Bridge over troubled waters

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Michal Ron –Head of International Relations and Network @SACE …

Michal Ron –Head of International Relations and Network @SACE

Italian Festival in Bulgaria 2010
Forum economico “Bulgaria-Italia: insieme per uscire dalla crisi”

Sofia, 7 giugno 2010

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  • 1. Bridge over troubled waters Sofia, 7th June 2010 Michal Ron – Head of International Relations and Network
  • 2. THE LEADING ITALIAN CREDIT MANAGEMENT COMPANY  Export credit and Project Finance We offer solutions for the  Protection of foreign investments integrated management  Financial guarantees of commercial and political risks  Credit insurance  Surety and construction risks 2
  • 3. Our strengths Over 30 years of providing risk management EXPERIENCE solutions to small and medium-sized business and large corporations Aa2 credit rating (Moody’s) FINANCIAL SOUNDNESS Shareholders’ equity: € 5.9 Bn Outstanding commitments for over € 50 Bn to RELIABILITY insure commercial and financial transactions in over 180 countries Insured business: € 34 Bn, + 22% yoy FINANCIAL RESULTS Consolidated net income: € 460 Mn, + 32% yoy Gross written premiums: € 430 Mn, + 13% yoy 3
  • 4. Risks insured by geographical area (31/03/2010) Turkey 7,1 % SACE Exposure Others 25,0 % 1. Italy 15% Russia & CIS 2. Russia 13% 16,3% 3. Turkey 8% … 6. Balkans 4.5% North Sub of which: America Saharian 4,5 % Af rica Bulgaria 2% € 0.5 Bn 2 ,1% LATAM Asia Pacif ic 5,5% 6,5 % Balkans Europe 4,5 % 28,4 % TOTAL 35,3 bln Outstanding Guarantees We cover political and commercial risk in over 180 countries 4
  • 5. Economic trends in recession: ECAs’ role • The contraction of international trade in 2009 has been dramatic. The main drivers of the trade collapse have been the strong reduction of demand combined with an increase in the elasticity of world trade. • Part of the international response to the global crisis has involved, and is involving, support to trade financing. Export Credit Agencies have played an important role in the recovery, and their contribution is still essential in supporting economic growth. • In a global context of growing uncertainty, where risks are more unpredictable and banks that greatly scaled down their lending facilities, dramatically increased their liquidity spreads and show little or no willingness to share risk, the role of ECAs appear even more determinant in helping enterprises to carry on their activities. 5
  • 6. The evolution of an ECA: a time pattern Marketable risk Pure Market Player EDC (Canada) SACE (Italy) ONDD (Belgium) Nordic Agencies NEXI (Japan) European Emerging Markets Agencies EFIC (Australia) Sinosure (China) Non marketable risk KEIC (Korea) Euler (Germany) Coface (France) Atradius (Netherlands) Pure CESCE (Spain) U.S EXIM OekB (Austria) ECA ECGD (UK) Traditional products Advanced products 6
  • 7. The evolution of SACE: increasing our scope as a global partner PRODUCTS Export Bank Factoring Bonding & Surety Financial Guarantee PRI insurance DURATION CONTENT Credit Insurance Working Capital Export Credit Export Credit Export Credit (Short Term) Facilities OECD regulated MADE BY UNTIED SME Credit Insurance/ Enhancement Domestic Strategic Sectors MARKETS 7
  • 8. Our outlook on the Region • Before global crisis, large capital inflows into Bulgaria generated a robust GDP growth. • At the end of 2008, capital inflows sharp decrease led to a contraction of domestic demand, whereas the recession in Bulgaria’s trading partners caused a drop in exports (GDP growth: -5,1% in 2009) • In 2010, due to the recovery in global GDP, which growth will stimulate exports, Bulgarian GDP is projected to increase by 0.2% • The main challenge for the banking system will be to absorb the increase in NPLs. Anyway, thanks to prudent regulation, the banking system has built up substantial buffers during the boom years. • Some concerns derive from the fact that 28% of the Bulgarian banking sector is held by Greek banks. Anyway the general assumption is that Greek parent banks will support their investments in the Region. 8
  • 9. SACE Market Risk Index BULGARIA SACE Terms of Cover Sovereign Risk open Corporate Risk open Bank Risk open OECD Country Risk Category 4/7 Consensus Category 2 RISK: M2 9
  • 10. SACE’s support in Bulgaria € 454 Mn (2% of total portfolio, 13th Country in Total Exposure terms of total exposure) 21 new operations in the last three years, New Guarantees mostly transactions involving Italian SMEs Several potential transactions under current Pipeline evaluation, for a total amount of € 70 Mn € 659 Mn € 12 Mn € 1.5 Mn Financial Guarantee Buyer Credit Buyer Credit Modernisation of Stara Zagora plant Supply of a four-high combination Plant for the production of tiles reversing mill 2006 Bulgaria 2007 Bulgaria 2009 Bulgaria 10
  • 11. SACE’s Balkans Programme • After a long period of political instability and economic distress related to the breakup of ex-Yugoslavia, the Balkans have reached a more stable situation and commenced implementing important reform programs. • In December 2006 SACE adopted a more open approach towards the Region in response to the growing request for SACE’s support from Italian exporters. • SACE’s cover policy takes into consideration the improvements in the Countries’ political and economic situation and, regarding sovereign risk, the presence of IMF ceilings on public or publicly guaranteed debt. • The Balkans Programme has allocated an amount of € 300 Mn to directly support transactions in the Region. 11
  • 12. SACE’s future office in Balkans Balkans region plays a strategic role for Italy. Trade flows between our firms and these Countries have been increasing significantly in the last years. New business opportunities have emerged for Italian firms in the context of growing political stability and economic expansion. Considering the positive market outlook and the business opportunities under current evaluation, SACE wishes to establish a formal presence in the Region through the opening, in 2010, of a Representative Office in Bucharest. The new office will act as a reference point for Italian exporters and their local partners and will enable SACE to further expand its Balkan operations and meet the growing demand for our support provided to investments in the Balkan Region. 12
  • 13. SACE’s International Network MOSCOW BUCHAREST* ISTANBUL* HONG KONG MUMBAI* SAO PAULO JOHANNESBURG * To be opened in 2010 13
  • 14. How to contact us ITALY WORLDWIDE www.sace.it Customer care: +39 06 6736000 Bari China Via Amendola 172/5 - 70125 Bari 40/f Suite 4001 - Central Plaza 18 Tel. +39 080 5467763 • Fax +39 080 5467764 Harbour Road - Wanchai, Hong Kong Tel. +852 36202323 • Fax +852 36210227 Lucca HEAD OFFICE Via Dante Alighieri 167 - 55100 Lucca South Africa Rome Tel. +39 0583 40071 • Fax +39 0583 400790 Two Commerce Square Piazza Poli 37/42 - 00187 Rome 39, Rivonia Road Tel. +39 06 67361 • Fax +39 06 6736225 Milan Corner Melville Road Sundhurst Via A. De Togni 2 - 20123 Milan 2196 Sandton, Johannesburg Tel. +39 02 4344991 • Fax +39 02 434499749 Tel. +27 11 2680623 • Fax +27 11 2680617 Modena Brazil Via Elsa Morante 71 - 41123 Modena Avenida Paulista 1971 - 4° andar Tel. +39 059 891240 • Fax +39 059 820832 01311-300 Sao Paulo Tel. +55 11 31712138 • Fax +55 11 32664051 Monza c/o Unione Industriali Monza e Brianza Russia Viale Petrarca 10 - 20010 Monza c/o ICE - Office n.1202 Tel. +39 039 3638262 • Fax +39 039 3638208 Krasnopresnenskaja Naberejnaja 12 123610 Moscow Rome Tel. +7 49 52582155 • Fax +7 49 52582156 Piazza Poli, 37/42 - 00187 Rome Tel. +39 06 6736309 • Fax +39 06 6736770 New openings: Istanbul, Bucarest. Turin c/o ICE - Via Bogino 13 - 10123 Turin Tel. +39 011 836128 • Fax +39 011 836425 Venice Viale Ancona 26 - 30172 Venice Mestre Tel. +39 041 2905111 • Fax +39 041 2905103 14