This insurance product is designed to cover the risk of non-payment under a letter of credit (including with financing) which is confirmed by a Russian bank. Policies cover banks adding their confirmation to a letter of credit guaranteeing payment for goods (work or services) exported from Russia under contract.
What is insured?
The confirmed documentary letter of credit (including with financing) supplied to make a payment under an export contract
Who is the insured?
The insured is the Russian or foreign bank that adds its confirmation to a letter of credit issued by an overseas bank (often the buyer’s bank)
What is the term of an insurance contract?
The insurance period corresponds to the term prescribed for the issuing bank to fulfil its obligations to the confirming bank
Degree of insurance coverage
Insurance covers both commercial and political risks related to non-fulfilment of the overseas issuing bank’s obligations
- Increases the volume of banking operations
- Minimizes the cost of financing for the borrower, while lengthening financing schedules
- Insurance contracts offered by EXIAR qualify as first-class security, thereby minimising reserve requirements
- EXIAR insurance may cover a bank loan (in addition to the principal) extended to the borrower for financing the agency’s insurance premium
- Strengthens the competitiveness of Russian companies in international markets
- Provides the opportunity to finance export projects being implemented in “difficult” regions
- A substantial reduction on the capital load of Russian banks: with an EXIAR insurance contract, lending requirements and requirements concerning payable (accrued) interest denominated and/or allocated in roubles or foreign currency fall under the 3rd (0.5) asset group
The review procedure for export projects consists of 7 stages and takes between 12 and 29 days.
Documentation required to review a project:
- A brief description of the export project or an insurance application (using the agency’s form)
- Information on the overseas borrower, including financial records (balance, profit and loss account), ownership structure, information on the group of companies that the counterparty is a member of, and the group’s consolidated management accounts (if applicable)
- An export contract (or draft version)
- A credit agreement (or draft version)