vdp welcomes package of measures in support of the German export industry

The Association of German Pfandbrief Banks (vdp) welcomes the 5-point package of measures that entered into effect on July 1, 2020 in support of Germany's export industry. The package is designed to improve the liquidity situation of importers and exporters, to make the financing of transactions easier and to broaden the refinancing possibilities open to banks.

“In particular, we endorse the resolved introduction of an additional form of the Hermes securitization guarantee offered by the Federal Government. This is something we have advocated for years. The expansion of the securitization guarantee scheme is an important contribution in terms of supporting German exporters in overcoming the economic fallout of the Covid-19 crisis. Basically speaking, it allows all banks engaged in export finance to take advantage of the highly competitive terms provided by Pfandbrief refinancing,” remarked Jens Tolckmitt, Chief Executive of the vdp.

Note

In future, the Federal Government will, under certain preconditions, cover the default risk borne by commercial banks that provide export credit financing under a refinancing loan with Pfandbrief banks. It is to be assumed that also the legal details of the newly resolved guarantee form as well as the preconditions for the adoption of same will be in conformity with the Pfandbrief Act (Pfandbriefgesetz). This means that, in future, Pfandbrief banks will also be in a position to refinance in a legally secure way via Pfandbriefe export credit financings conducted in cooperation with non-Pfandbrief banks.

As state-guaranteed export credit financings often take the form of syndicated loans, the newly created possibility means that more financing partners will be available to Pfandbrief banks for joint international project financings (e.g. buyer credits). Ultimately, this will be beneficial to the German export industry, too. Export-financing non-Pfandbrief banks will now receive access to Pfandbrief refinancing through cooperation with German Pfandbrief banks (in particular, by concluding a refinancing loan agreement). This will enable them to offer considerably more attractive loan terms compared with a loan facility linked to uncovered refinancing. German exporters, in turn, stand to gain from this, as it will strengthen their international competitive position.