D Insurance of an export buyer credit against the risk of non payment Examination cut-off criteria of banking entities

Banking entities

The basic evaluation criteria in providing insurance of export credit risks which EGAS as the insurer primarily assesses mainly based on information provided by the applicant for insurance, and the fulfilment of which has negative impact on the possibility to provide insurance of export credit risks, are the following:

  • The bank, its actual owners and other members of its financial group1 the composition of which is and should be known to the applicant for insurance2, and the country of the registered office of the bank are subject to international sanctions regimes;
  • The bank, its actual owners3 and/or subsidiaries do not comply with regulations on the prevention of money laundering and terrorist financing2;
  • The bank and/or its actual owners3 and/or subsidiaries are subject to insolvency proceedings or similar proceedings as the obligated person2;
  • The bank is not a duly established and existing company and is not entitled to carry out activities as a bank.

1 The parent company, a subsidiary and another company of the financial group. Financial group of an entity is a group of natural or legal persons, where:

  1. two or more natural or legal persons that, unless proven otherwise, constitute a single risk since one of them has direct or indirect control over the other person(s);
  2. two or more natural or legal persons between which there is not a relationship of control referred to in (a) but that must be seen as persons constituting a single risk because they are interconnected to such extent that if one of them got into financial difficulties, mainly difficulties with funding or payback, the other person or all other persons would probably also got into difficulties with funding or payback,

control is understood as a relationship between the parent company and a subsidiary company (persons) where the controlling person (parent company):

  1. has a majority of voting rights of shareholders or members in the other company; or
  2. has the right to appoint or remove a majority of the members of the administrative, managing or supervisory body of the other company and is concurrently a shareholder or member of the company; or
  3. has the right to exercise a dominant influence on any company it is a shareholder or member of within the meaning of a contract concluded with it or pursuant to its constitution or memorandum of association where the law which governs the company allows that it is subjected to such contracts, constitution or memorandum of association; or
  4. is a shareholder or member of any other company and
    1. a majority of members of the administrative, managing or supervisory body of this company who were members of these bodies during the current and previous accounting period until the time of preparation of consolidated financial statements, was appointed solely using their voting rights, or a share in any other company is at least 20%; or
    2. exercises, based on an agreement concluded with other shareholders or members of this company, a majority of voting rights of shareholders and members in this company.

A group of natural or legal persons consisting of central government and all natural or legal persons directly or indirectly controlled by it or interconnected as referred to in (b) are not considered a financial group.
The existence of a financial group made of central or regional government or local bodies ("central bodies") and other natural or legal persons may be assessed separately for each of persons directly controlled as referred to in (a) or directly interconnected as referred to in (b) or all natural and legal persons that are controlled by this person as referred to in (a) or interconnected with this person as referred to in (b), including central bodies.

2 The information follows from data which the applicant for insurance has available and/or from publicly available sources as of the date of examination.

3 Actual owner means

  1. legal or natural person that factually or legally exercises directly or indirectly decisive influence on the management or operation of the bank's enterprise; indirect influence means influence exercise through another person or other persons,
  2. legal or natural person that itself or based on an agreement with another member(s) disposes of more than 25% voting rights of the bank; disposing of voting rights means a possibility to exercise voting rights based on one's own discretion regardless of whether and on the basis of what legal reason they are exercised, or a possibility to influence the exercise of voting rights by another person,
  3. legal or natural persons acting in concert that dispose of more than 25% of voting rights of the bank, or
  4. a legal or natural person that is the recipient of the proceeds of the bank's activities based on another fact.
© EGAP  2017
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