Improving the Role of Eximbanks/ECAs in the OIC Member States
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Eximbanks in other countries and ECAs who provide financing facilities will also be potentially
valuable sources both of specimen documentation and technical advice on policy and practice, either
direct or via the Berne Union/Prague Club.
Crucial to the work on documentation and facilities will be full consultation with potential customers
in the exporting companies and banks and local brokers. Some formal committee or group for doing
this could be helpful.
f. Approvals and Authorities.
A very important task which should be done as soon as decisions have been taken on the range of
facilities which will be provided by the new entity is to analyze and list the approvals and authorities
which will be necessary.
A first stage point is whether or not new or amended legislation or legislative approval will be
required. If it is required, what is the timescale likely to be involved? Will any legislation be
controversial?
Two key stages will be first obtaining the necessary approval(s) for the preparation and introduction
of legislation and, second, having the legislation drafted.
At all stages of the legislative process there will be a significant amount of briefing required and also
some expertise and experience in the handling of legislation.
Legislation is normally drafted by specialist lawyers – Parliamentary Counsel or Draftsmen – and
again full and timely briefing will be essential. Legislation is, however, only part of the story. If the
entity is to provide financing facilities either direct to companies or via banks or other financing
institutions, then it may be necessary to get approval from those responsible for the registering and
monitoring of financial services institutions – normally the Banking Regulator or Supervisor or
Central Bank. Compliance with Basel III is of course part of this process. Any approval may come with
conditions and requirements.
If the new entity is to provide insurance facilities, then similarly it may be necessary to get
approval/sanction from the institution responsible for insurance regulation and supervision. Again
any approval may come with conditions and requirements, e.g. in respect of reserves to be held and
provisions against loss.
In some countries, Government entities are exempted from banking and insurance supervision but it
is very important to get absolute and authoritative clarification on these issues at an early stage.
g. Financing.
Additional considerations in respect of possible implications arise if the new entity is to provide
financing. This is the case whether or not financing is to be provided direct to companies, direct to
banks or other financing institutions or to companies via banks.
Analysis of risk will arise for both insurance and financing facilities and will include appraisal of the
recipient of the facility in terms of performance, status, balance sheet and financial strength and track
record, whether these are companies or banks/financial institutions.
However, when financing is involved, one issue which is much more important than in the case of
insurance is the availability and enforceability of security – e.g. the value of personal guarantees from
owners of local companies or of parent company guarantees or letters of comfort from the parent
companies on respect of their subsidiaries or of any assets pledged as security in respect of lending.