Financing operations
Financing
By providing financing, Finnvera influences the competitiveness of Finnish enterprises - their opportunities to operate and grow in Finland and to enter international markets. Finnvera can provide financing for most sectors.
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.
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.
Financing and outstanding commitments by business units
|
* Includes Loans, Guarantees, Export Guarantees and Export Credit Guarantees for SMEs
**Includes Export Credit Guarantees and Special Guarantees
|
Outstanding commitments (EUR bn) |
6/2022 |
2021 |
2020 |
2019 |
2018 |
|
Domestic financing* |
2.8 |
3.1 |
2.9 |
2.3 |
2.3 |
|
Export financing** |
22.0 |
22.2 |
22.0 |
25.2 |
23.3 |
|
Total |
24.8 |
25.3 |
24.9 |
27.4 |
25.6 |
* Includes Loans, Guarantees, Export Guarantees and Export Credit Guarantees for SMEs as well as guarantee and export guarantee receivables
**Includes Export Credit Guarantees and Special Guarantees
Domestic financing according to the industrial classification
|
Additional information:
Sectors Finnvera can not finance
The following sectors are not covered by Finnvera's financial operations in accordance with the legislation governing Finnvera's operations or the company's own policies:
- Farming and forestry*
- Founder contracting* and real estate investment
- * In these respects, Finnvera's financing activities are governed by the law on the state special financing company's credit, guarantee and private equity activities. Companies operating in special sectors of agriculture and forestry, such as greenhouse cultivation, fur farming, seedling growing, forestry services and timber harvesting, are eligible for financing.
- Financial, investment and insurance activities and business based on cryptocurrencies
- Gambling activities
- Pornographic Adult Entertainment
- Coal-fired power plants, coal mining and infrastructure projects in the sector **
- ** The limitation does not apply to metallurgical coal used in the manufacture of steel. Measures to reduce pollution from existing power plants are permitted when the life or capacity of the power plant does not increase. A power plant with CCUS technology (carbon capture, utilization and storage facilities) or its installation is not prohibited.
- Export guarantees for new peat power plant projects abroad
- Export credit guarantee applications to oil and gas projects, as of 1 January 2023:
- 1. No export credit guarantees will be granted for the exploration and drilling of new oil or gas fields or for significant extension of old fields or for fixed infrastructure built for these fields (e.g., oil pipelines).
- 2. Export credit guarantees will be granted for oil-fired power plants only in limited situations: reserve power plants or isolated electricity networks located in remote areas where other solutions are not feasible to ensure security of supply or enable use of renewable energy.
- 3. Export credit guarantees will be granted for gas-fired power plants only in limited situations:
- The power plant serves as a reserve or regulating power plant for renewable energy, or
- The power plant generates basic power and replaces energy production with higher emissions in the energy network, or the use of renewable energy is not justified.
- The fuel a power plant primarily uses during its life cycle is considered as its primary fuel.
- Finnvera publishes the guaranteed projects within the scope of the policy and their justifications according to its sectoral policy.
- The policy does not apply to:
- Trade financing (export credit guarantee project with a repayment period of less than 2 years) and projects in Finland
- Non-fossil fuel based energy production (e.g., energy production using biofuels, hydrogen) and sectors outside energy production (e.g., vessels)
- Power generation in energy-intensive sectors (e.g., paper and steel mills)
- Electricity and heat networks and power generation of critical infrastructure in society (e.g., hospitals, water utilities) and projects improving the state of the environment or safety
Regardless of the industry, significant negative environmental and social impacts are grounds for credit rejection.
Risk-taking
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.