Export credit financing system

21 Pages·0.507 MB·English

EXPORT CREDIT
FINANCING SYSTEMS
IN OECD MEMBER
COUNTRIES AND
NON-MEMBER
ECONOMIES
Germany
www.oecd.org
GERMANY
1. ORGANISATION AND STRUCTURE
1.1 Insurance and guarantees
1.1.1 Representative organisation
Consortium consisting of:
Euler Hermes Kreditversicherungs-AG (“Euler Hermes”)
Friedensallee 254
D-22763 Hamburg
Telephone: [phone]
Telefax: ([phone]
Internet: www.agaportal.de
and
PricewaterhouseCoopers Aktiengesellschaft
Wirtschaftsprüfungsgesellschaft (“PwC AG”)
New York Ring 13
D-22297 Hamburg
Telephone: [phone]
Telefax: ([phone]
Internet: www.agaportal.de
1.1.1.1 Function
The Federal Government has entrusted the management of the Official
Export Guarantee Scheme to a consortium of two private companies. This
mandatory consortium which consists of Euler Hermes Kreditversicherungs-AG
(“Euler Hermes”), the leading partner in the consortium, and
PricewaterhouseCoopers AG (“PwC AG”) is authorised to provide and manage
the insurance business in the name and for the account of the state.
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Applications for cover are first checked and processed by the consortium.
Euler Hermes normally evaluates and takes decisions on applications covering a
value of up to EUR 5 million, on the basis of guidelines set by an
Interministerial Committee for Export Guarantees (see 1.1.1.4). On larger
contracts, decisions are taken by the Federal Ministry of Economics and
Technology after discussion in the Interministerial Committee.
1.1.1.2 Summary of organisation
Board of Management
Underwriting Claims & International Sales & Legal & Berlin Liaison Strategy
& Risk International Relations Marketing Finance Office
Management Debt
Management
1.1.1.3 Resources
The Federal Government can grant cover only within an exposure limit on
total commitments fixed annually by Parliament. The ceiling for export credit
insurance in the 2006 budget year was set at EUR 117 billion. Thus, the
authority for new cover essentially depends on the commitments already
existing at the beginning of the fiscal year (about EUR 104, 9 billion at the end
of 2005). Claims are paid from the budget, which is credited with premium
payments and any recoveries from earlier claims.
1.1.1.4 Other organisations involved
An Interministerial Committee (Interministerieller Ausschuss) is composed
of representatives of the Federal Ministries of Economics and Technology
(which chairs the Committee), Finance, Foreign Affairs, and Economic Co-
operation and Development. It is advised by representatives of Kreditanstalt für
Wiederaufbau (KfW) (see 1.2.1), Ausfuhrkredit-Gesellschaft mbH (AKA) and a
number of experts from the export trade and banking business.
The Committee is the central decision-making body for underwriting
questions and cover techniques, e.g. types of cover, general conditions,
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premium rates, cover policy and international agreements. It establishes
directives for decisions on cover and indemnification which are delegated to
other ministerial bodies and to the consortium. It discusses applications for
cover of more than EUR 5 million before a decision is taken by the Federal
Ministry of Economics and Technology. For individual transactions covering
amounts between EUR 5 and 10 million the decision on cover has been
delegated to a “small” Interministerial Committee which meets more regularly.
1.1.1.5 Relations with the state
The management of the Official Export Guarantee Scheme is mandated to
a consortium of the two private companies, i.e. Euler Hermes and PwC AG. The
consortium acts only in the name and for the account of the state. The Official
Export Guarantee Scheme is governed by the Federal Budget Law and
Guidelines for the Issue of Federal Guarantees. There are four Guardian
Authorities, i.e. the Federal Ministries of Economics and Technology (which
chairs the Interministerial Committee), Finance, Foreign Affairs, and Economic
Co-operation and Development, which are responsible for central decisions.
1.1.1.6 Relations with the private sector
Apart from Government facilities, export credit insurance is provided by
private insurance companies for their own account. The Government steps into
the breach when the privately owned insurance industry does not provide
sufficient cover, i.e. for so called non marketable risks. Marketable risks are
being defined as commercial and political risks with a risk horizon of up to two
years in the EU and the OECD core countries.
1.2 Export finance
1.2.1 Representative organisation
KfW-Bankengruppe
Postfach 11 11 41
D-60046 Frankfurt
Telephone: [phone]
Telex: 41 52 56-0
Telefax: (49 69) 74 31 29 44
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1.2.1.1 Function of KfW Bankengruppe
KfW was established in 1948. Its initial task was to administer Marshall
Aid made available under the European Recovery Programme (ERP) for
financing the most urgent reconstruction projects. Today, it is a bank with
responsibilities for economic policy. It promotes the German economy by
granting investment loans. A second function involves international project and
export credits (“KfW IPEX-Bank”). From 2004, international project and export
finance activities are carried out under the label KfW IPEX-Bank, a member of
KfW-Bankengruppe. KfW IPEX-Bank will be a legally independent, but 100%
subsidiary of KfW; KfW also extends loans and grants on behalf of the federal
government within the framework of German financial co-operation with
developing countries. In the field of international project and export financing,
KfW IPEX-Bank concentrates on medium- and long-term loans in certain
industries, but also offers short-term trade finance instruments.
KfW was established as a corporation under public law; 80% of its capital
is provided by the Federal Republic and 20% by the Länder (federal states). Its
executive bodies are the Board of Managing Directors (Vorstand) and the Board
of Supervisory Directors (Verwaltungsrat, see 1.2.1.4). The Board of Managing
Directors is responsible for conducting business and administering assets.
1.2.1.2 Summary of organisation of KfW IPEX-Bank
At KfW IPEX-Bank, the acquisition and structuring of export and project
finance is handled in two departments: Department X I is responsible for
financing primarily for the basic and manufacturing industry, the energy sectors
and telecommunications; Department X II is responsible for projects in the
shipping industry, air transport, land-based transport, airports, seaports and
inland ports and construction.
1.2.1.3 Resources
For its various activities, KfW Bankengruppe raises the required funds by
issuing bearer instruments and taking up loans in the domestic and foreign
capital markets. A minor part of its loan commitments is financed from
appropriations in various public budgets, mainly for financial co-operation with
developing countries and for various domestic investment programmes.
KfW IPEX-Bank has two sources of financing. One is the annual
allocation of export promotion funds from the ERP budget of the federal
government (ERP funds) and funds raised by KfW on the capital market. KfW
IPEX-Bank combines the ERP funds in a ratio of one to three (or more) with
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capital market funds. The ERP funds are reimbursed to the government as loans
amortise. KfW must obtain approval from the Ministry of Economic Affairs for
each loan it proposes on the export promotion funds. These loans are only
granted within the framework of the KfW/ERP Export Financing Programme
for financing exports to developing countries for which certain restrictions
apply (see 3.1.2.1). The terms and conditions of these loans are subject to the
Arrangement.
The second source is the purely market funds raised by KfW on behalf of
KfW IPEX-Bank either on the German or on the international capital market on
the terms and conditions currently available. The volume of market funds
depends on that of loan commitments refinanced at market terms. Today, the
greater portion by far of KfW IPEX-Bank’s yearly commitments use purely
market funds.
1.2.1.4 Other organisations involved
The Board of Supervisory Directors and the specialist committees it sets up
are responsible for harmonising the manifold interests of the federal
government, the Länder governments, the economic sectors and the credit
institutions. KfW has to take these interests into consideration in the
performance of its functions. The Board of Supervisory Directors consists of the
Chairman and the Deputy Chairman, both appointed by the federal government,
several federal ministers, members appointed by the Bundesrat (Upper House),
representatives of commercial banks, industry, local authorities, agriculture,
crafts, trade, the housing sector and the trade unions.
1.2.1.5 Relations with the state
In the field of international project and export financing, provided by KfW
IPEX-Bank, the government becomes involved when KfW IPEX-Bank grants
official support in the form of credits partly refinanced with public funds or in
the form of interest subsidies from public funds. This applies to credits under
KfW’s export promotion funds, to mixed credits granted by KfW and to loans
in connection with ship and aircraft financing for which KfW administers
interest rate subsidies on behalf of the German government. The government is
not involved when KfW uses funds raised in capital markets.
1.2.1.6 Relations with the private sector
KfW IPEX-Bank very often co-operates in a banking consortium with
commercial banks, especially for larger transactions.
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1.3 Aid finance
1.3.1 Representative organisation
KfW (Kreditanstalt für Wiederaufbau)
Postfach 11 11 41
D-60046 Frankfurt/Main
Telephone: [phone]
Telex: 41 52 560
Telefax: (49 69) 74 31 29 44
1.3.1.1 Function
Within the framework of the development policy of the Federal Republic
of Germany, KfW implements the part of the aid programme that concerns
bilateral financial co-operation.
1.3.1.2 Summary of organisation
Financial co-operation is handled by three regional departments reporting
directly to KfW’s Board of Managing Directors.
1.3.1.3 Resources
KfW’s activities in respect of financial co-operation are mainly financed
from budget funds provided by the Federal Ministry for Economic Co-operation
and Development (BMZ). KfW also provides financing by mixing its own
funds with financial co-operation funds.
1.3.1.4 Other organisations involved
KfW administers financial co-operation independently and on its own
responsibility in accordance with guidelines established by the federal
government. Within the government, the BMZ is responsible for steering and
monitoring assistance programmes in co-ordination with other ministries.
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2. INSURANCE AND GUARANTEE PROGRAMMES
2.1 Cover for exporters
2.1.1 Types of cover available
The Wholeturnover Policy offers exporters supplying goods/services to
several buyers in various countries an easily manageable tool for safeguarding
trade receivables with a credit period of up to 12 months.
Cover includes protection against payment default, particularly due to
buyer insolvency or non-payment of receivables within six months after due
date (protracted default), adverse measures taken by foreign governments or
warlike events, non-conversion/transfer of local currency amounts, confiscation
of the goods due to political circumstances and contract frustration due to
political circumstances.
The Wholeturnover Policy Light offers small and medium-sized export
companies supplying goods/services to several buyers in various countries an
easily manageable tool for safeguarding trade receivables with a credit period of
up to four months.
It offers protection against payment default if the foreign buyer fails to
make payment within six months after due date (protracted default).
Manufacturing Risk Cover safeguards the production costs invested in the
performance of an export transaction.
It offers protection against a discontinuation of production, particularly due
to the insolvency of the foreign buyer, the cancellation of the contract or the
occurrence of other fundamental contract violations, adverse measures taken by
foreign governments or warlike events, embargo measures taken by the Federal
Republic of Germany or third countries participating in the export transaction,
as well as non-payment of cancellation fees or non-fulfilment of the claim to
partial repayment after legitimate cancellation of the contract by the buyer.
Supplier Credit Cover safeguards amounts receivable due to a German
exporter under a single export transaction with short or medium/long repayment
terms.
It offers protection against payment default due to the insolvency of the
foreign buyer, adverse measures taken by foreign governments or warlike
events, non-conversion/transfer of local currency amounts, confiscation of the
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goods due to political circumstances or contract frustration due to political
circumstances, as well as non-payment within six months after due date
(protracted default).
The Revolving Specific Policy safeguards trade receivables with repayment
terms of up to 24 months due to an exporter supplying one specific foreign
buyer with goods/services on a continuous basis.
It offers protection against payment default, particularly due to the
insolvency of the foreign buyer, non-payment of the amounts owing within six
months after due date (protracted default), adverse measures taken by foreign
governments or warlike events, non-conversion/transfer of local currency
amounts, confiscation of the goods due to political circumstances as well as
contract frustration due to political circumstances.
2.1.2 Eligibility
2.1.2.1 Criteria for accepting cover
Insurance cover may be provided to a German exporter or to a bank
financing a German export transaction (see 2.2.1). In principle, all types of
goods and services are eligible for cover. The limits to eligibility arise at the
point where a transaction may contravene the vital interests of the Federal
Republic of Germany. Such restrictions on eligibility may be based on e.g. the
type of goods concerned, the country of destination, a combination of the two,
the parties of the contract, the payment terms agreed or other issues connected
with environmental aspects, human rights or corruption.
The transaction must be justifiable in terms of the commercial and political
risk involved. In this context the creditworthiness of the foreign buyer is
scrutinized and the country risk is examined to determine the risk based on
payment record in the past and the future ability of the country to service its
debts.
Export business is only eligible for support if the conditions agreed in the
contract are in line with those generally accepted in export trade. This is
particularly true for payment conditions in accordance with the terms of the
Berne Union Understanding. The other conditions are regulated e.g. by the
OECD Arrangement and relevant EU legislation.
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2.1.2.2 Nationality requirements
Cover is normally made available only to German exporters and for goods
manufactured in (and services rendered from within) the Federal Republic of
Germany. However, some foreign content of an export contract may be
included, depending on where the foreign content originates and its share of the
total contract value. Among EU member states, Community subcontracts are
included in credit insurance and guaranteed financing up to 30% of contract
value (40% for small contracts) regardless of whether interest rate support is
involved or not. A foreign component originating in Switzerland or Japan may
normally amount to 30% pursuant to bilateral agreements. It may be up to 10%
when originating in other countries. This threshold can be raised up to 49% for
deliveries made by foreign subsidiaries of German exporters. Numerous
bilateral Reinsurance Agreements have been concluded which facilitate the
inclusion of foreign content on the basis of reinsurance.
2.1.3 Cost of cover
The insured pays premium and administrative fees for his export credit
cover.
Administrative fees depend on the order value. When an application is
made, an application fee (EUR 100 to EUR 6 000) is charged. For each
prolongation of the offer of cover beyond one year, a prolongation fee must be
paid. There is in addition an issuing fee (EUR 50 to EUR 12 500) on issuance of
the cover policy. No insurance tax is payable.
The premium rate depends primarily on the country risk category into
which the country of the buyer/guarantor is categorized. Category 0 means a
very low risk and thus the lowest premium rate, while Category 7 signifies the
highest risk and the highest premium.
The premium is further influenced by the order value, the repayment term,
the buyer's status - public or private, with or without a bank guarantee - and,
depending on the case, also by the level of the uninsured percentage (percentage
of cover). In case of a private buyer/guarantor (e.g. bank) its credit standing also
influences the premium amount (buyer/bank category).
[Rev. 2007] 9 Germany