UniCredit's international dimension and its widespread banking network in Central and Eastern Europe offer the ideal conditions for the spread of this innovative tool for settling international commercial transactions.

The Bank Payment Obligation is an irrevocable and autonomous undertaking by a bank, generally an importer's main bank, to pay on demand or on maturity a certain amount to the exporter's bank following successful electronic checks on a series of data previously agreed by the parties.

The documentation relating to the operation (invoices, transport documents, certificates, etc.) is exchanged separately by the commercial parties, delegating to the banks the automated and direct management of the electronic data flow through the Trade Service Utility (TSU) platform developed by SWIFT (the main financial messaging communication network).

Having as its prerequisite the existence of a relationship of commercial trust between buyer and seller, the BPO lies in between documentary credit and open accounts (bank transfers), combining some advantages of both: of the former, for example, the reduction of the risk of non-payment; of the latter, the simplicity and speed of execution. The exporter company can also expand its exposure to buyers that issue BPOs and obtain easier access to financing or disposal of the underlying receivable; the importer company can instead negotiate longer payment terms, thus optimising its cash flows.

Last October, UniCredit, through its German subsidiary, was the first bank to complete a BPO transaction between Germany and Japan. Now it is ready to extend the service to companies operating on the international market on an open account basis.

Alessandro Cataldo, UniCredit Head of Marketing and Sales for Italy commented: "We are particularly happy to have successfully completed the first BPO transaction in Italy, with a highly internationalised medium-sized company. We believe strongly in the BPO as an instrument which enables us to leverage our widespread presence in Central and Eastern European countries and the broad, consolidated network of our correspondent banks, to offer a better service to support the ever-increasing volume of commercial transactions which are managed on an open account basis."

Claudio Camozzo, UniCredit Global Transaction Banking Co-Head and member of the SWIFT board said: "The growth of global trade is accompanied by a significant shift from the use of traditional instruments such as letters of credit to the world of the open account, and by market demand for solutions that help to manage the growing costs and risks effectively. With the BPO, we can offer our customer companies a solution which combines automated processing of the flows with careful cost management, prompt payments and financial options for the seller."