Date post: | 21-Dec-2015 |
Category: |
Documents |
View: | 213 times |
Download: | 0 times |
All rights reserved. Copyright © 2008 Euler Hermes Kreditversicherungs-AG and PricewaterhouseCoopers AG WPG.
Opportunities and development in the current global crisis
Ute Kochlowski-Kadjaia, Euler Hermes Russia
Moscow, April 21, 2010
page 2
Contents
Role and Function of Export Credit Agencies (ECAs)
Crisis Response – Consequences for ECAs
Cover Policy for Russia
Conclusion
page 3
Mandatary business
Federal Export Credit Guarantees
By order and for account of the Federal Republic of Germany
as leading partner
cooperating as partners to a consortium
page 4
Interministerial Committee for Export Guarantees (IMA)
IMA
AAFederal Foreign OfficeBMWi
Federal Ministry of Economics and
Technology(in charge)
BMFFederal Ministry
of Finance
Experts- KfW IPEX-Bank- AKA Ausfuhrkredit-Gesellschaft- Representatives of export and banking
ConsortiumEuler Hermes
PricewaterhouseCoopers
BMZFederal Ministry for
Economic Cooperation and
Development
page 5
Definition Export Credit Guarantees
Insurance against the political / commercial risks arising abroad involved in export business (or export financing) transacted by an exporter domiciled in Germany provided by the Federal Republic of Germany
It requires the payment of a premium in accordance with the risk involved
and an uninsured portion to be borne by the policy holder
page 6
Requirements for Export Credit Guarantees
Business that qualifies for official support
– Export transactions (supply, works/services and financing contracts) of a German exporter with goods of mainly German origin involving non-marketable risks abroad
Criteria for the granting of cover are
– that the transaction is eligible for support
– that the risk is justifiable
– that the terms of the contract are in accordance with common practice
– that the provisions of the federal budget law are observed
page 7
NEWLY COVERED BUSINESS
15.213.2
10.313.012.2
7.2
7.5
6.7
7.67.6
2005 2006 2007 2008 2009
Wholeturnover/ Rev. policies
Specific policies
in Euro billions
20.6
17.019.8
22.420.7
page 8
TOP MARKETS FOR NEW GUARANTEES
165
12
210
845
649
447
678
703
716
971
1,552
1,357
1,479
2,878
2,042
1,353
1,363
1,991
2,066
2,087
10. Israel
9. Romania
8. Dubai
7. India
6. Brazil
5. China
4. Turkey
3. Russia
2. United States
1. South Korea
2009
2008
in Euro millions
page 9
Total: 15,156 EUR millions
in Euro millions and in %
BREAKDOWN OF SPECIFIC POLICIES BY TYPE OF SECTORS
51%
20%
12%
6%
4%3% 2% 1%
Infrastructure: 7,659 (51%)
Processing industry: 3,046 (20%)
Energy: 1,852 (12%)
Paper, timber, leather and textileindustry: 943 (6%)Services: 611 (4%)
Mining: 503 (3%)
Agriculture and food processingindustry: 338 (2%)
Environmental technology: 149 (1%)
Oil production and gas gathering: 32(0.2%)
Chemical industry: 22 (0.1%)
thereof:
aircraft: 21%
ships: 19%
thereof:
metal industry: 16%
page 10
Types of export guarantees – extract
Cover facilities
Single export cover/tied loan cover (pre and post shipment) Framework credit cover Revolving buyer credit cover Project financing Structured financing including countertrade business Cover in local currency Cover against payment defaults for confirmed L/C Whole turnover cover
page 11
Tied loan cover
Export contract/deliveryForeign buyerGerman exporter
German bankLoan contract
Repayment
Disbursement of buyer credit
Foreign bank
If necessary: buyer involvement in payment obligations
Local contract
Types of export guarantees I
page 12
Framework credit cover
Targets
– Financial credits for smaller transactions
– More flexible and quicker
Criteria for cover
– Credit volumeup to EUR 10m per single transaction
– Currencyframework and single contract must be the same
– International standards e.g. consensus must be considered
Types of export guarantees II
page 13
Revolving buyer credit cover
Contract between a German and a foreign bank to finance transactions between one German exporter and one foreign importer
Payment terms on short term basis (up to 12 months, in exceptional cases up to 24 months)
Policy period is one year and will be automatically extended if notice of termination is not given
Targets
– Cover of short term credits
– More flexible and quicker
Types of export guarantees III
page 14
In general: Export guarantees are granted to promote German export goods, but…
… a product receiving a German certificate of origin is considered as German.
… foreign content is acceptable in principle. Local costs and foreign content can amount to 30% (base rate) of the contact value without any statements. Exceeding the base rate is possible under certain circumstances.
Foreign ContentInclusion of non-German sub deliveries
page 15
Background Main supply and subcontracting deliveries will be covered by one credit insurer The value of the subcontracting deliveries will be reinsured by the credit insurer
for goods sourced from his country Resulting in
– One policyholder
– One credit insurer
– One cover
– One cover scheme
= One stop shop
Foreign Content – Reinsurance I
page 16
ASHR´A (Israel) Atradius (Netherlands) CESCE (Spain) COFACE (France) COSEC (Portugal) ECGD (Great Britain) EDC (Canada) EFIC (Australia) EGAP (Czech Republic) EKF (Denmark) EKN (Sweden) FINNVERA (Finland)
GIEK (Norway) KUKE (Poland) NEXI (Japan) ODL (Luxemburg) OeKB (Austria) ONDD (Belgium) SACE (Italy) SERV (Switzerland) SID (Slovenia) US Ex-Im Bank (U.S.A)
German ECA: 21 reinsurance agreements with other ECAs
Foreign Content – Reinsurance II
page 17
Contents
Role and Function of Export Credit Agencies (ECAs)
Crisis Response – Consequences for ECAs
Cover Policy for Russia
Conclusion
page 18
Challenge for ECAs
The major challenge for ECAs in a world characterised by a financial and increasingly economic crisis is to find a balance
between…
... a prudent and responsibleadministration of the Germangovernment‘s and taxpayer‘smoney
►grant cover after a thoroughevaluation of the risks involved
…and the objective of promotingthe economy, in our caseespecially German exports
►accept risks despite the global economic turbulences
page 19
Crisis response – Consequences on ECAs I
During the crisis ECAs were forced to act counter-cyclically and
flexibly.
Substantial increase in demand for ECA cover in combination with ECA related government action against the crisis
ECAs are approached by new customers and are getting involved in new industry sectors and/or buyer countries such as EU and other OECD countries
Cover is sought for risks that used to be perceived as save
page 20
Crisis response – Consequences on ECAs II
Governments response with new/amended insurance products and cover policies in order to facilitate export finance
(Re-)Entry of ECAs in the field of marketable risks (short term cover for EU and OECD countries) due to restrictions of the private credit insurance market
ECAs are extending their umbrella – rather than closing it
page 21
Crisis response –New and amended products I
German Government launched a package of new cover
regulations embedded in the Economic Stimulus Plan II.
Supplier Credit Guarantee
– Increased percentage of cover up to 95 % to reduce refinancing costs
Credit Confirmation Risk Cover– Newly established instrument to stabilize L/C business
– Banks can insure themselves against the risks involved in the confirmation of a letter of credit that has been issued to finance an export transaction by a German company
page 22
Crisis response –New and amended products II
German Government launched a package of new cover
regulations embedded in the Economic Stimulus Plan II.
Contract Bonding– Increased single limit of cover from EUR 80 to EUR 300 million to
ease exporter’s liquidity position, as it helps to ease the pressure on the exporter’s credit line
Securitisation Guarantee in relation to the KfW Refinancing Program– Facilitating access to long-term funding for banks arranging
Hermescovered transactions.
– Banks sell their covered receivables (from existing and new loans) to KfW and make fresh funds available for the financing of new business covered under Federal Export Credit Guarantees
page 23
The crisis so far
Despite a double-digit decrease in German exports in 2009 as well as cancellations and postponement of many projects cover volume is expected to rise
Both standard and new products contributed to this result
During the crisis, ECA-covered financing has gained tremendous importance
ECAs have proved to be a reliable partner and will continue giving support to maintain and where necessary restore trust in global financial systems and trade relationships.
page 24
Policies regarding the analyses of banks I
► Apart from generally accepted banks, still case by case analysis
► No general rejection of any CIS country
► Detailed information regarding ownership structure
► In-depth insight into the respective bank‘s risk management
page 25
Policy regarding analysis of banks II
► Financial Statements (preferentially according to IFRS) for 3rd Quarter 2008
► Securities portfolio
► Detailed overview of liquidity situation
► Exposure to currency risks- Matching Maturities
- Proportion of ‘Loans to customers’ in foreign currencies and assessment of customers’ ability to pay back such loans
► Detailed overview of ‘Loans to Individuals‘
► Exposure to real estate sector
► Impairment provisions
page 26
Contents
Role and Function of Export Credit Agencies (ECAs)
Crisis Response – Consequences for ECAs
Cover Policy for Russia
Conclusion
page 27
Russia – cover policy
Generally open for short-term transactions (examination of creditworthiness)
Criteria / securities for credit business transactions:
- State guarantee
- Corporate risk
• Additional securities not required in cases of excellent standing of the buyer
- Bank guarantee
• Generally accepted banks: 15 banks such as VTB, Sberbank, Vnesheconombank, Gazprombank or Alfa Bank
• Other banks on a case-by-case basis (about 50 banks so far)
• In general involvement of the Russian buyer in the payment obligations
Premium category 4
page 28
Russia – cover volume for recent years
1.420
1.7922.015
3.249
2.878
1.991
2004 2005 2006 2007 2008 2009
short term long term total
(in million EUR)
page 29
German ECA underwriting volume (long term) for Russia by type of security
716
61
2925
50
32
35
37
37
32
17
75
36
50
6361
47
68
23
2002 2003 2004 2005 2006 2007 2008 2009(30.09.)
State Guarantees Bank Securities Corporate Risk
%
page 30
Russia – recent experience
►Only very few covered banks have not been able to meet their obligations so far
►Strong effort by the Russian government to support system relevant banks
►Further consolidation of the banking sector is nevertheless to be expected in 2009
Russia will remain a major partner in the years to come
page 31
Contents
Role and Function of Export Credit Agencies (ECAs)
Crisis Response – Consequences for ECAs
Cover Policy for Russia
Conclusion
page 32
Conclusion
Due to the current challenges and difficulties ECA-covered
financing has gained tremendous importance.
ECAs will be a reliable partner and will give support to maintain
and where necessary restore trust in global financial systems and
trade relationships.
Russia and CIS will remain major partners also in the years to
come.
page 33
Thank you for your attention!
Further information is provided under:
Hotline: +49 (0) 40/88 34-90 00
Vorname Name
Unternehmen
Tel.:
E-Mail: