Financial Instruments for Export Support

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Governmental Programme

Financial Support for Exporters

Information for buyer

June 2013

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BGK – the state development bank of Poland

BGK supports Polish economy by:

Managing state funds, e.g: The National

Road Fund

Managing government programs, e.g:

Exports Support, Polish Investments

Providing commercial offer for local

governments and enterprises

BGK, established in 1924, is the only state-owned

bank in Poland.

Total assets of 27 billion EUR.

Active cooperation with public institutions,

including local governments.

BGK branches

• Fitch: Long-term Issuer Default Rating (IDR): A-

equal to Polish state rating

• Very strong implicit State guarantee


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Advantages for importer:

• importers are provided with financing for purchases of Polish goods and services

• importers are insured against not receiving products or services despite paying for

it

• preferential cost of financing

• repayment period up to 5/10/12 years

• financing in USD, EUR

• importer can deal with exporter on sight basis, negotiate better contract terms

• grace period for the whole time of contract / project execution

• possibility of single instalment repayment for loans with duration up to 2 years

BGK grants to foreign importers (directly or through the importers’ banks) credits

for financing purchases of goods and services of Polish origin. Polish supplier

delivers goods or provides services to the importer and the importer pays for

delivery after deferment period. Total volume of available preferential loans in

BGK amounts to 1.4 bln EUR.


Governmental Programme


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hotel construction near Vnukovo airport in Moscow Contract value:

99.2 million EUR

finishing works in office and hotel centre

in Saint Petersburg

Contract value:

65.9 million EUR

Examples of the projects financed

within the Programme (Russia)


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Buyer’s country Product/service Contract value

(mln EUR)

Belarus construction of Viktoria hotel in Minsk 47.7

Belarus rolling stock 10.2

Azerbaijan delivery and assembly of demilitarisation works 4.8

Belarus production lines for cheesemaking and salting 4.6

Belarus traditional cottage cheese production lines 2.0

Serbia construction machines (bulldozers and pipelayers) 1.5

Ukraine delivery of conveyor belts 1.2

Examples of the projects financed

within the Programme (other countries)


Product

Conditions

Buyer’s credit granted

through the Buyer’s

Bank

Buyer’s credit (direct) Receivables

purchasing

Origin of products (services) Polish1

Buyer’s country any country

Aim financing foreign buyers of goods and services of Polish origin

Credit costs borne by buyer

Type of products (services) investment goods

Minimum credit amount 1 mln EUR 10 mln EUR

Buyer’s bank participation yes no

Repayment period from 2 years

Credit amount up to 85% of contract value

Financial Support for Exporters - instruments for long term financing

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1 defined in the Order of the Minister of Economy of 6th August 2001 (Polish Journal of Laws of 2001, No. 101, Item 1097).

In general, the foreign content must not exceed 50% of the value of the exported product or service, exceptions are defined in the Order for certain

industries:

- optical fiber, agricultural and sports aircrafts, pharmaceuticals: 60% - electronic products: 80% - construction services: 90%


Buyer's credit granted through Buyer’s Bank

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2. BGK and buyer’s bank conclude a credit agreement.

Buyer’s bank conclude credit agreement with buyer.

3. BGK insures the credit with KUKE.

4. Exporter performs the contract.

5. Exporter submits commercial documents confirming delivery

of goods / completion of services to BGK.

6. BGK makes a disbursement of credit, making a direct

payment to exporter and simultaneously debiting credit

account with the amount of the disbursement. In turn, buyer

is debited with the disbursed amount, under relevant credit

agreement concluded between buyer’s bank and buyer.

7. Buyer repays the credit to his bank and, irrespective of that

repayment, buyer’s bank repays the credit to BGK.

BUYER of Polish products

or services

1. Buyer and exporter conclude export contract.

POLISH

EXPORTER

BUYER’S

BANK

1

7

3

4

5 6 2

7

2

Transfer of funds

Transfer of goods

Transfer of documents


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Buyer’s credit (direct)

2. BGK and buyer conclude credit agreement.

3. BGK insures credit with KUKE.


5. Exporter submits commercial documents confirming delivery

of goods / completion of services to BGK.

6. BGK makes a disbursement of the credit, making a direct

payment to Exporter and simultaneously debiting the credit

account with amount of the disbursement.

7. Buyer repays the credit in installments, in accordance with

schedule prepared by BGK.

BUYER of Polish products

or services

POLISH

EXPORTER

7

1

4

2

3

5 6

Transfer of funds

Transfer of goods



1. Buyer and exporter conclude export contract.

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BUYER of Polish goods

POLISH

EXPORTER

5 7 6 3

1. Exporter concludes a contract with buyer on terms of a

supplier credit (grants trade credit to importer for purchase

of products/services).

2. Exporter insures the receivable resulting from export

contract with KUKE.

3. Exporter applies to BGK for future receivables purchaising.

BGK analyses economic and financial condition of debtor

and makes decision in relation to the purchase.


5. Exporter concludes receivables purchasing agreement with

BGK.

6. Exporter submits commercial documents confirming

delivery of products or completion of services to BGK.

7. Receivables purchasing – BGK disburses money to

exporter.

8. Buyer repays the dues to BGK.

Export receivables purchasing

8

1

4

2

Transfer of funds

Transfer of goods


New


0. It is recommended that exporter contact BGK before

concluding a contract in order to establish contractual

provisions complying with the requirements of the Program,

which would facilitate arrangement of the purchase

transaction.

Product

Conditions

Prefinancing Discounting

receivables from L/C

Documentary L/C

post-financing

Origin of goods (services) Polish1

Buyer’s country any country non-marketable risk countries2

Aim production for export financing foreign buyers of goods and services

of Polish origin

Credit costs borne by exporter buyer

Type of products (services) any products

Minimum credit amount not applicable

Buyer’s bank participation no yes

Repayment period up to 2 years

Credit amount up to 100% of contract value

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Financial Support for Exporters - instruments for short term financing

2 all countries except EU members, Canada, USA, Japan, New Zealand, Iceland, Norway, Switzerland and Australia.

1 defined in the Order of the Minister of Economy of 6th August 2001 (Polish Journal of Laws of 2001, No. 101, Item 1097).

In general, the foreign content must not exceed 50% of the value of the exported product or service, exceptions are defined in the Order for certain industries:

- optical fiber, agricultural and sports aircrafts, pharmaceuticals: 60% - electronic products: 80% - construction services: 90%


Credit for exports prefinancing

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2. Exporter submits application to KUKE for a guarantee

issued in favour of BGK.

3. Exporter concludes credit agreement with BGK.

KUKE issues the guarantee.

4. Exporter submits the guarantee to BGK and meets all

other requirements to get credit disbursement.

7. BGK pays for the invoices preseted by exporter – credit

disbursement.

4 3

3

1

5

1. Exporter submits credit appliction together with a set of

required documents to a BGK branch.

Importer and Exporter conclude an export contract or prepare a

project of an export contract.

0.

Exporter’s

SUPPLIER

POLISH

EXPORTER

7

2

Bra

nch

5. Supplier sells products/services to exporter and draws up

invoices.

6. Exporter presents the invoices in BGK.

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Credit is repaid by exporter from his own funds or other credits

granted by BGK within the Program.

8.

Transfer of funds

Transfer of goods



Documentary L/C post-financing

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2. BGK and the issuing bank (buyer’s bank) establish

postfinancing terms. Buyer’s bank issues L/C with a

postfinancing option by order of buyer.


3. Exporter performs the export contract.

4. Exporter presents documents required under the L/C in

connection with the shipment/delivery at BGK counters.

6. BGK pays to the exporter and at the same time debits issuing

bank’s credit account. Buyer’s bank grants credit to buyer.

7. Buyer repays the credit to his bank and, irrespective of that

repayment, issuing bank repays the credit to BGK.

1. Exporter and buyer conclude export contract. POLISH

EXPORTER

BUYER of Polish goods and

services

BUYER’S

BANK

1

7

3

7

2

5

4 6

Transfer of funds

Transfer of goods



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Discounting receivables from L/C

2. Buyer’s bank issues a letter of credit available by deferred

payment by order of buyer.

4. Exporter presents documents required under the L/C in

connection with the shipment/delivery at BGK counters

together with a request to discount L/C proceeds.

6. BGK disburses money to the exporter after deducting discount

interest.

7. Buyer’s bank pays BGK according to the L/C terms.

POLISH

EXPORTER

BUYER of Polish goods and

services

BUYER’S

BANK

1

3

5

4 6

Transfer of funds

Transfer of goods


7

7

2


1. Exporter and buyer conclude export contract.

3. Exporter performs the export contract.


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India, Russia, Algeria Belarus, Moldova,

Ukraine, Iraq

Azerbaijan,

Kazakhstan, Vietnam

Armenia, Georgia,

Uzbekistan

Short-term financing Repayment period: up to 2 years

(any kind of goods and services)

Example. Repayment period: 1 year.

EURIBOR12M 0.52% 0.52% 0.52% 0.52%

Margin (incl. KUKE's insurance premium) 1.12% 1.99% 1.48% 1.70%

Total annualized credit rate (incl. insurance

premium) 1.64% 2.50% 2.00% 2.21%

Long-term financing Repayment period: from 2 to 5 years

(only capital goods and services)

Example. Repayment period: 5 years.

Interest rate EURIBOR +

1.40% EURIBOR + 1.40% EURIBOR + 1.40% EURIBOR + 1.40%

Administration fee 0.50% 0.50% 0.50% 0.50%

KUKE's insurance premium paid up-front in one

amount1 2.19% 8.18% 4.77% 6.26%

Финансовая поддержка экспорта

Koszt kredytu i ubezpieczenia (waluta: EUR)

1 Example for a borrower with rating equal to country rating.

When credit is granted through the importer's bank:

•no other fees and commissions charged by BGK

•cost of credit for Buyer = cost charged by BGK + cost charged by Buyer’s Bank

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India, Russia, Algeria Belarus, Moldova,

Ukraine, Iraq

Azerbaijan,

Kazakhstan, Vietnam

Armenia, Georgia,

Uzbekistan

Short-term financing Repayment period: up to 2 years

(any kind of goods and services)

Example. Repayment period: 1 year.

LIBOR 12M 0.68% 0.68% 0.68% 0.68%

Margin (incl. KUKE's insurance premium) 1.37% 2.25% 1.74% 1.95%

Total annualized credit rate (incl. insurance

premium) 2.05% 2.93% 2.42% 2.63%

Long-term financing Repayment period: from 2 to 5 years

(only capital goods and services)

Example. Repayment period: 5 years.

Interest rate LIBOR + 1.75% LIBOR + 1.75% LIBOR + 1.75% LIBOR + 1.75%

Administration fee 0.50% 0.50% 0.50% 0.50%

KUKE's insurance premium paid up-front in one

amount1 2.19% 8.18% 4.77% 6.26%

Финансовая поддержка экспорта

Koszt kredytu i ubezpieczenia (waluta: USD)

1 Example for a borrower with rating equal to country rating.

When credit is granted through the importer's bank:

•no other fees and commissions charged by BGK

•cost of credit for Buyer = cost charged by BGK + cost charged by Buyer’s Bank

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Current list of foreign banks accepted by KUKE

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

Country Bank

Argentina (1) Banco de la Nacion Argentina

Azerbaijan (2) International Bank of Azerbaijan,

Pasha Bank

Belarus (8)

Belagroprombank, Belarusbank,

BPS-Sberbank, Belinvestbank,

Belgazprombank, Belvnesheconombank,

CJSC VTB Bank, Priorbank

Bosnia and

Herzegovina (1) Raiffeisen Bank

Croatia (1) Zagrebacka Banka

Czech Republic (1) UniCredit Bank Czech Republic

Georgia (1) Bank of Georgia

Hungary (1) CIB Bank Zrt

India (3) State Bank of India,

Bank of India,

Bank of Baroda

Indonesia (3) Bank Danamon Indonesia,

Bank Mandiri,

Bank Central Asia

Iraq (1) Trade Bank of Iraq

Ireland (1) Allied Irish Banks plc

Italy (1) UBI-Banco di Brescia

Kazakhstan (6)

Kazkommertsbank,

Halyk Savings Bank of Kazakhstan,

Eurasian Bank,

Eurasian Development Bank,

ATF Bank, Tsesnabank JSC

Country Bank

Macedonia (1) Komercijalna Banka Macedonia

Morocco (3) Attijariwafa Bank S.A., Banque Marocaine pour le

Commerce et l’Industrie, Credit du Maroc

Mexico (1) Banco Santander Mexico S.A.

Moldova (1) Moldova Agroindbank

Netherlands (1) ABN Amro

Nigeria (1) Zenith Bank

Qatar (1) Qatar National Bank

Russia (20)

Ak Bars Bank, Alfa Bank, Bank Saint Petersburg,

Bank Uralsib, Energotransbank,Gazprombank,

Investment Trade Bank, Khanty-Mansiysk Bank,

Masterbank, MTS BANK, Nomos Bank,

Promsvyazbank, Raiffeisenbank Russia ZAO,

Rosbank, Rosselkhozbank, Russian Regional

Development Bank, Sberbank of Russia,

Unicredit Bank, Vozrozhdeniye Bank, VTB Bank

Serbia (3) Banca Intesa a.d. Beograd,

AIK Banka a.d.,

Komercijalna Banka a.d.

Turkey (2) Turkiye Garanti Bankasi AS, Turkiye Is Bankasi A.S.

Ukraine (8) Ukreximbank, The State Saving Bank of Ukraine,

PrivatBank, VTB Bank (Ukraine), Ukrgasbank,

Raiffeisen Bank Aval, Ukrsotsbank, Prominvestbank

U.S.A. (1) Comerica Bank

Uzbekistan (1) The state commercial People’s Bank of the Republic

of Uzbekistan (Halk Bank)

Vietnam (3)

Sacombank,

Bank for Investment and Development of Vietnam,

Vietnam Joint Stock Commercial Bank for Industry

and Trade


Total financial support for exporters

(mln EUR)

17

56,0%39,0%

4,0% 1,0% 1,0%

Belarus

Russia

Azerbaijan

Serbia

Ukraine

0

50

100

150

200

250

300

value of the credits

value of the export

contracts

Value of the credits by buyer’s country:


www.bgk.com.pl

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Should you have any questions, please contact us:

Bank Gospodarstwa Krajowego, Al. Jerozolimskie 7, 00-955 Warsaw, Poland

Tel. +48 22 596 58 05, e-mail: [email protected]

Arkadiusz Zabłoński

Director

Andrzej Ślączko

Bank to Bank Lending

Piotr Stolarczyk

Direct Lending



Export Finance Department

e-mail: [email protected]


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Financial Instruments for Export Support

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