Committee Reports > List of Committees > Joint > 1977 > Committee on the Secondary Legislation of the European Communities > Report No. 52 - European Export Bank, Establishment

REPORT

1. Introduction

The Joint Committee has examined the proposal made by the Commission in February, 1976 for a Council Regulation (EEC) setting up a European Export Bank (S/349/76).

The idea of setting up a European Export Bank was first mooted in a Communication sent by the Commission to the Council in July, 1975. The Commission drew attention to problems of obtaining export credit insurance and finance for the large and increasing number of major multinational projects undertaken jointly by companies based in different Member States. In the Commission’s view European consortia are at competitive disadvantage because of the backing their American and Japanese competitors receive. Pointing to the wide divergences between the practices of the various national export credit organisations of the Member States, the Commission suggested the desirability of creating a European Export Bank and undertook to consult export credit insurers and industrial and banking circles in the Community on the matter. Following these consultations the Commission made its formal proposal in February, 1976.

2. Contents of Proposal

The proposal envisages setting up a European Export Bank which would operate within the guidelines of Community commercial, economic and financial policies and in accordance with Commission directives which the Council could amend or rescind. Its purpose would be to facilitate exports of goods and services to third countries by undertakings located in two or more Member States “where such exports constitute operations of common European interest”. It would give assistance by way of finance (conditional on the availability of other financing facilities) or credit insurance “where appropriate, in co-operation with the credit insurance institutions in the Member States”.

The initial capital of 100 million units of account would be provided by the Community but the Bank would be entitled to raise most of its finance by borrowings on the financial markets secured by a Community guarantee.

The Bank would be directed by a board of directors, of which each Member State and the Commission would nominate one member; the Commission’s nominee would have a power of veto. The Management Committee would consist of a Chairman and four others appointed by the Directors.

3. Implications for Ireland

The Commission apparently envisages that where the Bank acts as export credit insurer it would seek to reinsure itself in whole or in part with public or private sector insurers. If it is intended that the Bank would seek to reinsure Ireland’s portion of an insured contract with the national export credit insurer, the Committee understands that it would be feasible to so arrange under the provisions of the Insurance Act, 1953, as amended. The present credit insurance scheme operated through the agency of the Insurance Corporation of Ireland is based on these provisions.

As far as the initial capital is concerned, Ireland’s contribution would be about £253,000 but it is not possible at this stage to quantify what further liability might arise in respect of provision for guarantees, initial expenses and any debit balance arising from the operations. The European Communities (State Financial Transactions) Regulations, 1972 contains legal authority for making whatever payments might be necessitated.

As far as the practical implications for exporters are concerned the Committee has been informed that the Bank would be concerned principally with major capital goods projects involving credit in excess of five years i.e. in excess of the normal maximum period of credit for the types of capital goods currently produced in Ireland.

However, the Confederation of Irish Industry fully supports the proposal. The Confederation has pointed out that since the present national scheme for export credit insurance was established in 1970, the export of capital goods has increased and that many new industries set up in recent years are in the capital goods field. It expects that, even without the stimulus expected from a European Export Bank, the demand for concessional finance to support exports of such goods will exceed £60 million within a few years. Moreover, the Confederation has stated that since Ireland’s accession to the EEC, firms here have successfully negotiated joint venture projects with firms in other Member States. It believes that the establishment of a European Export Bank would create opportunities for more of such ventures and, in particular, would help firms here to participate as sub-contracting parties in multinational projects. The Confederation believes that such developments would assist in bringing new technology to Ireland and in attracting further investment.

The Joint Committee has been impressed by the case made by the Confederation. It believes, therefore, that the proposal should be supported if the technical examination of it shows that the Bank would have a reasonable prospect of achieving the object the Commission has in mind.

4. Acknowledgements

The Joint Committee wishes to thank the Confederation of Irish Industry and the Irish Bankers’ Federation for their assistance in dealing with this proposal.

(Signed) CHARLES J. HAUGHEY,

Chairman of the Joint Committee.

23rd March, 1977.