The Council of Ministers has approved the Royal Decree (RD) that develops Law 8/2014 on coverage by the State of the risks of the internationalization of the Spanish economy. The norm defines the operations and modalities covered, the risks covered by the State, the mechanism for the payment of claims or the separation between the own account and the State account.
With the approval of this RD, the reform of the legal framework for export credit insurance ends, whose regulation dated from 1970, when the Spanish Export Credit Insurance Company (CESCE) was created. Furthermore, it adapts the regulatory framework to that of most OECD countries, such as France and Germany, and seeks to fully support the export effort of Spanish companies.
The RD is part of the 2014 Strategic Plan for the Internationalization of the Spanish Economy to boost competitiveness and the contribution of the foreign sector to the growth of the economy and job creation in the medium and long term.
The regulation is at the same time a further step in the CESCE privatization process. State ownership of capital has ceased to make sense since the company's main activity is carried out in the private sector in a highly competitive market. Notwithstanding this, the RD guarantees public control of the insurance on behalf of the State, regardless of the ownership of the company. In short, it seeks to make greater efficiency compatible with the private management of risk coverage and the future privatization of CESCE, with the official nature of financial support.
After the approval of this RD, which was passed by the Council of State on November 21, the Management Agreement between the State and CESCE must also be approved.
These are the most outstanding contents of the RD:
Coverage modalities.- Instruments to hedge the risks derived from internationalization may take the form of credit and guarantee insurance. There is also a specific section for underwriting in favor of financial entities.
Risks.- Develops the risks covered by the State, which may be commercial, political, extraordinary, or of any other nature, provided that they are provided in the authorized guarantees or in the insurance policy modalities authorized or that can be authorized by the Minister of Economy and Competitiveness as risk coverage on behalf of the State.
Operations.- It delimits the internationalization operations that are the object of coverage and details the special circumstances in the event that the requirements to define an operation as strategic are not fulfilled. These special circumstances include the promotion of the brand, the transfer of technology, the project's contribution to improving the productivity of investments abroad, the acquisition of carbon credits or the manufacture of equipment supplied by Spanish subsidiaries in third parties. countries. It also establishes as special circumstances the connection of the operation with concession contracts for the provision of services that involve the investment of Spanish companies abroad and those of national companies that provide the above goods and services, or that are necessary and complementary contracts. to carry out internationalization operations.
Claims payment.- It establishes a procedure for the processing and verification of the claim, or the payment formula and compensation.
Designation of the managing agent and conflict of interest.- For the selection of the Managing Agent, a series of merits are defined and the definition of conflict of interest is specified, both for reasons of control and significant linkage.
Separation between the own account and the account of the state in the managing agent.- It specifies the separation of activities established in the Law. This separation must be approved once the Management Agreement is signed, at the beginning of the activity, by the Secretary of State for Commerce and the General Directorate of Insurance and Pension Funds.
Management agent remuneration.- It sets a maximum limit of 20% of the premiums paid, net of cancellations and returns, for the contracted coverage, divided into two sections: a fixed and a variable section. The percentage of each of these tranches will be set in the Management Agreement, based on costs, management efficiency, compliance with the objectives and guidelines of commercial policy and efforts to modernize resources and improve resources. intended for the management of the State account, among others. However, it establishes a transitional period where the remuneration will be 20% fixed from the moment in which the loss of the majority of the State capital in CESCE occurs and the end of the calendar year in which said loss occurs, and during the following natural year.
Operation of the Risk Commission.- Regulates aspects such as substitution, vice-presidency, constitution and majorities or work groups.
Rates.- It develops different aspects of the fees charged by the Managing Agent, both in its proposal and in its amount. It establishes that they will be adequate to cover the operating costs of the system and potential long-term losses, taking into account the circumstances of foreign areas or markets, and taking into account the credit rating of exporters and importers and the guarantees provided in the operation.
Reserve Fund for the risks of internationalization.- It develops different aspects of the budgetary, economic-financial, accounting and control system to cover the risks of internationalization. As for the management of the Fund, the signature includes a management agreement between the Insurance Compensation Consortium and the Secretary of State for Commerce to define rights, obligations and tasks to be carried out, in addition to other aspects such as the provision of funds, settlement of accounts, accounting and control.