EU finance ministers have to improve the EU’s economic governance reform program agreed in the future violations of financial discipline in the EU Member States will “automatically” face punishment. EU refuses to correct the violation of fiscal discipline The same day, led by the strengthening of economic governance Rompuy panel held its last meeting in Luxembourg, aims to finalize the EU economic governance reform program. Van Rompuy issued after the meeting a written statement that the final meeting of EU finance ministers reached an agreement, which marks the EU to strengthen economic governance in the forward of “a big step.” The European Commission late last month to draw up a financial monitoring legislative proposals, the main contents include: strict compliance with the EU to force Member States, “Stability and Growth Pact” in the deficit should not exceed gross domestic product (GDP) of 3%, public debt shall not exceed the GDP 60%, the Union of these two indicators will be exceeded in a member of the punishment. Punishment measures are: a member of the excessive deficit will be required to hand over its 0.2% of GDP non-interest bearing deposit, and if members can not be exceeded by the European Commission’s warnings and recommendations to correct, this deposit will be into a fine; on the debt exceeds the member, asking them to cut the total debt each year 1 / 20, if I can not, should be fine. Van Rompuy said that the EU finance ministers agreed that all decisions will be punished in accordance with “reverse majority” voting system to make, is fine by the European Commission under the relevant rules to execute, no longer need to discuss the finance ministers of Member States, for violation of the European Union fiscal discipline and refused to correct the member states, the European Commission will recommend punishment, unless a majority of EU member states in order to effectively oppose, or penalties into effect automatically. Euro group president, Juncker of Luxembourg said that in this meeting, EU finance ministers to improve economic governance framework of agreed and punishment mechanism is expected to take effect from 2012, but details have yet to continue the discussion. In fact, due to serious differences between the Member States, the Working Group’s final plan may be far from the European Commission’s legislative proposals. Member States there are two main differences now. First, decide whether the punishment exceeded the member who made. European Commission in the legislative recommendations to the power held in his hands, although Germany, the Netherlands, Finland and other support to the European Commission’s legislative proposals, but France, Italy and other countries insist on the punishment reserved for ministers. Second, a warning from the members to end excessive punishment, the Member States to correct how long. In this regard, countries and uncompromising. In addition, whether and how to punish a member of the macroeconomic imbalances, the greater the differences between member states. These key issues are pushed to the discussion after the EU summit in autumn. According to EU finance ministers reached a compromise, a State constitute a violation of the EU fiscal discipline, excessive deficit, there will be 6 months time to take corrective measures, the EU finance ministers will be a simple majority of members decided to take measures of a country the adequacy of the Member States only if they refuse will face penalties. The relatively more strict budgetary discipline started only applies to the euro zone countries and then extended to the outside of the UK all the EU member states. European Union finance ministers also supported the establishment of an early warning mechanism to detect the potential macroeconomic risks euro-zone members, such as real estate bubble and the gap in competitiveness. In addition, the EU finance ministers also said that as an interim goal, the euro zone is necessary to establish a more effective crisis response mechanisms, to avoid the beginning of the chaos in aid to Greece, but the specific structure to be further discussion. Daily Roundup France, Germany, the adoption of punitive measures to strengthen financial discipline in the EU French President Nicolas Sarkozy and German Chancellor Angela Merkel, 18, in the northwestern city of Deauville, France to hold bilateral joint statement after the meeting, said France and Germany have agreed to jointly recommend the European Council to take punitive measures to strengthen the EU fiscal discipline. The statement said that France and Germany stressed the need to strengthen and speed up EU financial supervision and coordination of economic policies, the two sides that should be taken to a wider range, more operational preventive and corrective measures of punishment, to urge the EU member states to comply ” Stability and Growth Pact. ” France and Germany also found it necessary to “Lisbon Treaty” to modify, and requested the President of the European Council in March next year before the draft amendments to establish a strong mechanism of permanent crisis, and the violation of the European Economic and Monetary alliance based on the principle of suspension of voting rights of States to take punitive measures. However, the latest proposal for France and Germany, British Prime Minister Cameron clearly shows that the British Government will not support any power assignment to the EU. Although it is not British euro membership, but EU member states, any of the “Lisbon Treaty” changes are needed after the approval of all EU member states, or even need to put to a referendum in Britain.
Finding a right job is never easy. We live in an extremely competitive world with fierce competition for jobs in all fields. Your education is of great importance when looking for a job. Finding a right job is never easy. We live in an extremely competitive world with fierce competition for jobs in all fields. Your education is of great importance when looking for a job. Many people these days opt for higher education to get better placements. Other than education, your skills to take advantage of the right opportunity are also influential. Your degree can only help you to through an interview, but it’s your understanding of your field that can take you ahead. The finance and economy sector is one of the more rapidly developing areas with plenty of employment opportunities. It is a reputed sector with a number of lucrative opportunities for students and professionals today. The demand for finance recruitment is rising with time. There are many different ways of getting these financial jobs. One of the more effective methods is to opt for the assistance of a finance recruitment agency. Credit controller recruitment is a process involving different stages. Credit control positions are varied, and are based on a hierarchical scale. These are key positions as they deal with all the financial issues of the company. To get into this field, you require detailed financial knowledge and acumen. It is important to have good communication skills as well. The credit controllers should have good communication skills as they have to deal with different clients. For credit controller recruitment, you should be aware of business processes and should posses an ability to work in tandem with other departments. You should also learn to empathize with the customers and meet their expectations. There is a vast scope of promotion in this field. To qualify for credit control recruitment, you should also have the requisite skills to deal with variety of accounting software and have a thorough command of IT communications. Finance recruitment agency is the right place to look for jobs in these sectors. These job agencies serve both, the candidates who are looking for jobs and to the companies that are looking for new employees. A finance recruitment agency will help you take advantage of the right opportunity present in the market. These jobs are not easily available, as there is heavy competition. These agencies have a wide database of job opportunities which will provide you the right information. Many big companies employ the services of these agencies. You can also opt to search for these agencies online. There are many job opportunities for you to select from on the internet. You can opt for a more personalized search and seek the job according to your own terms. These platforms also allow you to share your views about the credit control recruitment online. You can access updated information on credit control on such sites. You can learn about the status of the market and changes in the industry. This will prove vital when you apply for a job. Such agencies are highly beneficial and help to find the right placement for people today.
The Obama administration has established a program called the Hardest Hit Fund in order to provide special attention to states with high foreclosure rate in the country. The D.C. Housing Finance Agency is the official state housing agency of Washington, D.C. The Department of Treasury allotted approximately 20 million U.S. dollars to the DCHFA to help the agency implement loan modification and home refinancing programs in their area. The DCHFA was established during the year 1979 in order to give help for homeowners and stabilize the housing market of Washington, D.C.
The Agency aims to broaden the opportunity for borrowers to achieve their American dream of homeownership. It issues mortgage revenue bonds so that the housing cost is lowered and consequently decreases the costs of home rehabilitation. Furthermore, the agency also helps developers in the acquisition, rehabilitation, and construction of communities or homes.
The various help for homeowners available in the state of Washington, D.C. are as follows:
The Housing and Economic Recovery Act- It improves the housing development in Washington, D.C and reaches out to more troubled American homeowners needing loan modifications in an attempt to ultimately combat the current foreclosure crisis in the state.
American Recovery and Reinvestment Act of 2009- Offers an expanded financial and mortgage benefits to the American unemployed workers by giving over 700 billion dollars for social welfare programs, foreclosure prevention, etc.
DC Bond Affordable Mortgage Program- Available for homebuyers with FHA mortgage. The DC Bond Program makes your monthly loan payment more affordable by providing a 30 year, fixed-rate loan with an interest rate of 4 percent.
DHCD’s Down payment and Closing Cost Assistance- Provides subsidies to low income families who want to purchase a new home. It offers financial down payment assistance for up to 10 thousand dollars to Americans who qualify for the program.
There are plenty of mortgage help available in the region, DCHFA partners with the different firms in providing loan modification opportunities to D.C homeowners. You may also look for the DCHFA’s list of community-based organizations ready to provide free counseling to troubled borrowers.
If you have any question regarding the various government help for homeowners programs, visit their office at 815 Florida Avenue, NW Washington, D.C. 20001 or call their hotline number at (202) 777-1600. Log on to you will find plenty of foreclosure resources and counseling agencies that can help you preserve your home and prevent repossession permanently.
Angie Andrews assists homeowners in trouble on her blog that specifically addresses loan modification. Take control of your own finances, discover options to modify your loan and save your home. There are government sponsored options available and you can get all the information you badly need in AllmandandLee Loan Modification Blog.
The blog is Angela’s way of providing free information about the many unknown programs available to homeowners in trouble. Her years of experience an insight help those in trouble to fully understand the loan modification process. For more specific details about mortgage assistance, federal loan modification and loan modification attorneys see Angela’s blog and find out the Secrets About Loan Mods today.
California ranked third in the highest number of foreclosure filings among all states in the country; as a matter fact in 2009 alone, the foreclosure rate in California rose to 60 percent; that is 16 in every 100 houses! The good news is that foreclosures in the state have declined during the first quarter of 2010. However, the number is still considerably high if you base it on historical standards. To address this persisting problem, the Obama administration has agreed on a strategic plan in giving mortgage assistance to homeowners living in these five hardest hit areas.
The department of treasury allotted billions of dollars in order to extend financial help, if you need counseling on how to qualify for mortgage assistance in your area, you may go the Housing Finance Agency in California. The Housing Finance Agency is a government housing department in the state of California which aims to save houses and help homeowners afford their mortgages by providing opportunities in modifying troubled borrowers’ loans.
If you need someone to answer your foreclosure questions, you may go directly to their office and ask for the help of an HUD-certified housing counselor. That way, you do not have to spend your remaining cash on legal counseling to some private lawyer or loan modification expert. A state counselor is being paid by the government in order to answer every homeowner’s question and provide sound advice to those borrowers currently in default.
California’s Housing Finance Agency is under the supervision of the Housing and Urban Development which passes its relief plan to the U.S. Treasury Department for further approval. Currently, the agency is focusing more on providing low cost housing to families with low to moderate income. The Keep Your Home California programs were launched by the CalHFA with an objective of assisting in community revitalization and preserving the American dream of home ownership especially to troubled borrowers in the state.
Some of the agency’s missions are to: help homeowners remain in their respective homes especially when the reason of default of payment is unemployment, death of a spouse, and other uncontrolled circumstances; another is to submit strategic plans to the federal government in order to obtain funds for their citizens; and lastly, to deliver such funds more efficiently to help reduce the number of foreclosure filings in the state.
These are just some of the different mortgage assistance programs available to Californian homeowners. If you need to know more about these programs, contact the California Housing Finance Agency immediately.
Angie Andrews assists homeowners in trouble on her blog that specifically addresses loan modification. Take control of your own finances, discover options to modify your loan and save your home. There are government sponsored options available and you can get all the information you badly need in Allmand & Lee’s Loan Modification Blog.
The blog is Angie’s way of providing free information about the many unknown programs available to homeowners in trouble. Her years of experience an insight help those in trouble to fully understand the loan modification process. For more specific details about mortgage assistance, federal loan modification and loan modification attorneys see Angela’s blog and find out the Secrets About Loan Mods today.
STAKEHOLDERS AND HOW THEY AFFECT YOUR BUSINESS
The concept ‘stakeholder’ is a variant of ‘stockholder’, which relates to ‘investors in’ or ‘owners in’ a firm or business. Stakeholders can be defined as ‘individuals and groups who are affected by the activities of an organisation. The most important stakeholders can be seen as those with most to lose from the organisation’s actions, but this does not always reflect their relative power.’. (Hannagan, T (2002), ‘Management: Concepts and Practices’ P142.) Their goals and objectives vary immensly, but all must be considered.
In the past it had been the common conception that businesses fundamentally rely upon, and in turn effect their economic capital, which is represented in the form of stockholders. The rise to prominence of stakeholders (through studies and reports) has allowed firms to realise that there are people and infrastructure beyond the company which are necessary to it and who must have their interests protected. An organisation’s stakeholders are all parties who can reasonably be understood to be affected by its decisions. They can be deemed to represent the businesses’ social and environmental capital as well as economic. Stakeholders can be of very different and varied guises and also harbour conflicting interests. In the main they can be categorised into three major groups: Internal, Connected and External Stakeholders.
Internal stakeholders include managers and employees and are those that are situated within the company and affect the ‘day-to-day’ running of the organisation. Connected stakeholders cover groups such as shareholders, suppliers and customers, and are parties which invest or have dealings with the firm. The third group, External stakeholders, are those not directly linked to the organisation but who can be influenced or influence activities of the firm through various means. External stakeholders include the Government, neighbours, pressure groups, local councils and the surrounding community.
As well as stakeholders, organisations and the people involved with them are expected to adhere to written and unwritten ethical boundaries. The degree to which these are adhered depends upon as varied a mixture as government enforced action to simply the moral fibre of a manager or employee. On occasions only the ‘eye of the beholder’ can truly acknowledge whether the moral considerations were taken on board when making a decision. This makes gauging an organisations ethical stance very difficult as the image they portray to the public may not match the internal reality. ‘The ethical environment refers to justice, respect for the law and a moral code. The conduct of an organisation, its management and employees will be measured against ethical standards by the customers, suppliers and other members of the public with whom they deal’ ( HNC / HND BTEC (2002) ‘BUSINESS COURSE BOOK: Organisations, Competition and Environment’ P267).
During the course of this study, the effect of stakeholders and ethical / moral issues on organisations will be investigated at depth using various theories and research
Stakeholders are found in all organisations, businesses or firms – from a local
grocer store to huge multinational companies such as Coca-Cola, McDonalds and Microsoft. The number of stakeholders per business will vary as will their importance and influence. The type of organisation or product / service it supplies will also determine its stakeholders. A Public Limited Corporation may have far more stakeholders than a family owned business due to its vast numbers of shareholders. As too might a Nuclear Power Station such as Sellafield which may have many more stakeholders from the environment groups (Greenpeace / ‘Save the World’ etc) / government / local residents / trade unions than a more ‘low risk’ facility or industry. However, as recent events such as the ‘Foot and Mouth Epidemic’ / BSE, and recent reports into colourings in packaged foods, it is impossible to predict when an organisation will gain new stakeholders – either of the wanted or unwanted kind.
The arrival of a new stakeholder often provides the company with an ethical dilemma of how to (or how not to) satisfy this new member’s needs, whilst avoiding conflict with the present stakeholders. In an ideal world a fine balance could be achieved to satisfy all stakeholders whilst obtaining the organisations goals in profit and sales (often profit maximisation and / or sales maximisation). However certain stakeholders may have completely conflicting measurements of success, resulting in one stakeholder being rewarded having a detrimental effect on another stakeholder.
Perhaps the main form of stakeholder approach / management is the “Stakeholder Corporation” concept. Its authors, Wheeler and Sillanpaa, argue that ‘In the future, development of loyal relationships with customers, employees, shareholders, and other stakeholders will become one of the most important determinants of commercial viability and business success. Increasing shareholders value will be best served if your company cultivates the support of all who may influence its importance’. This firmly supports the concept of ‘stakeholder symbiosis’ which believes all stakeholders are dependant upon one another when achieving success and financial well-being.
Whilst this appears an ideal scenario theory, it takes little account of conflicting stakeholders, whose personal perspectives of success may be situated at complete opposite ends of the spectrum. In a theoretical situation it may seem viable to appease all stakeholders with a fine balance of benefits and concessions, but human behaviour tends to diversify over time – with certain parties deeming themselves ‘winners’ or ‘losers’ in the scale of organisational fairness. The Premiership footballer is a prime example of a stakeholder in an organisation (club) who carries extreme power and often gets what he wants even if it has a detrimental effect. Despite his obvious privileges over other stakeholders such as fans, ground staff and the local community, he will often not be content unless his financial gains are on a par with fellow team-mates, and the finance is in the hands of this select minority. Operations and activities at the club may be designed around satisfying the present ‘high profile’ stakeholders with little consideration for the long-term effect. The fall from grace and into bankruptcy of Leeds United Football Club being the most widely publicised case.
‘Stakeholder Power: Four Gates of Engagement’ is a theory put forward by Steven Walker and Jeffrey Marr. It presents a practical framework for assessing stakeholder group commitment levels. It is their view that organisations must be proactive in their approach to relationships with potential stakeholders in order for the stakeholder to want a relationship back. In order to achieve this the framework suggests the organisation / stakeholder relationship should pass sequentially through the ‘four gates’ of Awareness, Knowledge, Admiration and Action. Each time a gate is passed, the relationship gains attributes, hopefully ultimately resulting in an Action relationship where the two strive towards multi-beneficial goals and aims. Similarly to ‘The Stakeholder Corporation’, in theory it appears common sense, but for firms with many stakeholders, as with any relationship, the more groups or individuals involved the higher the possibility of conflict. It may be viable to maintain a strong ‘Action’ relationship if the company has few stakeholders, but to keep hundreds of stakeholders happy must be at the expense of others.
Another approach to stakeholder management, described by Freeman, is to analyse to what extent an organisation has developed its Stakeholder Management Capability (SMC). Similar to the above fore-mentioned approach, SMC provides three levels in which an organisation can address its stakeholders – Level 1: The Rational Level, Level 2: The Process Level and Level 3: The Transactional Level. At the level 1 stage a company simply identifies its stakeholders and what their stakes maybe. Level 2 organisations have actually developed and applied processes or procedures to collate data and information on their stakeholders. This information is then used for decision-making. Level 3 organisations are in a position were their managers interact with stakeholders and form relationships. ‘At this highest level of SMC, the management must take the initiative in meeting stakeholders face to face and attempting to be responsive to their needs’. (Hannagan, T (2002), ‘Management: Concepts and Practices’ P87.) An organisation deemed to be in the Transactional level must be open to criticism and willing to respond if it is to keep strong relationship ties with its stakeholders. However stakeholder demands or actions which are detrimental to the company, its operations or other stakeholders must be dealt with in a strong managerial style as and when they occur.
In the case of organisations and in particular multi-national firms, it is increasingly the case that stakeholders are aware of what that company does in other countries in which it operates. Therefore concessions or benefits which have been readily agreed in one country may be demanded in another, yet cannot be afforded as easily. For years, companies such as Nike have used ‘cheap’ and sometimes ‘child’ labour to manufacture their products in countries such as China and India. Whilst extremely profitable to the company in financial terms and providing the employees in these developing countries probably a better lifestyle than they would otherwise expect, the firms ethics have been continuously called into question. Perhaps a more long-term approach would have recognised earlier the stakeholder potential of large developing countries like China, India and Malaysia.
Ethical issues between employees and management can have serious effects on a company. Unethical employment practices such as discrimination (by creed, age, sex etc), harassment (sexually, physically etc) and poor standards of health and safety can severely damage an organisations image. Poor employment relations can lead to loss of reputation, low productivity, poor morale amongst staff and heavy financial costs resulting from tribunals and compensation pay-outs. Firms, which seek to exploit cheap labour in underdeveloped countries, risk alienating both their customers and the governments in their home and host countries. An ethical and socially responsible employer should recognise that a safe working environment with pleasant conditions has a motivational effect on staff and thus increases their loyalty and commitment towards the firm in general.
Some firms have set procedures which outline the ethical responsibilities
the company has to certain stakeholder groups. The car manufacture Daimler-Chrysler has recently implemented an ‘employment pact’, thus demonstrating the importance the company places in ethical responsibility to its employees. The Daimler-Chrysler web-site quoted ‘The Daimler-Chrysler Company illustrates that companies can balance the needs of different stakeholders if alternative arrangements are put in place…They have negotiated an ‘employment pact’ which effectively guarantees 6000 jobs in their German plants until 2012, in addition to structures allowing for an increase in productivity and the long-term competitiveness of the Mercedes car group’. Taken from Daimler Chrysler’s website. By agreeing such a pact, the management of Daimler-Chrysler are removing the burden of redundancy from their employees for a set period of time, thus increasing a sense of importance, self-worth and security amongst the workers. However, a large scale slump (although unlikely) in the sales of these vehicles could see the company paying ‘idle’ workers, which would most certainly displease other stakeholders, in particular shareholders.
The main question that has arisen from my research is whether or not the theories, which have been put forward, are realistic. The various economists, researchers and theorists have suggested many models and structures which supposingly represent ‘best practice’, but in how many organisations is this actually the case or is likely to be the case in the future? International economy trends suggest that the complete opposite to an ‘ethical stakeholder economy’ may be developing. ‘The growth of multinational corporations, with their ability to move finance and production to wherever it is most profitable, has weakened the power of employees, local interest groups and even national governments’. (Sloman, John & Sutcliffe, Mark (2004) ‘Economics for Business’, 3RD Edition– Prentice Hall P286).
The expansion of multinational organisations can result in employees of very different backgrounds with few common bonds or interests. This, I feel, makes them less likely to join together to promote common beneficial goals and in extreme cases leads to employees vying against each other for a limited number of positions.
For example, the company for which I am employed has become increasingly disillusioned with the lack of employees willing to work overtime at weekends. As a result and with the aid of an agency, the company has brought several workers of Polish origin to the organisation. These employees have limited contracts, receive less remuneration and are not entitled to the normal workforce privileges of ‘time and a half’ on Saturdays and ‘double time’ on Sundays. However, the early results in terms of profitability look promising and unfulfilled customer orders are now being met. This is against an offset of varying displeasure amongst the original workforce and local community, with some employees aggrieved over the loss of overtime and potential job vacancies for local friends and family.
As highlighted above, many firms are employing larger numbers of temporary, part-time, casual and agency workers. This is part due to their high availability under the new ‘flexible labour markets’ created by the EU and government deregulation in the mid 1990’s. These workers have very little say in the way the company is run due to the ease in which they can be ‘hired and fired’. Couple this with share incentive schemes for managers (resulting in increased emphasis on profits), the present and future scenario appears one where ethical duties and less powerful stakeholders are given very little consideration or in fact their opinions dismissed!
A higher emphasis must also be placed on organisations to provide precise and honest information, particularly were it affects the public good. Extreme penalties must be inflicted on those who flaunt the truth if repeats of the Enron scandal are to be avoided. Firms cannot simply be content with providing the information the clients want to hear when the actuality is a far different scenario. Perhaps a part solution to this would be for every Public Limited Company (PLC) and Private Limited Company (Ltd) to annually be audited by an external independent accountant. This Accountant / Specialist would be given a ‘free hand’ in regards to all company figures. A confidentiality clause would be in place and only illegal or fraudulent activities would be reported.
Perception questionnaires and audits are common practice in many modern organisations as they attempt to gauge their image amongst customers. These audits, perhaps, should be more widespread to include all stakeholders and, in the case of many firms, the general public and their opinions.
Scandals such as the Enron Power Company ‘cover-up’ and similar smaller scale scandals have seriously affected public confidence like that at the telecommunications firm OneTel. Lack of public confidence can endanger key structures of our everyday lives, such as democracy and the market place. No organisation, firm or society can function to its full potential when trust is continuously being eroded by cynicism.
Today, operations of practically each Ukrainian company, one way or another, concern international trade. First, Ukrainian manufacturers are forced to import higher quality raw materials, equipment or machinery that have no analogs in Ukraine. Second, any equipment is subject to depreciation and obsolescence and, therefore, needs regular updates. It would be also reasonable to mention the expansion of production resulting in the need to acquire new property and equipment and to increase the raw materials purchase volumes.
Rather frequently, all the above processes are unpredictable for Ukrainian businesses and, what’s more, they tend to arise simultaneously, forcing businesses to take out good round sums from cash in turnover which they often just are unable to afford. What is the way out? Where can one borrow significant amount for a long period of time?
Following lengthy discussions and analyses, management often makes decision to go along the simple path of applying for bank loan or conclusion of leasing agreement. However, both options are rather costly, and the periods of financing, as a rule, are unacceptable for Ukrainian companies. In addition, the procedure for obtaining a loan is quite intricate and includes approval of the credit committee, verification of honesty of the business owner, availability of relevant collateral, audit…
If you intend to engage in a foreign economic transaction, how about taking a more high-profile glance at the options of debt financing and find out what else do they do abroad??! In the first place, go beyond Ukrainian information framework. You are right, we will discuss foreign trade financing.
To begin with, let’s define the terms. Foreign trade financing or export financing is the attraction of foreign capital against guarantees provided by a foreign export credit agency (ECA). In addition, they use the term “structural financing” describing this process from the perspective of its structure, that is the sequence of its stages. Nevertheless, in all cases, we deal with the financing of deliveries to Ukraine.
The chairs this morning
As of today, this financial instrument appears to be the most advantageous for Ukrainian businesses both in terms of cost (which is by an order of magnitude smaller than domestic rates), and in light of maturities (which are distinguished by significant duration). In addition, successfully realized projects on attraction of foreign trade financing develop a positive international credit history for Ukrainian company, opening further perspectives of cooperation with foreign banks and export credit agencies.
“In our opinion, trade financing arrangements facilitate the increase of companies’ purchasing power and ensure their access to finance required to purchase goods or services from Thailand, raise competitive ability of our producers in other countries, decrease risk of default, and increase the borrowers’ working capital”, – told us our source in Export-Import Bank of Thailand.
There is no doubt that, to be able to properly present its merits to a foreign partner, domestic business will have to attract specialists in the area of credit analysis according to the international standards, who will prepare relevant project documents. However, acting knowingly, the borrower will carry out such procedure quickly and painlessly, and the resulting credit conclusion will also be instrumental for further presentation of the business with the objective of expansion of international trade relations.
“When determining the amount of insurance coverage, we focus primarily on analysis of the risks and carry out research of the foreign borrower’s creditability and its ability to repay the loan on time”, – said our source inOeKB, Austrian ECA.
Naturally, to be able to apply for trade financing, potential borrower must meet certain criteria. And you should not think it’s beyond your control, you should just have a clear understanding of your capabilities and the requirements of the foreign banks and insurers to the Ukrainian corporate borrowers. One should not underestimate own merits and surrender under the storm of allegations about insolvency of Ukraine as a country and Ukrainian business as a whole.
Thus, if you are prepared to the victories on the international scale, it is high time to take a detached view of your business and assess the degree of its transparency. Well, let it be at least semi-transparency. “When rating international credibility of a company or a group of companies, we concentrate on positive movements in revenues, volumes of assets, existence of related legal entities, history and structure of ownership, and on payment discipline. In addition, we pay attention to many other legal and marketing factors characterizing operations of the target in specific industry”, – points out Mrs. Antonina Mavrodii, Manager of IBcontacts Analytical Department and an ACCA member.
As such, if, after applying the above criteria, you come up with at least firm “4? according to the old good 5-point scale, your should undoubtedly ponder over entry on the foreign financing market which will automatically raise your company to a new level of business.
“Our company can insure so called “supplier’s credit”, providing the buyer direct credit limit, which depends on country risks, level of credibility, and payment discipline of the buyer. Obviously, the decision is made on the basis of the available information about the borrower”, – told us Baigozin Erbol, Director of Marketing and Sales Department of ECA KazExportGarant, Kazakhstan.
The money tomorrow evening
When attracting short-term financing (for a period of up to one year) for the purpose of, say, procurement of raw materials, foreign supplier may give commodity credit and deferral of payment against guarantees of ECA. However, if the payment deferral period required is longer (five years and more), foreign exporter is unable to wait so long for its luck penny. At this point steps in foreign lending bank which in most cases is operating in the country of the producer’s incorporation.
The funds are disbursed to Ukrainian borrower (it may be either a Ukrainian bank, or the Ukrainian importer itself) against guarantees of ECA. In this case, the cost of financing is significantly lower which has its logical explanations. First, the funds are granted by foreign banks whose interest rates are lower apriori. Second, export credit agency insures the risks of the lenders, which also enables them to reduce annual interest rates.
The question is, what are the motives that drive ECAs to take part in such projects and take the risks? As we have already told in the previous issue of IBobserver, ECAs are established by foreign states to support their domestic producers, therefore the risks are, in effect, taken by the foreign governments. And this is the main advantage of trade financing arrangements.
On the other hand, if your supplier is a customer of a private insurance company which does not have the noble goal of development of national economy, obtaining insurance cover becomes much more difficult, because in this case the insurer puts at stake its own money. In addition, the insurers have been incurring huge losses during the past two year of total defaults. This is why these are state-owned ECAs that are dominating in the post-crisis era and expanding their shares on the market.
Normally, when realizing such projects, ECA charges premium representing lump sum interest rate. The amount of the premium directly depends on the risks prevailing in the country of the borrower. In addition, OECD has developed a special rating scale, according to which Ukraine was rated the lowest 7th grade. This is the key factor affecting the amount of insurance premiums charged by ECAs from the Ukrainian importers – the higher the risks, the higher the fees. However, our practice of cooperation with ECAs and banks shows that there are certain factors that may reduce these rates.
Therefore, the following key question remains: in which cases the importer applying for foreign long-term financing can act as the borrower itself and when it should attract Ukrainian bank.
“In our practical work, we often find ourselves in the situations when creditability analysis and business plan developed by us for Ukrainian business appear to be quite safe for ECA, enabling Ukrainian company to obtain funds directly from the lender which rules out bank from the project. This, of course, makes it possible to reduce the borrowing rates making the trade project cheaper. It is a case of so called “mini IPO”. Having obtained financing of such type, you win international recognition as a reliable borrower with minimal financial risks which is a total success, as the risks of our country on the whole continue to be at the top level for the international community”, – said Anna Pobedimskaia, IBcontacts Trade Projects Coordinator.
However, when rendering services to the Ukrainian businesses that, due to a number of reasons, are still unable to borrow directly from foreign banks, we attract to the projects Ukrainian banks which are essentially acting as guarantors. In this case these are the banks who obtain loans to finance Ukrainian companies’ projects.