Approval of the Acts on the new ceilings for Finnvera’s outstanding commitments
The Acts enabling higher ceilings on Finnvera’s outstanding financial commitments are approved and the new ceilings will come into effect in June 15th 2009. The ceiling on outstanding commitments for export financing will rise from EUR 10 billion to EUR 12.5 billion, and for domestic financing from EUR 3.2 billion to EUR 4.2 billion.
By raising the maximum sums on outstanding commitments, the government wants to ensure that Finnvera is able to finance enterprise operations deemed to be profitable even during the current financial crisis. The ceilings on outstanding commitments were last raised at the beginning of 2009. The higher ceilings are applied for a fixed term, and they will be reviewed when the situation on the financial market has been normalised.
At the beginning of June, the demand for Finnvera’s domestic financing, in monetary terms, was about 61 per cent higher than at the same period one year ago. In monetary terms, in the same period the demand for export financing fell, but the number of applications was 110 per cent higher than last year..
Refinancing means an additional EUR 2.5 billion in maximum outstanding commitments for export credit guarantees
Finnvera’s subsidiary, Finnish Export Credit Ltd, has been able to offer credits according to the refinancing model since the beginning of this year. A bank that is financing exports can transfer a buyer credit, in full or in part, to be financed by Finnish Export Credit Ltd. The FEC financing is available only in situations where an export transaction could be materially hampered due to non-availability of funding on competitive terms.
Refinancing projects are always accompanied by Finnvera’s export credit guarantee; for this reason, the ceiling on outstanding commitments for export credit guarantees was raised to EUR 12.5 billion. When the outstanding commitments are calculated, the principal of the guarantees that have come into effect is taken into account in full, whereas only half of the principal of binding offers given is included in the calculation.
Finnish Export Credit can use at most EUR 3.7 billion for refinancing export projects. The total value of the refinancing offers given by the end of May was EUR 0.5 billion.
EUR 1 billion more for outstanding commitments in domestic financing
The outstanding principal of credits granted by Finnvera for domestic financing and the amount of guarantees in effect cannot exceed EUR 4.2 billion. The purpose of the higher ceiling on outstanding commitments is to ensure that SMEs continue to have uninterrupted access to financing even though the financial crisis has made it more difficult for them to acquire financing on normal market terms.
As part of the stimulus package, Finnvera started to grant counter-cyclical loans and guarantees at the beginning of March. For a three-year period, Finnvera can grant these counter-cyclical products to companies that have encountered temporary financial difficulties. The total sum that can be granted is about EUR 900 million. To be eligible for counter-cyclical financing, the company must have the prerequisites for profitable business once the economic situation has improved. Another prerequisite for counter-cyclical financing is that other financiers reschedule their receivables. The total value of the counter-cyclical financing granted was almost EUR 100 million in the beginning of June.
Additional information:
Pauli Heikkilä, Managing Director, tel. +358 20 460 7321
Topi Vesteri, Executive Vice President, tel. +358 20 460 7238 (Financing of exports)
Veijo Ojala, Executive Vice President, tel. +358 20 460 7405 (Domestic financing)
Leena Jaakkola, Senior Vice President, Communications and Marketing, tel. +358 20 460 7232 or +358 40 352 9332
