Spanish financing significantly facilitates the purchase of the plants...
Financing, Insurance and Banks
As a result of the resolute growth of economic potential and strengthening of the Bank system of many countries, and also of the directed efforts in Spain and in the European Commission, now a State Spanish Financing of export supplies of the Holding’s companies to different countries is available.
Any country is interested in the export of its national product. This creates new jobs, improves the standard of population’s living and increases budget funds of the exporting country due to the influx of funds from outside.
To increase the volume of export, the developed countries take certain measures in the country and abroad, always within the frames of the international agreements, e.g. World Trade Organization (WTO).
For this purpose a special fund is allotted for the evaluation of export operations risk and insurance from the golden reserve of the country. This fund is controlled by the State Export Insurance Companies with the participation of the State capital and the capital of the most important Banks. In Germany this Company is HERMES, in France - COFACE, in England - ECGD, In Spain – CESCE (Compañía Española de Seguros de Crédito a la Exportación), etc.
These Insurance Companies cover the export operations risk solely of products (goods) of national production. CESCE provides insurance against political, commercial risk and extraodinary risks of export operations of products manufactured exclusively in Spain.
If national product is recognized as competitive in the world market, the deliveries of national Seller (exporter) obtain State Financing, i.e. long-term (of more than 2 years), preferential credits are granted to the Buyer (importer).
State funds are allotted by special State organizations. In Spain it is ICO (Instituto de Crédito Oficial).
Selling and buying operations are transacted through the banks of exporting and importing countries. In case the deliveries are financed by the state, the role and significance of the banks of the participating countries considerably increases.
Banks of any country have their national and international rating. Depending on the volume of the registered capital, their private means, debt funds and other factors, their rating changes from year to year. In accordance with the reliability of the Buyer’s (importer’s) bank, the degree of risk and the coverage of insurance policy of the export operation is estimated. In Spain this estimation is made by CESCE.
If the operation itself and the Buyer’s bank are positively evaluated by CESCE, CESCE determines a volume of the operation insurance policy. If the Buyer (importer) and his bank express their agreement with the CESCE evaluation and with the coverage of the insurance policy, the operation takes place.
Our Holding (exporter) works with the biggest Spanish banks: BBVA (Banco Bilbao Vizcaya Argentaria) and/or SCH (Santander Central Hispano).
To «carry out» export-import financing operation succesfully, it is desiarable that the Buyer (importer) should be supported by an important bank or even better by a Spanish bank in his country:
After CESCE has analysed and evaluated the operation positively, i.e. the oficial CESCE statement of willingness (want, can and is ready) to insure the risk of the operation, Spanish banks start working.
Almost each bank has its leasing company (an independent juridical person) through which it channels commercial credits to the clients. The leasing forms of commercial credit have substancial fiscal benefits, agreed upon with the state.
Spanish Buyer’s credit
Financing of the Holding companies’ deliveries has the following main characteristics:
- it is a long-term commercial Buyer’s credit (for up to a 5-year period) with a low annual interest rate (about 3,6 – 4,2%);
- 70-85% of the operation cost (Contract cost) is financed;
- minimal financing amount is 550.000 Euros (70-85% of the Contract cost);
- advance payment is 15-30% of the operation cost (Contract cost);
- only deliveries of the equipment made in Spain are financed;
- customs clearance expenses (at the equipment importation) are not financed.
By now two principal financing schemes are elaborated:
- I scheme - financing of 70-85% of the Contract cost – Buyer’s credit:
- Seller (exporter) – Holding Company TRIBOPRESS, S.L.
- Insurance Organization – Spanish Export Credit Insurance Company CESCE;
- Creditor (70-85% of the Contract cost) – the Seller’s Bank is BBVA or SCH;
- Guarantor of the Financing Operation – a Bank of the Buyer’s (importer’s) country;
- Buyer (importer) – a Leasing Company of the Bank of the Buyer’s country;
- Recipient (user) – Manufacturer of building materials.
- II scheme - financing of 70-85% of the Contract cost – Buyer’s Credit:
- Seller (exporter) – Holding Company TRIBOPRESS, S.L.
- Insurance Organization – Spanish Export Credit Insurance Company CESCE
- Creditor (70-85% of Contract cost) – the Seller’s Bank is BBVA or SCH;
- Operation Financing Guarantor – a Bank of the Buyer’s (importer’s) country;
- Buyer (importer) – Manufacturer of building materials;
- Recipient (user) - Manufacturer of building materials of the purchased plant.
In both financing schemes a Commercial Credit is given to the Buyer with the only difference that:
- in the first case – a Leasing company acts as a Buyer (importer), and the User of the equipment as a Recipient;
- in the second case – the Buyer (importer) is the user and the recipient of the equipment.
In any case, the Buyer (importer) must make the advance payment of 15-30% of the Contract cost in favour of the Seller (exporter). Without this advance payment the financing of the operation cannot take place. Personal participation of the Buyer is indispensable.
principal scheme of the buyer’s credit
The total cost of the arrangement of the Buyer’s Credit is 3% of the Contract Cost. The approximate time of the arrangement of the Buyer’s Credit is about 1,5 - 2 months.
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