Credit financing to improve the competitiveness of capital goods exporters
The Government of Finland has decided to enhance the options available for exporters of capital goods – in practice, large Finnish companies – when arranging financing for foreign buyers. A new permanent export credit transfer model was approved by the Cabinet Committee on Economic Policy in September. Adoption of the model will require legislative amendments, and the Government will present a Bill to this effect to Parliament. The amendments are scheduled to enter into force at the start of 2012.
According to the new permanent export credit transfer model, Finnvera’s subsidiary, Finnish Export Credit Ltd, will finance export credits arranged by commercial banks while the parent company, Finnvera, is responsible for the necessary acquisition of funds and liquidity management. The acquisition of funds is guaranteed by the State.
The objective is to ensure the competitiveness of Finnish export companies by improving arrangements for financing. Banks would still have a pivotal role in the new model. In the model, the credits granted by Finnish Export Credit are used for financing long-term export credits (a minimum of two years) arranged by a Finnish or foreign bank on the OECD terms. The arrangement always includes an export credit guarantee granted by Finnvera.
The total outstanding credits granted for export financing may not exceed EUR 3 billion
The current Finnish model for export financing is not competitive when compared against our principal competitor countries. The financing system based on export credit guarantees and interest equalisation involves problems stemming from the fact that commercial banks have fewer opportunities to provide long-term export financing, for instance, because of the new Basel III regulatory framework that will enter into force within a few years.
“Lack of trust between banks has diminished their possibilities to grant long-term export financing. For this reason, the financing model now planned will be taken into use at the right time,” says Executive Vice President Topi Vesteri, responsible for export financing at Finnvera.
Pauli Heikkilä, Managing Director, tel. +358 20 460 7321
Topi Vesteri, Executive Vice President, tel. +358 20 460 7238.
Ulla Hagman, Senior Vice President, Finances and IT, tel. +358 20 460 7409
Jyrki Wirtavuori, Managing Director, Finnish Export Credit, tel. +358 20 460 3502