Recent and planned changes in Finnvera’s financing options

During the current financial crisis, the State of Finland is prepared to take several measures to ensure the availability of financing for business deemed to be profitable. Finnvera’s ceilings on outstanding commitments both in domestic financing and for export credit guarantees were already raised at the turn of the year. By means of refinancing, Finnvera can ease the liquidity problems faced by export financiers. The legislative amendments concerning ceilings on outstanding commitments and refinancing entered into force at the start of the year.

As the latest project facilitating financing to enterprises, several new measures have been presented for Finnvera. These are based on proposals made by Minister Antti Tanskanen and published on 8 January.

On 13 January, the Ministry of Employment and the Economy recommended the adoption of a number of measures associated with SME financing, counter-cyclical products and financing for export enterprises. These measures will also have a bearing on Finnvera.

Ceilings on outstanding commitments raised at the start of the year

The total outstanding commitments arising from loans, domestic guarantees and export credit guarantees granted by Finnvera must remain below a ceiling set by law. Following the legislative amendment ratified by the President, the ceiling for domestic financing was raised from EUR 2.6 billion to EUR 3.2 billion. For export credit guarantees, the maximum liability rose from EUR 7.9 billion to EUR 10 billion. The amendment entered into force on 1 January 2009.

With greater demand for financing, higher ceilings on outstanding commitments make it possible to provide financing for an increasing number of projects deemed to be profitable. A financing decision is always based on a corporate analysis where it is investigated whether the company has the prerequisites for profitable business in the near future.

A new refinancing model into force

Liquidity problems among export financiers are eased by means of a refinancing model where a Finnish or foreign bank that finances a foreign buyer can transfer a buyer credit, in full or in part, to be financed by Finnvera’s subsidiary, Finnish Export Credit Ltd, if no other financing is available for the project at reasonable terms.

According to the Act that entered into force on 1 January, Finnish Export Credit can use at most EUR 1.2 billion for refinancing export projects.

In addition, the authorisation granted to Finnish Export Credit to conclude interest equalisation agreements and to give offers concerning export and ship credits between the years 1997 and 2010 was raised from EUR 5 billion to EUR 6 billion.

Proposals from Antti Tanskanen’s report

The report on the development of enterprise financing, drawn up by Minister Antti Tanskanen, contains several proposals pertaining to Finnvera’s activities. From among these proposals, the Ministry of Employment and the Economy decided on 13 January to recommend that the following be implemented:

• Raising the ceiling on outstanding commitments in domestic financing from EUR 3.2 billion to EUR 4.2 billion
• Adoption of counter-cyclical loans and guarantees within the limits of the above ceiling
• Raising the compensation paid by the State to Finnvera plc for credit and guarantee losses
• Raising the sum available for the refinancing of exports through the State’s acquisition of funds from EUR 1.2 billion to EUR 6.2 billion
• Raising the maximum liability for export credit guarantees by EUR 5 billion
• Provision of more capital to Finnvera in 2009–2012, owing to the increase in outstanding commitments

The annual authorisation to grant loans and guarantees raised

Each year, the Ministry of Employment and the Economy confirms the maximum sum that Finnvera can use annually for granting non-subsidised loans and guarantees. Owing to the more brisk demand for financing, this annual authorisation was first raised by EUR 60 million in autumn 2008 and by EUR 33 million before the end of the year.

The increases in the authorisation apply to non-subsidised loans and guarantees granted in 2008.

For further information, please contact:

Pauli Heikkilä, Managing Director, tel. +358 20 460 7321 or +358 400 429 210
Topi Vesteri, Executive Vice President, tel. +358 20 460 7238 or +358 400 702 002 (export financing)
Veijo Ojala, Executive Vice President tel. +358 20 460 7405 or +358 400 672 401 (domestic financing)

Leena Jaakkola, Senior Vice President, Corporate Communications and marketing, tel. +358 20 460 7232 or +358 40 352 9332