The Council of Ministers has approved the Royal Decree (RD) that develops Law 8/2014 on coverage on behalf of the State of the risks of internationalization of the Spanish economy. The rule 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, whose regulation dates back to 1970, when the Spanish Export Credit Insurance Company (CESCE) was created. In addition, 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 Strategic Plan for the Internationalization of the Spanish Economy 2014 to boost the competitiveness and contribution of the foreign sector to the growth of the economy and the creation of employment in the medium and long term.
The rule constitutes one more step in the privatization process of CESCE. The ownership of capital by the State has ceased to make sense since the company's main activity takes place in the private sector in a highly competitive market. Notwithstanding the foregoing, the RD guarantees public control of the insurance on behalf of the State, regardless of the company's ownership. 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 ruled by the State Council on November 21, the Management Agreement between the State and CESCE must also be approved.
These are the most prominent contents of the RD:
Modalities of coverage.- The instruments for coverage of risks arising from internationalization may take the form of credit and guarantee insurance. There is also a specific section for insurance in favor of financial institutions.
Risks.- Develop the risks covered by the State, which may be of a commercial, political, extraordinary, or any other nature, provided that they are provided for in the authorized guarantees or in the insurance policy modalities authorized or that may be authorized by the Minister of Economy and Competitiveness as a hedge of risks on behalf of the State.
Operations.- It defines the internationalization operations covered and details the special circumstances in case the requirements to define an operation as strategic are not met. Among these special circumstances it includes the impulse of the brand, the transfer of technology, the contribution of the project to the improvement of 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 linkage 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 previous goods and services, or that are necessary and complementary contracts. to perform internationalization operations.
Payment of claims.- It establishes procedure for the processing and verification of the accident, 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 for significant linking.
Separation between the own account and the state account in the managing agent.- 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.
Remuneration of the managing agent.- It marks a maximum limit of 20% of the premiums paid, net of cancellations and externals, for the contracted hedges, divided into two tranches: a fixed tranche and another variable. The percentage of each of these sections will be set in the Management Agreement, depending on the costs, the efficiency in the management, the fulfillment of the objectives and guidelines of commercial policy and the efforts in modernization of means and improvement of resources destined to the management of the State account, among others. However, it establishes a transitional period where the remuneration will be a fixed 20% 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 working groups.
Rates.- It develops different aspects of the fees charged by the Managing Agent, both in its proposal and 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 the 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 of the coverage of the risks of internationalization. Regarding the management of the Fund, the firm collects a management agreement between the Insurance Compensation Consortium and the Ministry of Commerce to define rights, obligations and tasks to be developed, in addition to other aspects such as the provision of funds, Account settlement, accounting and control.