EC approves Dutch state support for trade credit cover

The European Commission has approved a Dutch guarantee scheme to support the trade credit insurance market in the face of the coronavirus outbreak. This follows similar state support schemes in France, Germany, the UK and Belgium. The Dutch scheme means the state would share the risk with insurers and provide up to €1bn of capacity. European Commission executive vice-president Margrethe Vestager, in charge of competition policy, said earlier this week: “The Dutch guarantee scheme will help ensure that trade credit insurance remains available to all companies to secure their commercial exchanges. This will protect their liquidity needs and help them continue their activities in these difficult times. We continue working closely with member states to ensure that national support measures can be put in place in a coordinated and effective manner, in line with EU rules.” The EC noted that given the economic impact of the coronavirus outbreak, the risk of credit insurers pulling cover and restricting capacity has risen rapidly. “The Dutch scheme ensures that trade credit insurance continues to be available to all companies, avoiding the need for buyers of goods or services to pay in advance, therefore reducing their immediate liquidity needs,” it explained. The state support scheme complements a series of measures that Atradius Dutch State Business, the national export credit agency, has already implemented to support exporters of capital goods, as well as contractors and engineers operating internationally, during the crisis period. The package was designed in consultation with entrepreneurs and the Dutch government, explained Atradius. One important change is that coverage has been enabled on short-term export credits with terms of less than two years. “As a result of this coronavirus crisis, it is anticipated that export transactions based on short-term credits will be more difficult to insure in the private market. In order to support Dutch manufacturers of capital goods or services, or Dutch contractors and engineers, in their transactions with buyers from high-income countries (EU and OECD), there will be opportunities to insure them on a single-transaction base. The temporary framework for state aid measures (European Commission) is applicable,” explained the insurer. The package also means that indirect export transactions are now insurable. “This measure will allow Dutch manufacturers of capital goods or services or Dutch contractors and engineers to increase their revenue-generating capacity by securing domestic transactions, as long as there is an (indirect) link to export,” said Atradius. The package has also extended the insurer’s country policies and country ceilings, which means exporters have more opportunities to make transactions. “We offer exporters the opportunity to discuss transactions with us at an early stage that do not currently comply with the country policy. We will then consider whether we can provide insurance for these transactions,” Atradius explained. The insurer has also increased the percentage covered on counter-guarantees and working capital insurance, and removed the usual 5% down-payment requirement.“Temporarily, we relinquish our requirement that a buyer makes a minimum down payment of 5% when a transaction takes effect. This down payment can be made at a later time, but at the latest upon delivery. The requirement remains that a buyer must pay at least 15% from their own resources,” said Atradius.

EC approves Dutch state support for trade credit cover

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