Inaugural panel announced of 20 partnering institutions to help deliver its £3 billion support to UK exporters
UK Export Finance (UKEF), the UK’s export credit agency announced the first contract to be supported by the Direct Lending Facility (DLF). The enhanced DLF was announced by the Chancellor as part of the Budget in March and is designed to help overseas buyers purchase goods and services from UK exporters.
A US $110 million buyer credit loan under the DLF has helped Carillion to secure a significant contract with Dubai World Trade Centre LLC in Dubai. The loan has been arranged by Deutsche Bank who are also providing 50 per cent of the lending. Deutsche Bank is a member of the inaugural panel of partnering institutions that will help UKEF deliver the £3 billion facility.
Chancellor of the Exchequer, George Osborne said:
“Helping British companies’ access global markets is a key part of our long term economic plan. So today I’m delighted to announce the first deal supported by UK Export Finance’s Direct Lending Facility along with the twenty financial institutions that are going to help us deliver the loans.
It is great to see successful companies like Carillion, winning contracts around the world. Today’s deal, the first in a pipeline of many, will help us reverse the age old trend of not exporting enough”.
UKEF has also announced the names of the 20 financial organisations appointed to its panel of partners to help deliver loans under the DLF. In August, the government department, which during the last five years has provided over 1,500 guarantees and insurance policies with an exposure value in excess of £14bn, invited suitably qualified banks and financial institutions to apply to partner it to administer DLF export credit loans, with a closing date for applications of 19 September.
Applicants were asked to satisfy demanding criteria covering their competence, capabilities, and level of expertise and experience in performing the services that underpin the arrangement and administration of specialised export credit finance.
Members of the inaugural DLF panel are:
Australia and New Zealand Banking Group
Bank of China
Barclays Bank Group
Cargill Inc/Cargill Financial Services International
Crown Agents Bank
HSBC Bank Group
JPMorgan Chase Bank Group
Lloyds Banking Group
NorthstarTrade Finance/Sovereign Star Trade Finance
Standard Chartered Bank
T. Garanti Bankasi
The Bank of Tokyo-Mitsubishi UFJ
The Royal Bank of Scotland Group
David Godfrey, Chief Executive of UKEF said: “This is a key milestone in the delivery of the £3 billion Direct Lending Facility. Panel members cover a wide range of overseas markets, with complementary geographical strengths that will make it easier for UK companies to arrange competitive loans throughout a worldwide network. That reach will increase UKEF’s capacity to lend to overseas buyers of UK products and services. It will also provide a springboard to help us cater for the needs of a broad range of companies, in a variety of sectors, requiring loans of different sizes.”
Commenting on the appointment of 16 British Bankers Association (BBA) members to the 20 strong DLF panel, Irene Graham, Executive Director of the BBA said:
“International trade plays a vital role in supporting our economy and the DLF means that export finance will be cheaper and easier for businesses to access. The banking industry has worked with UKEF to revise the facility and its very pleasing to see the range of BBA members that will partner the department. This is invaluable support for businesses selling overseas.”
UKEF supplements the financial support for exporters from the commercial sector and enables banks and other financial institutions to help more customers take advantage of international sales. Under the DLF, UKEF will provide loans to overseas buyers in order to finance the purchase of goods and services from UK exporters. Loans are available to cover new international sales by any business exporting from the UK, to any country where UKEF medium term cover is available, and can be made in Sterling, US Dollars, Euro or Japanese Yen.
In exchange for working with UKEF to provide loans under the DLF, partnering institutions can negotiate fees from borrowers in the normal way and will have the opportunity to develop new business.
Simon Sayer, Head of Structured Trade & Export Finance, EMEA for Deutsche Bank commented: “The competitive terms of the enhanced Direct Lending Facility, backed by expertise from UKEF, provides us with the opportunity to build on the strong know-how and financial support we already deliver to businesses trading in global markets. We are delighted to be the first bank to partner UKEF under this exciting new scheme.”
Carillion Chief Executive, Richard Howson, which is the first UK exporter to be supported by a DLF loan to its client, Dubai World Trade Centre LLC, commented:
“This is a significant and very important contract for Carillion, which will help us to build on our success in the Middle East and make further progress with our strategic objective of growing our business in the Region. The Direct Lending Facility is a major new development that is providing us with the support we need to achieve our export goals.”