Bankinter and CESCE sign a partnership agreement
Both institutions will provide facilities for taking out Supplier Credit policies, a type of insurance package available to SMEs.
These policies cover, on the Spanish government's behalf, non-payment risks on export agreements and any possible losses as a result of these agreements being terminated with no justification for doing so.
Bankinter and CESCE have signed a partnership agreement this past Wednesday on providing cover, mitigating the risks associated with international business and improving access to funding for Spanish exporters. Both institutions will offer facilities for taking out Supplier Credit policies, one of the most widely used support mechanisms for international companies on the Spanish Government's behalf, behind the Buyer's Credit and Working-Capital-Loans cover.
This is a very popular insurance package among SMEs, which make up more than 80% of the CESCE's customer portfolio. The insurance company has an SME unit, which solely focuses on managing transactions within this business sector.
The agreement was signed at Bankinter's headquarters, with Fernando Salazar (the Chairman of the CESCE), Carmen Vara (the Head of Transactions on the Spanish Government's Behalf), Paula de las Casas (the Head of the CESCE SME Unit) and Vicente Calderón (Bankinter's International Corporate Banking Director) in attendance.
According to the Executive Chairman of the CESCE, "SMEs need all of our support, as this new phase in the economic recovery will create opportunities, but there will be some risks and financing will be needed. As a result, SMEs require cover and expert advice right more than anything right now".
Agreement-termination and non-payment risks
Supplier Credit policies provide cover for exporters who have signed agreements with foreign buyers. The insurance package covers non-payment risks on these agreements and, upon request, any possible losses as a result of them being terminated with no justification for doing so.
In 2020, the CESCE took out 52 Supplier Credit policies, which made the package the third most taken out on the Spanish Government's behalf. Most of the applications for this type of cover come from SMEs and usually relate to medium-sized transactions, even though any transaction can be covered, regardless of how much it is worth. Last year, insured transaction amounts ranged between 22,000 euros and 4 million euros. In 2020, the destination country with the largest number of international transactions covered by this type of insurance was Mexico, followed by Egypt and Colombia.
Financing goods and services of Spanish origin
Exporters can use this type of policy to obtain financing, through deductions of the insured receivables under an export agreement. In that instance, they can name the bank as the beneficiary, which will deduct the receivables for the transaction beforehand, transferring the right to receive compensation for unpaid invoices to it.
Bankinter regularly works with the CESCE, offering and granting financing to Spanish companies that take out Credit Insurance policies with the insurance company for projects relating to exporting goods and services of Spanish origin. These insurance packages include Supplier Credit policies.
According to Vicente Calderón, Bankinter's International Corporate Banking Director, "Signing this agreement with the CESCE will provide us with a platform to take a further step forward in our value proposition for this business, with a solution that will enable our export customers to expand to new markets and increase their international-sales volumes, while also minimising the risks associated with this activity. Bankinter's international corporate banking business stood at more than 7,800 million euros in assets under management, with more than 6,000 million euros in loans and receivables. We are a leading operator in this market and focus on providing specialist services and rolling out tailor-made solutions for its customers. And the agreement with the CESCE will certainly help us to consolidate this position".
Under the agreement signed this past Wednesday, the CESCE and Bankinter will work to increase the reach of this product created as part of a collaborative partnership between the two institutions. The CESCE will insure the risks and Bankinter will provide liquidity to exporters who are looking to deduct the receivables in connection with their agreement beforehand. In addition, both institutions will promote relevant meeting spaces with topics of interest for Spanish exporters.
