Finnvera Oyj - Company Announcement

Financing for the working capital of SMEs and export credit guarantees for long-term financial arrangements

Information on Finnvera's operations in 2011

The year just ended was busier than 2010 for SME financing, with demand
increasing by 13 per cent. In contrast, demand for export credit guarantees and
special guarantees in 2011 was nearly one third less than in 2010. Apart from
seasonal changes in individual capital goods transactions, uncertainty factors
postponing investment decisions also contributed to the decline. The number of
Finnvera's financing offers increased, especially in export financing, owing to
the brisk demand for export credit guarantees in 2010. 

“Signs of growth were really in the air in spring 2011 but then something
happened during the summer and the market atmosphere changed completely. The
euro crisis dominated the news in autumn, but enterprise financing continued
almost normally in Finland and there was no significant weakening in the real
economy. Banks operating in Finland and Finnvera together provided even
slightly more financing for enterprises than in 2010,” says Pauli Heikkilä,
Managing Director of Finnvera, recapitulating last year's events. 

SMEs needed working capital

In 2011, Finnvera provided EUR 866 million in financing for enterprises'
domestic operations; this was 3 per cent more than the year before. Owing to
the economic situation, companies have also faced other types of financial
challenges; for many, counter-cyclical financing has been one solution. The
volume of counter-cyclical financing granted exceeded the figure for 2010 by
well over a half: in total, 410 enterprises received EUR 173 million. Finnvera
can still offer counter-cyclical financing until the end of 2012. 

Many offers for export credit guarantees from Finnvera

Offers given for export credit guarantees and special guarantees totalled EUR
3.9 billion; this was over one and a half times more than in 2010 (2.4
billion). Telecommunications accounted for 28 per cent of all guarantee offers
given. Among individual countries, the most guarantees were granted for exports
to Uruguay, Germany, South Africa and Russia. The increase in guarantee offers
in a situation where the number of applications fell indicates that
negotiations in capital goods exports take time. The first contact with
Finnvera is taken several months, even years before the deal comes through. 

“Uncertainty and slowing down of economic growth were reflected in Finnvera as
shrinking demand for export credit guarantees in 2011. The downturn in the
availability of long-term financing for exports was another factor contributing
to the fall in demand. It seems that, owing to the situation on the financial
market and the changes in regulatory practices, the role of banks is shifting
from the provision of long-term financing towards the arrangement of large
export credits,” Heikkilä says. 

New tools for export financing

At the start of this year, Finnvera began to finance export credits. The new
export financing system helps to ensure the competitive standing of Finnish
export companies. The system is intended for arranging long-term financing for
foreign customers who buy Finnish capital goods. 

Finnvera has launched a new SME Export Finance Programme for small and
medium-sized enterprises. The programme is intended for SMEs that engage
actively in direct exports. Together with banks, Finnvera gives them a
practical opportunity to learn about payment methods and various financial
arrangements for exports. The companies for the programme are selected on the
basis of applications. The first application period will end on 24 February
2012. 

Future prospects

Restlessness on the financial market and uncertain prospects for the world
economy will slow down economic growth in Finland, too. According to the
current year's first statistics, demand for Finnvera's financing for working
capital among SMEs remains. Close cooperation between Finnvera and banks
ensures that SMEs with prerequisites for profitable business will receive
financing even during a period of low economic activity. 

The uncertainty on the financial market, triggered by the high debt rates of
developed economies, has darkened the future expectations of export companies.
The new model for financing export credits granted by banks is likely to
increase Finnvera's share of buyer credit arrangements. 

Finnvera's financial statements and annual report for 2011 will be published on
20 March 2012 on the company's website www.finnvera.fi . 

Additional information:
Pauli Heikkilä, Managing Director, tel. +358 20 460 7321
Topi Vesteri, Executive Vice President, tel. +358 20 460 7238 (Financing of
exports) 
Annamarja Paloheimo, Senior Vice President, tel. +358 020 460 7267 (SME
financing)