Finnvera as an export finance provider
Finnvera secures Finnish exports
For their part, financing arrangements enable the success of Finnish companies in international competition. Our clientele comprises not only companies but also domestic and international banks and financial institutions.
We follow the principle of sustainable development in compliance with the Act on the State’s Export Credit Guarantees and comply with internationally accepted principles and procedures for assessing environmental and social impacts. By managing environmental, social and governance risks, we ensure the accountability and risk management of our financing operations.
Country classification as the framework for risks to be covered
Our country policy and country categories create the framework for covering export risks. We classify countries into eight categories depending on their ability to manage their external liabilities, their political stability and legislative framework, and their economic outlook. The country risk classification is based on methods widely used by export credit agencies as well as payment experiences, according to which the countries are classified together in the OECD. Finnvera’s risk-taking is based on our country-specific guarantee policy, as considerable differences may exist between countries even if they are classified in the same category. We monitor the countries’ economic and political situations, and review the category of each country is at least once a year.
The country categories affect the level of guarantee premiums and the required countersecurity or payment terms.
Political and Commercial risks
Political risks are related either to the home country of the foreign buyer or borrower or to a third country, where the political situation can cause the exporter, investor or provider of financing to incur a credit loss.
Commercial risks arise from foreign banks, companies or project companies, usually those located outside the OECD. These risks are covered by Finnvera's export credit guarantees for commercial risks.
Finnvera's regional managers monitor the development of different countries and markets from the export financing’s point of view. Country categories and contact details of the regional managers for different markets can be found on the Finnvera's country risk classification map.
Restrictions of export credit guarantees
Restrictions of export credit guarantees
As a public export credit agency, under the EU competition law Finnvera cannot guarantee so-called marketable risks, or risks that private insurance companies are prepared to cover. Consequently, in a normal market situation Finnvera cannot grant guarantees with a short-term risk period of less than 2 years (manufacturing period + repayment period) for exports to many Western industrial countries or EU countries.
Exceptions to this restriction have been made, however, for example due to economic cycles.
The EU regulation on transactions with a risk period of less than two years in market risk countries does not apply to insuring bank risks. This means that Finnvera may consider granting a guarantee to these countries following the risk sharing principle.
Domestic interest
In public export credit guarantee and export financing operations, the degree to which the export transaction benefits Finland’s national economy, or serves domestic interest, is one of the factors taken into account. Domestic interest is directly realised if the Finnish content (costs and purchases from Finland and the profit margin) of the export project is significant. The Finnish content is considered significant if it accounts for more than 27% of the export project’s value (including local costs) or 33% of the export credit amount. This applies when the repayment term of the export credit is more than 2 years.
Principles guiding export credit guarantee operations and corporate responsibility
We follow international rules on export financing and are actively involved in international development and cooperation. The purpose of international regulations and agreements on export credit guarantees is to curb countries’ attempts to compete with their export credit terms.
Intergovernmental cooperation takes place within the framework of the OECD and European Union. The aim is to create a level playing field for exporters in the member states.
We comply with international principles and recommendations as well as Finnvera's own policies related to corporate responsibility.
