Finance & Investment
State Export Guarantees
The federal export credit guarantees are a significant component of Germany’s export promotion policy. They give exporters the opportunity to hedge against economic and political risks. From a risk perspective, many exporters can only export to certain countries with a Hermes guarantee. In particular, the political risks of exports to countries outside the OECD cannot be adequately secured by a private-sector supply.
Without these state guarantees, German exporters would have a decisive disadvantage in international competition in difficult markets, because in all major industrialized countries there are state institutions that efficiently safeguard the exports of national companies.
In order to avoid distortion of competition between the various state insurance and support systems, the so called OECD-Consensus has established framework conditions, which are intended to guarantee essentially uniform competitive conditions. In addition, there are harmonized standards in the EU. This international set of rules is constantly being developed and adapted to current developments. For example, there is a working group in the OECD dealing with a variety of issues (such as environmental protection, avoiding bribery, preventing the poorest developing countries from becoming indebted) and developing common rules for state export insurers.
Procedure for granting Hermes Cover:
The confederation has delegated the administration of the company for the takeover of Hermes covers of Euler Hermes Deutschland AG as a federal mandate. Euler Hermes is granted a certain degree of discretion (as part of a mandate authorization). The Interministerial Committee (IMA), which is represented alongside the leading Federal Ministry of Economic Affairs and Technology (BMWi), the Federal Ministry of Finance (BMF), the Federal Foreign Office (AA) and the Federal Ministry for Economic Cooperation and Development (BMZ), decides on fundamental issues and the coverage of major export transactions.
Hermes cover is granted if the criteria of eligibility and risk-tolerability are met. The eligibility may result from employment creation or protection in Germany, structural considerations or foreign policy objectives. Ecological, social and developmental aspects are included in the decision.
To secure an export credit, fees are charged depending on the nature, extent and duration of a business as well as the risk classification of the importing country and foreign customers. This risk classification is made uniform throughout the OECD.
Our services:
- Consulting and support in the handling and financing of export transactions
- Qualitative and structured consultation after examination of the information which is completely provided by the client.
- Accompaniment during conversations of the client with third parties, such as banks, Euler Hermes Deutschland AG, private credit insurers, auditing companies, chambers of commerce, law firms, producers, customers, etc., if necessary, an independent takeover of conversations is to be coordinated.
Investment guarantees of the Federal Republic of Germany
Investment guarantees of the Federal Republic of Germany help German companies to finance and secure their investment projects abroad. By securing the often unpredictable political risks for companies (for example expropriations, war, civil war, transfer restrictions, breaches of government commitments), investment guarantees play an important role in opening up foreign markets – especially in developing and emerging countries – and making them a part of the foreign trade promotion of the Federal Government.
Procedure for granting investment guarantees
The principles for assuming investment guarantees are the same as for export credit guarantees. In the case of investment guarantees, the Federal Republic of Germany has delegated the management to PricewaterhouseCoopers (PwC) AG as mandator. There is also an IMA for the investment guarantees, which decides on fundamental issues and guarantee assumptions. He owns the same departments as the export IMA, in addition to the BMWi responsible for this as well.
Our services:
- Consulting companies and banks related to economic and legal aspects of risk coverage of foreign investments
- Federal support in the negotiation and conclusion of investment promotion agreements
- Analysis of project, financing and security concepts in economic and legal terms as well as project-oriented further development of the concepts in dialogue with investors and banks
- Analysis of the political risks in the target countries and the developmental, social and environmental impacts of the projects
- Appraisal of the projects as basis for the decision making of the federation
- Monitoring of projects from a economical and environmental perspective
- Federal support in damage prevention and damage reduction (pre-damage phase)
- Analysis of the occurrence of risks, examination of the basis of the claim, assessment of the claim, settlement of the compensation
- Consulting and representing the federal government in the context of international cooperation with investment insurers from other countries as well as exercising the interests of the federal government in cooperations related to internationally funded projects