Export credit guarantees

Estonian Export Finance 2014
Finnvera - Finland’s Export Credit and
SME Financing Agency
26 November 2014
Finnvera in Brief
Clients 30 September 2014
28,900
› Specialised financing company
100% owned by the State of Finland
Outstanding Commitments 30 September 2014
Venture capital investments
EUR 0.1
billion
SME financing
EUR 2.6
billion
2
Export financing
EUR 12.5
billion
› Debt obligations are explicitly
guaranteed by the Republic of Finland
› Rating of debt obligations the same
as Finland’s – Aaa by Moody’s and
AA+ by Standard & Poor’s
Finnvera’s Role
›
Finnvera promotes the SME sector, the exports and
internationalisation of enterprises and the implementation
of the Government’s regional policy goals
› Act on the State-Owned Specialised Financing Company (443/1998)
dictates the purpose of Finnvera
›
Finnvera is:
› The official Export Credit Agency (ECA) of Finland – Export credit
guarantees and export credits
› The state-backed financier to Finland’s SME sector – Domestic loans
and guarantees
› A provider of venture capital to the Finnish SME sector – Venture capital
financing
3
Finnish State’s Commitment
Annual P/L apportioned
Export Financing
P/L, EURm
Credit loss compensation
P/L Export Financing
P/L Domestic Financing
100
No dividend payments
Retained earnings kept in
segregated reserves
Reserve for Export Credit
and Special Guarantees
(436 EURm, 30 Sep 2014)
State Guarantee Fund
(754 EURm, 30 Sep 2014)
Reserve for Domestic
Financing
(135 EURm, 30 Sep 2014)
80
60
40
20
0
2009 2010 2011 2012 2013
Shareholder’s equity
(other than reserve)
355 EURm, 30 Sep 2014
Domestic Financing
P/L, EURm
15
10
Losses from Export Credit and Special Guarantees in addition to
Domestic Guarantees covered by the State of Finland
5
0
-5
-10
Debt guaranteed by the State of Finland
4
2009 2010 2011 2012 2013
Organisational Structure
›
Finnvera falls under the administrative purview of
the Ministry of Employment and the Economy
›
The Supervisory Board of Finnvera is comprised of
members of the Parliament (10 members) and stakeholder
representatives (8 members)
›
In addition to the parent company, Finnvera Group
is comprised of the following subsidiaries:
› Finnish Export Credit Ltd (100%)
› Veraventure Ltd (100%)
› Seed Fund Vera Ltd (94%)
5
ECA Financing − Overview
› Finnvera’s export credit guarantees
provide Finnish exporters and
financiers with solutions covering
export risk
Exposure (EURm)
14 000
12 000
›
10 000
8 000
6 000
4 000
2 000
0
2010
2011
2012
2013
9/2014
Outstanding guarantees
Offers for guarantees
Financing for export credits (outstanding credits
and credit commitments)
Total Exposure 30 September 2014
EUR 12.5bn
Clients 30 September 2014
120
6
ECA financing also includes other than
export related state backed "special"
guarantees, e.g. ship guarantees,
environmental guarantees and
investment insurance
› Finnvera group provides financing for
export credits arranged by banks
through its subsidiary Finnish Export
Credit Ltd
› In 2013 Finnvera’s export credit
guarantees covered 3.8% of Finland’s
total exports
› In 2013 losses and provisions for
losses in export credit guarantee and
special guarantee operations were
minor, 0.09% of total year end 2013
exposure
ECA Financing – Exposure Breakdown
ECA Exposure Breakdown 30 September 2014
Geographic Exposure (EURm)
Sector Exposure
2 000
1 800
15%
17%
2%
1 600
8%
1 400
Offers
1 200
29%
Commitments
1 000
800
29%
600
400
Forest industry
200
Shipping
Telecommunications
0
Energy industry
Mining and metals industry
Other
7
SME Financing − Overview
› As part of the mandate given by
the State Finnvera promotes the
Finnish SME sector
Exposure (EURm)
3 500
3 000
Guarantee
receivables
2 500
2 000
Export
guarantees
1 500
Guarantees
1 000
Loans
500
0
2010
2011
2012
2013
9/2014
Total Exposure 30 September 2014
EUR 2.6bn
Clients 30 September 2014
28,780
8
› Focus on start-up and growing
enterprises
› Credit and guarantee losses in
SME financing amount annually
to about 2−3.5% of total
exposure
› The State compensates part of
Finnvera’s losses in domestic
operations to enable Finnvera
to take higher risks than those
taken by commercial financial
institutions
Funding Sources – Finnvera plc
Funding by Currency 21 November 2014
7%
8%
EUR
USD
51%
34%
SEK
NOK
Total Outstanding Debt 21 November 2014
EUR 2.64bn (Finnvera plc)
9
› Finnvera seeks to ensure that
funding is diversified by source,
and maturity
› The maximum amount of debt
obligations guaranteed by the
Republic of Finland is EUR 9.0bn
› Debt swapped into floating rate
EUR or USD
› The State has provided EUR 86
million of subordinated debt to
Finnvera plc
Finland – An Export Oriented Economy
Exports by Regions January–August 2014
15%
›
Nordic country rated Aaa (outlook
stable) by Moody’s and AA+
(outlook stable) by Standard &
Poor’s
›
One of the most competitive and
open economies in the world
›
The economy is knowledge-based
and strong on innovation
›
Almost 40 per cent of Finland’s
economy is based on foreign trade
14%
8%
6%
23%
34%
Asia
North America
Other countries
Euro zone
Other EU countries
Rest of Europe
Source: Finnish Customs
10
Contents
Finnvera in Brief
11
›
Business Review
›
Risk Management and Asset/Liability Management
›
Finland – Economic Overview
›
Key Figures and Corporate Responsibility
›
Contact Information
Finnvera and Finnish Export Credit
Finland’s official export credit agencies (ECA)
›
Cooperate with commercial banks and
export enterprises
›
Promote export financing and share risks with
export enterprises and privately owned banks
›
Comply with the OECD Arrangement on
Export Credits
›
Require that exports include a Finnish interest
›
The State of Finland is responsible for
export financing
›
The goal is to attain self-sustainability over the long term
04/12/2014
12
Export credit guarantees
›
Outstanding commitments EUR 12,5 billion 30.9.2014
›
The largest sectors: telecommunications, shipping, forest industry,
energy industry, and mining and metals industry
›
Export credit guarantees granted for exports to over 80 countries;
the biggest country exposures: United States, Germany, Brazil,
Russia, Spain, Uruguay
›
A guarantee cannot be granted unless the undertaking and
the country in question are creditworthy
› Emphasis on country analyses and enterprise analyses
› When a guarantee is granted, attention is paid to factors pertaining
to the environment and society, to good governance and corporate
responsibility, and to anti-bribery measures.
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13
Benefits of export credit guarantees
To exporters: Payment is received on cash terms,
protects against credit risks
To borrowers: Enables the availability of long-term financing
To lenders: Protects against credit risks
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14
Risks covered
› Political risk
›
›
›
›
Restrictions on currency transfers or currency change
Insolvency of a State
Expropriations
War, insurrection or some other state of emergency
› Commercial risk
› The buyer’s inability or unwillingness to pay
04/12/2014
15
Map of country risk categories
http://www.finnvera.fi/eng/Export/Export-CreditGuarantees/Country-classification-and-map2
4.12.2014
16
International cooperation
Frame of reference for export credit guarantees – creation
and development of common principles
WTO
OECD
EU
Self-sustainability
The Arrangement
StateEU
aid rules
Environmental and Social
Due Diligence
Directive on medium/
long-term guarantees
Anti-Bribery Measures
Communication on shortterm export-credit
insurance
WTO
OECD
Sustainable Lending
Pariisin
Klubi
Paris Club
Berne Union
Informal group of
official creditors
Cooperation between
export credit agencies
Equal treatment of
creditors
Best practices for export
credit and investment
insurance
Exchange of information
4.12.2014
17
Funding of Export Credits
Credit
Agreement
BANK
BUYER
Repayment
Supply Contract
(Delivery)
Export credit guarantee
Interest equalisation
Refinancing
Agency agreement
Loan proceeds
(Purchase price)
Finnish Export Credit Ltd
EXPORTER
FINNVERA GROUP
State guarantee
Acquisition
of funds
Protective measures
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18
Investments