Financial Support for Exporters - BGK · Financial Support for Exporters Examples of the supported projects Mexico 8 Hotel construction equipment EUR 99.2 mln In execution Belarus

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Financial Support for Exporters

Government Programme

Warsaw, 2015

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Agenda

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1. Bank Gospodarstwa Krajowego – Polish Development Bank

2. Government Programme Financial Support for Exporters

3. Short-term export support facilities

4. Long-term export support facilities

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1. Bank Gospodarstwa Krajowego General Information

• Established in 1924

• 100% state-owned

• Operates on the basis of Act on BGK (very strong implicit State guarantee)

• Fitch: Long-term Issuer Default Rating (IDR): A- level equivalent to a rating of Poland; A in national currency

• Governance:

Supervisory Board: representatives of Ministers competent in matters of State Treasury, economy, construction industry, spatial and housing management, transport, regional development. Chairperson and members of the Supervisory Board are appointed by the Minister of Finance

Management Board

• Operates in the area of the whole Poland:

Headquarters in Warsaw

Branch in every capital of voivodeship

Cash service in more than four thousand partner branches

• Subject to Bank Law

• Subject to Polish Financial Supervision Authority

• Zero risk weight of guarantees and warranties issued by BGK within governmental programmes

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1. Bank Gospodarstwa Krajowego Strategic objectives and tasks

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Bank of the first choice for the execution of state-commissioned tasks (state funds and socio-economic development programmes)

Funds provider for execution of Polish Investments Programme

Leading bank in the filed of financing and providing services to local governments, communal companies and health care institutions

Organiser of effective operation model in the field of warranties and guarantees for entrepreneurs (PLG de minimis)

Bank managing governmental programmes and funds in the field of infrastructure developing and modernising (communal, housing, related to transport and nature preservation infrastructure)

Organizer of funds and system of export support

Bank supporting absorption of EU funds

Leading institution in the process of public finance consolidation

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Agenda

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2. Government Programme Financial Support for Exporters Basic assumptions

• BGK’s strategic role is to organize a Polish exports support system based, among

other things, on the government programme adopted by the Cabinet on 30 July

2009

• The Programme was established for stimulating development of Polish export by

facilitating access to credits financing exports of Polish products and services.

• Thanks to adding new products to the programme in 2012, BGK grants from its

own funds credits to:

foreign buyers of Polish products and services or

their banks and

Polish exporters for realization of the export contracts.

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2. Government Programme Financial Support for Exporters Basic condition of obtaining support - Polish origin of the products – Every business entity registered in Poland as well as importers of Polish goods may apply for

facilities offered within the programme.

Maximum percentage share of foreign-origin components in the net revenues form

performance of an export contract shall be as follows:

• 70% in case of an export contract concluded for a credit period of less than two years,

• 60% in case of an export contract concluded for a period of two years or more ,

except for

• among others: computer systems, electronic computation equipment, electrical,

electronic and telecommunication products whose share is 80%,

• construction services whose share is 90%.

7 Minister of Economy Regulation of 19th December 2014

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2. Government Programme Financial Support for Exporters Examples of the supported projects

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Hotel construction

EUR 99.2 mln

Russia In execution

Mineral wax plant

EUR 48.2 m

Belarus In execution

Mining equipment

EUR 15.0 m

Mexico 2012

Railroad vehicles

EUR 10.2 m

Belarus 2012

Demilitarisation works

EUR 5.9 m

Azerbaijan

2011

Construction machines

EUR 1.5 m

Serbia 2013

Vacuum heater

EUR 9.2 m

Ukraine 2013

Meat proccessing line

EUR 2.5 m

Cold meats production equipment

EUR 13.5 m

Belarus 2014

Belarus 2014

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2. Government Programme Financial Support for Exporters Volume and structure of the support

0

100

200

300

400

500

2010 2011 2012 2013 2014

volume of the credits volume of the contracts

Total support granted within the programme (EUR m)

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65,0%

25,0%

2,0%

1,0% 2,0% 5,0%

Belarus Russia

Ukraine Serbia

Azerbaijan Mexio

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2. Government Programme Financial Support for Exporters Advantages for importers and exporters

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Advantages for exporter Advantages for importer

Complementing Exporter’s commercial offer with financing facility for his

contractor

Risk transfer from Exporter to BGK (without recourse to Exporter)

Disbursement immediately after the presentation of documents

Possibility of trade credit refinancing

Providing funds for production for export

Importers are provided with financing for purchases of Polish goods and services

Low cost of financing (state support and ‘non-profit’ formula)

Repayment period 5/7/10 years

Credit currency: EUR or USD

Stable and liable Polish state Bank as a Lender

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Export support facilities offered by BGK

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Short-term credits Long-term credits

• L/C postfinancing

• L/C discounting

• L/C confirming

• Buyer’s bank credit

• Buyer’s credit

• Receivables purchasing

Credits granted to buyer’s bank Credits granted directly to importer

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2. Government Programme Financial Support for Exporters Countries where banks, for which BGK has already established possibilities for export finance cooperation, have their seats

If needed, other foreign banks and countries can be reviewed and added to the list

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Agenda

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3. Short-term export support facilities Terms and conditions

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Type of credit Financing based on Importer’s bank standing, based on letter of credit

Max repayment period

2 years

Amount up to 100% of the L/C amount, no minimal amount

Countries all countries except: European Union, Australia, Canada, Iceland, Japan, New Zealand, Norway, Switzerland, USA

Aim financing exports of both investment and consumption goods

Currency PLN, EUR, USD

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3. Short-term export support facilities L/C postfinancing

• cost of credit – borne by importer

• for L/Cs paid a vista

Exporter (deliverer)

Importer (buyer)

1 Contract

3 Delivery/service

6 Payment to

the exporter

4 Documents

7 Repayment

2 Issue of L/C

Buyer’s bank

2 Issue of L/C

7 Repayment

5 Guarantee Cash

Documents

Products/services

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3. Short-term export support facilities L/C discounting

• cost of credit – borne by exporter

• for L/Cs with deferred payment

• for account holders only


Importer (buyer)

1 Contract

3 Delivery/service

6 Payment to

the exporter

4 Documents with

discounting order

7 Repayment

2 Issue of L/C

Buyer’s bank

2 Issue of L/C

7 Repayment

5 Guarantee Cash

Documents

Products/services

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3. Short-term export support facilities L/C confirming

• confirmation commission borne by exporter

• 0,25 – 0,40% (depending on risk category of the country of the issuing bank seat) of the L/C amount for every commenced quarter of L/C validity, paid up-front

• for L/Cs with confirmation order, paid a vista or with deferred payment


Importer (buyer)

1 Contract

4 Delivery/service

6 Payment

5 Documents and

determination of compliance

2 Issue of L/C

Buyer’s bank

2 Issue of L/C

7 Settlement

3 Guarantee Cash

Documents

Products/services

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Agenda

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4. Long term export support facilities Direct financing for importer (buyer’s credit and receivables purchaising)

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Type of credit importer’s balance sheet based financing, project finance no-recourse basis (based on SPV) and recourse against the sponsor basis

Amount of credit at least EUR 10 m

Tenor of financing

up to 28 months contract execution period and repayment period from 2 to 10 years *

Structure of financing

bilateral or consortium credits


Documents in case of buyer’s credit prepared by external legal advisor based on LMA standards, in Polish or English

Countries no exceptions

Pricing case-by-case, based on transaction risk profile

* Other tenor of financing is possible – according to OECD regulations

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4. Long term export support facilities Buyer’s credit

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1 Contract

5 5 Delivery/service

7 Payment to

the exporter

6 Documents

Importer (buyer)

2 Loan agreement

4 Condition precedent

8 Repayment

Guarantor

3

Guarantee (if necessary)

2 Insurance

Cash

Documents

Products/services

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4. Long-term financial facilities Financing for importer through a buyer’s bank (Buyer’s bank credit)

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Type of credit financing based on the assessment of importer’s bank standing

Min. repayment period

2 years

Amount of credit

up to 85% of the contract value, at least EUR 1 m

Countries all countries

Cost of credit borne by importer

Aim investment export financing


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4. Long-term financial facilities Buyer’s bank credit


Importer (buyer)

1 Contract

4 Delivery/service

6 Payment to

the exporter

5 Documents

7 Repayment

2. Credit

agreement

Buyer’s bank

2 Credit agreement

7 Repayment

3 Insurance

Cash

Documents

Products/services

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Bank Gospodarstwa Krajowego Al. Jerozolimskie 7

00-955 Warszawa

www.bgk.pl/en

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Andrzej Latoszek tel. +48 22 599 83 08 e-mail: [email protected]

Karol Jakubaszek tel. +48 22 599 83 07 e-mail: [email protected]

Joanna Mularczyk tel. +48 22 596 58 05 e-mail: [email protected]

Agata Wilińska tel. +48 22 599 81 64 e-mail: [email protected]