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UK Export Finance announces first Direct Lending Facility loan

Inaugural panel announced of 20 partnering institutions to help deliver £3 billion support to UK exporters.

UK Export Finance (UKEF), the UK’s export credit agency, today 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% 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 UKEF, which during the last five years has provided over 1,500 guarantees and insurance policies with an exposure value in excess of £14 billion, 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
  • Banco Santander
  • Bank of China
  • Barclays Bank Group
  • Cargill Inc/Cargill Financial Services International
  • Citibank NA
  • Crown Agents Bank
  • Deutsche Bank
  • Ecobank Nigeria
  • HSBC Bank Group
  • Investec Bank
  • JPMorgan Chase Bank Group
  • Lloyds Banking Group
  • Natixis
  • NorthstarTrade Finance/Sovereign Star Trade Finance
  • Societe Generale
  • 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 it’s 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 and 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.

  1. UK Export Finance is the UK’s export credit agency. It supports long term economic growth and competitiveness by complementing the private market with insurance for exporters, loan guarantees to banks, and support for and provision of loans to overseas buyers of UK goods and services.
  2. Sectors in which UKEF has supported exports include: aerospace, petrochemicals, construction, oil and gas, mining and metals, telecommunications, and transport.
  3. The enhanced DLF was announced by the Chancellor of the Exchequer in March 2014 and many transactions are under active consideration. These transactions range in value from £5 million to over £500 million.
  4. Dubai World Trade Centre LLC is the largest events and conference provider and facility in the Middle East, North Africa and South Asia (MENASA) region, attracting more than 2.2 million visitors and over 400 major events annually. The Carillion contract includes a hotel, an office block and associated infrastructure.
  5. The interest rate under the DLF will be charged at the lowest rate permitted in accordance with the OECD Arrangement.
  6. UKEF has a regional network of Export Finance Advisers supporting export businesses.
  7. Prior to the appointment of the DLF panel, direct lending was available directly through UKEF. The new arrangements are intended to make it easier for the buyers of UK exports to access the loans, extending the global reach of UK exporters.
  8. Deutsche Bank is a leading provider of export finance for the benefit of its clients around the world. Under the DLF, Deutsche Bank is co-financing the loan in partnership with UKEF.
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