Index for January 2014

Volume 13, Issue 1

• OECD Agreement on Export Credits for Rail Infrastructure enters into force

  The EU and several other OECD members have agreed to allow their export credit agencies to underwrite longer repayment terms for loans financing infrastructure. The deal, entered into force on 1 January 2014, will cover the export of trains, tracks, rail IT and related material and will be a boost for railway industries.

  The EU is home to some of the world's leading manufacturers of rolling stock, such as Alstom, Bombardier, Siemens, Talgo, Skoda and AnsaldoBreda. Europe is one of the world's largest markets for rail products.

  For further details see:
  http://www.oecd.org/tad/xcred/rsu.htm and Railway Gazette, 13 January 2014

• Controversial Danish railway purchase guaranteed by SACE

  Italy's "Ansaldobreda was awarded a contract in 2004 by Danish railways for 83 intercity trains worth a total of EUR 488 million, including an option for a further 67 trains. To guarantee this contract, SACE issued bonds for EUR 50 million. Ansaldobreda, a Finmeccanica company, is a world leader in the transport/mechanical sector and produces the new intercity trains in association with Pininfarina."  From page 39 of the SACE 2005 Annual Report  Following lengthy delays in delivery, including a report that AnsaldoBreda and then Italian prime minister Silvio Berlusconi gave Libyan dictator Muammar Gaddafi one missing trainset as a present on the occasion of the 40th anniversary of Gaddafi's revolution in 2009, Danish State Railways has taken over completion of the trains itself. Ansaldobreda has also been involved in the controversial cancelled sale of high speed trains to Dutch and Belgian rail operators. It is not known if SACE was involved in that sale.

• Italy’s SACE willing to cooperate with Belarusbank

  (BelTA, Minsk, 11 January 2014) – The Italian financial community is interested in cooperation with Belarusbank following the visit of a Belarusbank delegation to Italy's state-run export credit agency SACE. The visit was arranged with the assistance of Italian bank Intesa Sanpaolo. During talks with the Italian bank and the export credit agency the parties discussed a possibility to provide financial and insurance coverage for joint projects and a number of technicalities. “The representatives of SACE said they are ready to continue cooperation with Belarusbank within the framework of the existing projects. They also said they would provide insurance coverage on individual projects,” the press service informed. SACE is controlled by the Italian Ministry of Economy and Finance and facilitates and promotes trade relations of Italian companies with their partners worldwide through credit insurance, investment protection, the provision of sureties and financial guarantees. Belarusbank is Belarus’ biggest multi-business financial institution that offers over 100 banking products and services to individual and corporate clients. The Republic of Belarus holds nearly 98% of the authorized capital of the bank.

• Czech export bank and insurer targeted in police swoop

  (Czech Radio, Prague, 15 January 2014) Two state controlled Czech export credit and insurance institutions are at the centre of plans to boost the country’s export growth. But an expected strengthening of their role would appear to depend on dealing with problems from the recent past. Czech police swooped on the Prague headquarters of both institutions in dawn raids on January 15. State insurance company EGAP’s spokeswoman said police were primarily interested in contracts concerning around 10 export projects, which likely included the already well publicized problems concerning insurance for a Czech exporter to build glass works in Russia and Ukraine. The daily Lidové Noviny reported that one of the cases under investigation is the crashed deal to sell three Boeing 737 aircraft owned by Czech Airlines to Armenian airline Armavia.The incoming coalition government made up of Social Democrats, ANO, and the Christian Democrats has pledged to expand the role of ČEB and EGAP and use them to the utmost to help direct Czech exports away from the slumbering economies of the European Union to the high growth likes of Brazil, Russia, India, China, and South Africa.

• India’s SBI and the Export-Import Bank of Korea sign agreement for Line of Credit

  India's largest lender State Bank of India (SBI) and the Export-Import Bank of Korea (Korea Eximbank) today signed a loan agreement under which SBI would access a $200 million revolving line of credit from Korea Eximbank. A press release from SBI said it would utilise the line of credit, or interbank export loan, to finance the foreign currency requirements of Indian companies importing goods and services from South Korea.

• Indian ECA reluctant to take up $6-bn export deal

  (Indian Express, 27 January, Mumbai) At a time when India is leaving no stones unturned to boost exports and bring down current account deficit, Essar Steel is unable to execute a $6 billion steel products export deal as the domestic general insurers are reluctant to provide cover to the deal. Such a cover is necessary for the deal to ensure that if overseas buyers fail to pay the export proceeds, the banks which will be funding the deal can recover the amount from insurance companies. Without such a cover, banks and financial institutions will be  hesitant to take up financing big export deals. According to industry sources, Essar had approached state-owned Export Credit Guarantee Corporation (ECGC) which has a  monopoly in providing such covers but the latter responded with reluctance. “We were not comfortable with the idea taking up such a big export deal. If we take such a huge cover, it will exceed our exposure norms,” said a senior ECGC official.