Export Credit Agencies

A Lastest News about Business Environment in Ukraine

Last updated: 23 Feb 2011

The News of European Export Credit Agencies (ECAs)

The News of European Export ?redit Agencies (ECAs) By Kateryna S. Barabash, Trade Finance Specialist Senior Manager of the IBcontacts company Euler Hermes Forderungsmanagement GmbH Euler Hermes Kreditversicherungs-AG Euler Hermes is the biggest credit export agency in the world that accumulates over 40% of world credit insurance market share and consists of two subdivisions: Euler Hermes Forderungsmanagement GmbH, that is a privately owned organization, and Euler Hermes Kreditversicherungs-AG that is owned by German government. At the moment the processes of responsibilities redistribution between different countries offices and corporate culture reshaping have become the main tendencies among multinational credit insurance companies. According to Euler Hermes Forderungsmanagement GmbH representative, Mr. Joerg Vollus, who has been responsible for cooperation with Ukrainian companies during many years, Euler Hermes Forderungsmanagement GmbH has relocated the main office of the company from Hamburg, Germany, to Paris, France, and the responsibility for risks insurance of cooperation with Ukrainian companies is now placed on office that is situated in Poland. At the same time the honor of receiving insurance coverage from Euler Hermes Forderungsmanagement GmbH is given only to the chosen Ukrainian companies. ?Generally, we make exceptions for those companies, that relate to transnational corporations and international groups?, - explains the director of Swiss office of Euler Hermes Forderungsmanagement GmbH, Mr. Christian Thury. As for the other Ukrainian importers, the mission of receiving trade credit for the guarantees of Euler Hermes Forderungsmanagement GmbH is almost impossible, unless the company demonstrates ideal conditions of payment discipline and acknowledged growth of main financial indicators. According to the opinion of Euler Hermes Forderungsmanagement GmbH credit committee, that regularly implements changes concerning the corporate internal risks map (Risk Map), this situation has taken place due to the fact that Ukraine still belongs to the list of countries that have a high risk indicator and has gained a D rate. This rating is characterized by ineffective governmental policy, long term liquidity crisis, week business environment, political instability and low ability to cope with the results of economic crisis. The methodology used by Euler Hermes is assigning each country a risk rating that reflects the country?s economic and political risk. The economic factors taken into account are the macroeconomic indicators (indebtedness, fiscal deficit, etc) and institutional and structural factors. The political factors taken into account are the efficiency and stability of the political system in place. The combination of these two types of indicators are reflected in a rating ? AA, A, BB, B, C or D; AA is the strongest rating. This classification constitutes a first filter for any credit limit request and influences the terms and conditions of cover extended by Euler Hermes. Contemporaneously, state Euler Hermes Kreditversicherungs-AG proceeds to insure Ukrainian companies at both crisis times and nowadays. Without a doubt, this tendency has persisted due to the efforts of German government that bares all the risks of national producers, by presenting such behavior it supports German trading system. But even taking into account these favorable circumstances the buyer company needs to totally comply with the requirements and criteria in order to receive required insurance coverage and payment delay, especially when it comes to long term financing with banks participation. At the same time the hope for better changes still exists, as other credit insurance corporations have recently improved credit rate of our country and continue resuming the export credit insurance. Atradius Credit Insurance N.V. Atradius is a privately owned organization and is the second biggest corporation by the occupied territory. Atradius credit export agency continuously increases its share on the international market of credit insurance. The changes within corporate structure have affected Atradius less than other companies. The main office is still located in Amsterdam, the Netherlands, and the office that is responsible for Ukrainian importer companies? inspection is situated in Kopenhagen, Denmark. This country has an outstanding system of state support for domestic producers, thus it has gained popularity under the name of Danish System. As the senior informational specialist of Atradius, Marc Willems, explains Atradius has not still opened the insurance over the territory of Ukraine, but some Ukrainian importers are still capable of having such opportunity if they totally comply with the standards and requirements of credit committee located in Denmark. As it has already been mentioned above if the producer or supplier is located in Denmark, the government will bare most of the risks and this will help to develop trade relations with national exporters. Although for the rest of importing Ukrainian companies the insurance is not accessible, right now it is essential to start the process of financial statements and legal documents organization and structuring in order to be prepared when the approaching moment of full credit insurance resumption comes. The rating position of Ukraine is being quarterly overlooked by Atradius credit committee and hopefully it will soon be improved. The stabilization of Ukrainian political system is the top factor to have a favorable impact over the decision of Atradius committee. Coface Coface is an export credit agency that finalizes the list of leaders among world top credit insurance organizations. It is a unique agency represented in Ukraine. Although in the future Coface will not be held responsible for export insurance risks in our country. This credit insurance corporation has also been affected by the process of responsibility zones redistribution among regions. From now on Austrian office will be now held responsible for issues concerning Ukraine and not the Polish as it used to be before. Apart from this, a number of positive changes about Ukrainian rating have occurred recently. These days Ukraine is no longer characterized by D criteria as before, but has received a D+, which will have a positive impact over the process of export credit resumption while working with Ukrainian companies according to the underwriter company. Other influential credit insurance corporations GIEK, Norwegian Guarantee Institute for Export Credits, is a state owned company that belongs to Norwegian government, but does not relate to multinational credit insurance corporations. The company has presented maximum of flexibility and has saved Ukrainian fish and seafood market having continued providing insurance coverage while cooperating with Ukrainian importers during the crisis. The company has headed towards most import companies and showed loyal attitude on the changes within corporate culture and general reduction of financial indicators. This issue has expanded the credit of trust that has resulted in obligations fulfillment by national parties. This aspect can be explained by provision of Norwegian governmental support to national producers. The similar behavior has been presented by other government credit export agencies, including Polish KUKE Export Credit Insurance Corporation JSC, MEHIB Hungarian Export Credit Insurance Pte Lt., Nationale Delcrederedienst (ONDD) and others. Nowadays this tendency has still remained and contributes to international trade relationship strengthening and development. More detailed read in IBcontacts OBSERVER
Posted: 24 December 2010, last updated 23 February 2011

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