financial support for exporters - bgk

204/204/204

218/32/56

118/126/132

183/32/51

227/30/54

Financial Support for Exporters

Government Programme

Warsaw, 2015

204/204/204

218/32/56

118/126/132

183/32/51

227/30/54

Agenda

2

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

204/204/204

218/32/56

118/126/132

183/32/51

227/30/54

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

3

204/204/204

218/32/56

118/126/132

183/32/51

227/30/54

1. Bank Gospodarstwa Krajowego Strategic objectives and tasks

4

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

204/204/204

218/32/56

118/126/132

183/32/51

227/30/54

Agenda

5





204/204/204

218/32/56

118/126/132

183/32/51

227/30/54

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.

6

204/204/204

218/32/56

118/126/132

183/32/51

227/30/54

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

204/204/204

218/32/56

118/126/132

183/32/51

227/30/54

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

8

Hotel construction

EUR 99.2 mln

Russia

Mineral wax plant

EUR 48.2 m

Belarus

Mining equipment

EUR 15.0 m

Mexico

Railroad vehicles

EUR 10.2 m

Belarus

Demilitarisation works

EUR 5.9 m

Azerbaijan

Construction machines

EUR 1.5 m

Serbia

Vacuum heater

EUR 9.2 m

Ukraine

Meat proccessing line

EUR 2.5 m

Parcel lockers

USD 36.7 m

Canada

Belarus

Purchase of receivables

EUR 18.7 m

Ship construction

EUR 16.0 m

Netherlands

Russia

204/204/204

218/32/56

118/126/132

183/32/51

227/30/54

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

Total support granted within the programme (EUR m)

9

55% 25%

7% 4%

4% 3% 1% 1%

Belarus Russia

Canada Netherlands

Mexico Ukraine

Serbia Azerbaijan

0100200300400500600

credit volume contract volume

204/204/204

218/32/56

118/126/132

183/32/51

227/30/54

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

10

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

204/204/204

218/32/56

118/126/132

183/32/51

227/30/54


Export support facilities offered by BGK

11

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

204/204/204

218/32/56

118/126/132

183/32/51

227/30/54

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

12

204/204/204

218/32/56

118/126/132

183/32/51

227/30/54

Agenda

13





204/204/204

218/32/56

118/126/132

183/32/51

227/30/54

3. Short-term export support facilities Terms and conditions

14

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

204/204/204

218/32/56

118/126/132

183/32/51

227/30/54

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

15

204/204/204

218/32/56

118/126/132

183/32/51

227/30/54

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

16

204/204/204

218/32/56

118/126/132

183/32/51

227/30/54

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

17

204/204/204

218/32/56

118/126/132

183/32/51

227/30/54

3. Short-term export support facilities Costs of short-term financing

Example Tenor of financing: 1 year

Russia, Tunisia

Belarus, Ukraine, Pakistan

Kazachstan, Azerbejdżan,

Nigeria

Serbia, Georgia,

Uzbekistan, Mongolia

EUR USD EUR USD EUR USD EUR USD

Annual cost of credit and insurance* (%)

1.17 1.83 1.79 2.58 1.37 2.08 1.55 2.27

rate for buyer = rate for buyer’s bank + buyer’s bank margin

Exporter bears costs in line with BGK fee schedule , while importer in line with issuing bank’s fee schedule.

* Calculation based on EURIBOR and LIBOR USD as of 21.08.2015 and BGK’s margin valid in 3Q 2015

204/204/204

218/32/56

118/126/132

183/32/51

227/30/54

Agenda

19





204/204/204

218/32/56

118/126/132

183/32/51

227/30/54

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

20

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

204/204/204

218/32/56

118/126/132

183/32/51

227/30/54

4. Long term export support facilities Buyer’s credit

21


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

204/204/204

218/32/56

118/126/132

183/32/51

227/30/54

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

22

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


204/204/204

218/32/56

118/126/132

183/32/51

227/30/54

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

23

204/204/204

218/32/56

118/126/132

183/32/51

227/30/54

4. Long-term financial facilities Costs of long term financing – bank to bank credits

Example Tenor of financing: 5 years Repayment period: 1 year

Russia, Tunisia

Belarus, Ukraine, Pakistan

Kazakhstan, Azerbaijan,

Nigeria

Serbia, Georgia,

Uzbekistan, Mongolia

Fixed rate - CIRR (%) – p.a. EUR USD EUR USD EUR USD EUR USD

0.83 2.03 0.83 2.03 0.83 2.03 0.83 2.03

Administration commission (paid annually) (%)

0.70 0.70 0.70 0.70

KUKE insurance premium for five-year period (paid in one amount) (%)*

3.55 8.79 5.17 6.72

rate for buyer = rate for buyer’s bank + buyer’s bank margin

CIRR valid from 15.09.2015 to 14.10.2015

*Data for debtors whose rating is equal to state rating 24

204/204/204

218/32/56

118/126/132

183/32/51

227/30/54

Bank Gospodarstwa Krajowego Al. Jerozolimskie 7

00-955 Warszawa

www.bgk.pl/en

25

Michał Wosik tel. +48 22 522 91 05 e-mail: [email protected]

Should you be interested in direct financing, please contact:

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]

Elżbieta Bugalska tel. +48 22 599 83 17 e-mail: [email protected]

Karol Rozenberg tel. +48 22 522 93 76 e-mail: [email protected]