Covid-19 : “The European Commission approves the reinsurance programme”. Click here
As the Belgian public credit insurer, it is our duty to support the Belgian economy and its exporters. The unprecedented crisis caused by the covid-19 pandemic raises uncertainties of all kinds. That’s why we launched two new initiatives to increase our support and to help companies overcome these tough times.
European Commission approves Credendo’s initiatives to support Belgian economy
- The European Commission has approved the support measures for the Belgian economy set up by Credendo
- The new financial guarantee, the ‘Credendo Bridge Guarantee’, was given the green light by the European Commission
- The reinsurance programme allowing private credit insurers to continue to fulfil their roles despite the covid-19 crisis has also been endorsed by the Commission
Approved by the European Commission
The Belgian economy is one of the most open economies in the world and its exports represent over 85% of the Belgian GDP. Therefore, it is crucial to support internationally active Belgian enterprises during the covid-19 crisis.
In this context, Credendo – the Belgian export credit agency – launched new initiatives in order to ensure that enterprises continue to have access to bank credit and credit insurance in these difficult times. The European authorities have just approved these two support measures in favour of the Belgian economy and internationally active enterprises.
‘Credendo Bridge Guarantee’
Besides credit insurance, insurance for investments abroad and direct financing, Credendo also offers financial guarantees to banks granting credit to enterprises that are active abroad. Credendo is now offering a new financial guarantee, the ‘Credendo Bridge Guarantee’.
“The Credendo Bridge Guarantee aims at ensuring that enterprises, and SMEs in particular, can obtain the necessary bank credit in these challenging times,” states Dirk Terweduwe, CEO of Credendo. “We guarantee up to 80% of bridging loans for a maximum duration of one year and a maximum amount of 10 million euros per enterprise.” Thanks to this guarantee, internationally active enterprises can obtain credit more easily, and credit amounts can be higher, while the bank granting the credit facility will have a larger capacity and more comfort.
The other component of the support programme for the Belgian economy approved by the European Commission concerns the establishment of a reinsurance programme enabling private credit insurers to continue to fulfil their roles despite the covid-19 crisis. “Credendo, acting on behalf of the State, will act as reinsurer,” specifies Dirk Terweduwe.
The credit insurance sector is vital for companies and trade in Belgium and Europe. Commercial companies generally grant payment terms of 30 to 90 or even 180 days to their (business) customers. The role of credit insurers is to secure inter-company commercial transactions and to indemnify their insured in case of non-payment of the invoices by the insured’s clients. In that context, credit insurers grant credit limits which they agree to cover for a specific customer of their insured.
Under this reinsurance programme, the credit insurers undertake to keep the credit limits that were actually used in the 12 months preceding 1 March 2020 – representing a total amount of over 57 billion euros – as intact as possible until the end of 2020. In this way, commercial relations and trade flows can be maintained. In exchange for this commitment, Credendo – Export Credit Agency, acting on behalf of the State, undertakes to reinsure the risks underwritten by the credit insurers located in Belgium.
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Reinsurance programme by the State to support the Belgian economy
- A memorandum of understanding has been signed between the Belgian State, Credendo, Assuralia and the private credit insurers
- This agreement is intended to support the Belgian economy by maintaining the credit limits granted by private credit insurers to companies located in Belgium
- It provides the setting up of a reinsurance programme enabling private credit insurers to continue to play their part in spite of the covid-19 crisis
- Credendo, acting on behalf of the State, will act as reinsurer
In the context of the covid-19 outbreak and in order to counter its harmful impact on the economy and trade, a memorandum of understanding concerning a reinsurance programme for private credit insurers providing short-term commercial credit insurances (less than 2 years) by the Belgian State was signed on 21 April 2020 by the Minister of Finance, the Minister for Economy, the Minister for Security and the Interior, in charge of Foreign Trade, Credendo – Export Credit Agency, Assuralia and credit insurers Atradius, Coface, Credendo – Short-Term Non-EU Risks, Credendo – Excess & Surety and Euler Hermes. The negotiations took place under the aegis of the National Bank of Belgium.
The credit insurance sector is vital for companies and trade in Belgium and Europe. Commercial companies generally grant payment terms of 30 to 90 or even 180 days to their (business) customers. The role of credit insurers is to secure business-to-business commercial transactions and to indemnify their policyholders in the event of non-payment of invoices by their customers. For this purpose, credit insurers grant credit limits that they agree to cover for a specific customer of their insured. Together, the credit insurers that signed the memorandum have credit limits covering a total of more than EUR 57 billion worth of invoices for the benefit of their insured located in Belgium. This shows the essential role of credit insurance in the economic development and business life in Belgium.
Due to the consequences of the covid-19 pandemic, the risk of non-payment by customers has become such a concern that credit insurers should, in accordance with normal procedures, reduce the credit limits granted to the customers (debtors) of their insured. This results in a risk of a lack of credit insurance for trade receivables in the private market. The reinsurance programme by the State is intended to mitigate this risk for insured companies located in Belgium for their commercial transactions with buyers (debtors) based both in Belgium and abroad.
Under this agreement, the credit insurers undertake to keep the credit limits actually used in the 12 months preceding 1 March 2020 as intact as possible until the end of the year 2020. In this way, trade relations and flows can be maintained.
In return for this commitment, Credendo – Export Credit Agency, acting on behalf of the State, undertakes to reinsure the risks underwritten by the aforementioned credit insurers established in Belgium. The reinsurance programme provides that a substantial portion of compensation will continue to be borne by the insurers, with this portion evolving according to the loss ratio. Furthermore, the programme provides for a progressive sharing of premiums between the insurer and Credendo, also depending on the loss ratio.
A reporting system will be set up to monitor credit insurers’ commitment. It will consist of monthly reporting on the evolution of existing credit limits. It goes without saying that the confidentiality of commercial data is guaranteed. If requested by the State, the credit insurer will be required to briefly explain the basis on which it took a decision, in order to demonstrate that it does not act arbitrarily.
The conclusion of this agreement and its implementation address the concerns of the corporate world. Accordingly, Credendo – Export Credit Agency, acting on behalf of the State, and each private credit insurer having signed the memorandum have undertaken to conclude a bilateral reinsurance treaty as soon as possible.
Read all specifications about the programme in this document.
The Credendo Bridge Guarantee is no longer available as from 30 September 2020 since the Belgian support scheme offers similar support measures.
The Credendo Bridge Guarantee is a new financial guarantee. It can be issued in favour of a bank that granted a credit facility to a company that was in a good financial situation before the pandemic. We can cover up to 80% of the bank’s risk (with a maximum of EUR 10 million per company).
Credendo is increasing its support for Belgian businesses that are active internationally
- Credendo is increasing its support for Belgian businesses that are active internationally
- Alongside credit insurance, foreign investment insurance and direct financing, Credendo is also offering financial guarantees to banks that grant credit to businesses active abroad
- Credendo now offers a new financial guarantee, the ‘Credendo Bridge Guarantee’
- This guarantee covers bridging loans with a maximum duration of one year, granted to Belgian businesses that are internationally active
The Belgian economy is one of the most open economies in the world and exports from Belgium represent more than 85% of GDP. It is therefore crucial to support Belgian businesses active within the global economy during the covid-19 crisis.
On that basis, Credendo, the Belgian export credit agency, is increasing its support for Belgian exporters by offering a new financial guarantee, the ‘Credendo Bridge Guarantee’, to banks granting credit to those companies.
The ‘Credendo Bridge Guarantee’ has the following main features:
- the guarantee will be issued in favour of a bank;
- the guarantee, with a maximum duration of one year, is intended to cover bridging loans granted to Belgian businesses that are internationally active;
- the guarantee will cover 80% of the bank’s risk with a ceiling of EUR 10 million per company;
- companies that were already in difficulties before the crisis or that could have access to other support measures will not be able to benefit from this reinforced financial guarantee.
Banks are familiar with Credendo’s financial guarantee product. Through this guarantee, businesses can obtain credit more easily, and the credit amounts may be higher while also providing greater capacity and reassurance for the granting bank. The procedures for practical application will be implemented to accommodate the needs of SMEs as a priority.
Alongside the financial guarantees, Credendo offers credit insurance, insurance for investments abroad and direct financing packages designed for SMEs to Belgian businesses that are active globally.
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