Financing operations

By providing financing, Finnvera influences the competitiveness of Finnish enterprises - their opportunities to operate and grow in Finland and to enter international markets.

Finnvera enables comprehensive financing solutions that encompass the Finnvera Group's own products and the services offered by other public and private financiers.

Finnvera provide its clients with loans, guarantees, venture capital investments and export financing services.

Within the Finnvera Group, venture capital investments are carried out by Finnvera's subsidiary Veraventure Ltd.

Finnish Export Credit Ltd, another subsidiary of Finnvera, administers the interest equalization system for officially supported export credits and domestic ship financing in accordance with the OECD Arrangement.

Domestic financing granted; Loans, Guarantees and Export guarantees
	1 Jan-31 Dec 2020	1 Jan-31 Dec 2019	Change
Me	1,608	925	74%
Number	9,793	6,888	42%
Restructurings of financing
	1 Jan-31 Dec 2020	1 Jan-31 Dec 2019	Change
Number	13,951	5,170	170%

Domestic financing according to the industrial classification 2017-2020    2020   2019   2018   2017     Eur million % Eur million % Eur million % Eur million % Industry 787.2 49% 526.1 57% 493.6 56% 525.1 59% Services for business 358.1 22% 189.7 21% 172.4 19% 171.6 19% Commerce and consumer services 266.1 17% 142.6 15% 151.1 17% 130.2 15% Tourism 174.2 11% 54.6 6% 58.3 7% 57.3 6% Agricultural industries 21.6 1% 11.9 1% 10.2 1% 12.7 2% Total 1607.7 100% 924.7 100% 885.7 100% 896.9 100%

Financing and outstanding commitments by business units

Offered financing (EUR bn) 2020 2019 2018 2017 2016 Domestic financing* 1.7 1.0 0.9 1.0 1.0 Export financing** 2.9 5.2 3.0 7.5 4.2 Total 4.6 6.2 3.9 8.5 5.3

* Includes Loans, Guarantees, Export Guarantees and Export Credit Guarantees for SMEs

**Includes Export Credit Guarantees and Special Guarantees

Outstanding commitments (EUR bn)	2020 (30 June)	2019	2018	2017	2016
Domestic financing*	2.8	2.3	2.3	2.5	2.6
Export financing**	24.2	25.2	23.3	22.2	18.1
Total	27.0	27.4	25.6	24.7	20.7

The commitments figures are updated quarterly

* Includes Loans, Guarantees, Export Guarantees and Export Credit Guarantees for SMEs
**Includes Export Credit Guarantees and Special Guarantees

Finnvera's Half-Year Report 2020

Annual Report 2019

Controlled risk-taking is an integral part of Finnvera’s operations. According to the goal of self-sustainability set for Finnvera’s operations, income received from commercial operations must, in the long-run, cover both the company’s own operating expenses and the credit and guarantee losses for which it bears responsibility.

Ultimately, Finnvera operates under the aegis of the State and is able to assume greater credit risk than private financial institutions. In accordance with the Government's commitment from 2018 the State will compensate 50 per cent of the credit losses resulting from financing granted to SME and midcap enterprises. Losses resulting from these operations and remaining after the State’s compensation for credit losses are covered from the reserve for domestic operations on the balance sheet. Due to the coronavirus pandemic, the State’s loss compensation was raised from 50 per cent to 80 per cent retrospectively from the beginning of 2020.

Credit risks are shared between Finnvera and other providers of financing. Loans and guarantees are almost always granted without full collateral. Financing is based on the assessment of risks and the enterprise’s potential for success and on the effectiveness of financing.

The financing offered by Finnvera is priced on the basis of the assessment of the recipient’s business risks and the collateral available. In recent years, Finnvera has increased its risk-taking both in the financing of companies’ domestic operations and in the financing of exports. Credit losses incurred by Finnvera annually have been about 2 to 3.5 per cent of the total exposure.

The pricing of export credit guarantees is based on the risk category reflecting the relevant credit risk. Any export financing losses are covered primarily from profits arisen in previous years that have been transferred to the reserve for export credit guarantee and special guarantee operations on Finnvera’s balance sheet.

Turnaround

The monitoring of client companies’ financial and operational situation is part of Finnvera’s risk management. Finnvera’s aim is to respond to any weakening in the client enterprise’s situation as early as possible in order to secure viable business.

If the enterprise’s normal development measures do not produce the desired results, it is justified to consult outside professionals. Finnvera’s own turnaround experts assist clients in seeking help.

In the best of cases, turnaround means that the enterprise solves its financial difficulties and continues its operations profitably and competitively. For Finnvera, successful turnaround means smaller credit losses. Rapid and expert turnaround is also useful for society: it can help the company to avoid the possibly impending bankruptcy and loss of jobs.

Technically, turnaround is generally implemented using either voluntary turnaround or official restructuring, as referred to in the Restructuring of Enterprises Act. Sometimes the only alternative remaining is bankruptcy, but even in these cases the viable part of the business can often be sold to a new owner.