-111 Fax: 39-577-294-653 26th Floor 245 Park Avenue New York, NY 10167 Tel: (212) 557-8111 Fax: (212) 557-8039 Banco di Sicilia S.p.A. Via Generale Vincenzo Magliocco 1 90141 Palermo Tel: 39-91-608-1111 250 Park Avenue New York, NY 10017 Tel: (212) 692-4300