The role of Finnvera in financing exports and internationalisation of Finnish companies. IFCO Brazilian Workshop Pori

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1 1 The role of Finnvera in financing exports and internationalisation of Finnish companies IFCO Brazilian Workshop Pori Erno Ihto, Senior Adviser Financing for Growth and Internationalisation

2 Finnvera plc 2 Specialised financing company Owned by the State of Finland Supervised by the Ministry of Employment and the Economy Promotes the competitiveness of Finnish enterprises Provides financing solutions for enterprises: start-up, growth, internationalisation and exports Loans, guarantees and export credit guarantees Pre-seed venture capital No grants

3 Finnvera plc Finnvera s outstanding commitments as at end of March 2011 Domestic SME financing loans and guarantees 3.1 billion Export financing (Finnish ECA) export credit guarantees, export guarantees and special guarantees 8.8 billion Rovaniemi Oulu Kajaani 3 Regional and Head Office Regional Office Representation Office clients Micro-enterprises SMEs Large enterprises 200 Entrepreneur Loan clients Personnel 400 Vaasa Pori Seinäjoki Jyväskylä Kuopio Joensuu Mikkeli Tampere Lahti Lappeenranta Turku Helsinki St. Petersburg

4 Finnvera operations and the market players 4 Private financing always plays the primary role. Public financing supplements and acts as a catalyst for private financing. We have close co-operation with Finnish and international banks in export and domestic SME finance. We do not compete with commercial banks / investors or development finance institutions. We are expected to adhere to the principle of economic self-sustainability. We can only finance business that has the prerequisites for profitability. All risks are rated and our loans & guarantees are priced according to perceived risk. We conduct counterparty due diligence similarly as and in co-operation with private commercial banks: -> country, bank, corporate and project analysis

5 Services to SMEs seeking global growth 5 Export Finance Financing for Internationalisation Working capital facilities Investment financing in Finland

6 Financing for Internationalisation 6 Granted as direct loan to a Finnish SME or as guarantee to its bank Purpose is to promote the internationalisation of Finnish SMEs financing investments / working capital of a subsidiary abroad acquisition of ownership in a foreign company can not be used in financing exports SME employs fewer than 250 people, its annual turnover < 50 mio or balance sheet total < 43 mio ; ownership has to be considered (EU definition) In our due diligence attention is paid to i.a.; Creditworthiness of the Finnish SME Country risks and business environment of the target country Finnish interest (not exporting jobs out of Finland) Feasibility study and business plan for internationalisation

7 Financing for internationalisation 7 Finland Target Country Bank Securities Guarantee Credit Parent SME Oy Dividends or repayments Subsidiary Finnvera Equity or shareholder s loan Finnpartnership Finnfund Equity or debt

8 Finnvera as the Finnish Export Credit Agency 8 We issue export credit guarantees to Finnish exporters and to international banks when Finnish interest is present (Finnish exports) We cover credit risks in export transactions i.e. we provide cover against political and commercial risks (non-payment risk of the counterparty) and share the risks with other financiers Our export credit guarantees can relate to individual buyer credits or credit lines supplier credits (open account or bills of exchange) documentary credits (at sight, deferred payment or standy-by) pre-export financing to the Finnish exporter We act in close co-operation with other ECAs and financiers for example OECD, EU, Berne Union, Paris club We apply the international agreements related to official export credits (e.g. OECD Consensus, EU and WTO)

9 Top 15 Countries as at December UNITED STATES RUSSIA BRAZIL SPAIN INDIA UNITED KINGDOM TURKEY SAUDI-ARABIA NORWAY INDONESIA JAPAN UNITED ARAB EMIRATES ESTONIA FRANCE IRAQ Commitments Offers Receivables EUR Million

10 Finnvera s Country Policy: Brazil 10 Country classification 3/7 - in accordance with other OECD ECAs Finnvera has a large exposure in Brazil (telecom, forest industries) No specific restrictions in country policy all guarantee decisions based on risk assessment of the counterparty. Stable political environment, growth oriented government External debt and other macro figures have improved Banking sector in good health Petrobras has a huge $ 225 bn investment plan for next five years. Possible difficulties in coping with expanded responsibilities soccer World Cup and 2016 Olympics challenges and opportunities

11 11 Thank you! Erno Ihto Senior Adviser Financing for growth and internationalization Finnvera Plc Tel: GSM: