Buyer Credit Cover

Product at a glance

Buyer credit cover enables banks to insure their receivables arising from the financing of a German export transaction.

Target group

• German banks
• Branch offices of foreign banks in Germany
• Foreign banks (under certain conditions)

Payment terms of the covered transactions

• Short-term (up to 2 years)
• Medium/long-term (2 years and longer)

Insurable risks

Buyer credit cover offers protection against payment default, particularly if

• the borrower becomes insolvent
• the borrower fails to make payment within one month after due date (protracted default)
• adverse measures are taken by foreign governments or warlike events arise
• local currency amounts are not converted or transferred

Basic forms

Combined buyer credit cover:

• If a bank applies for a Buyer Credit Guarantee, the exporter can take out a Supplier Credit Guarantee to cover in particular the risk of non-disbursement of the buyer credit without having to pay additional premium

Isolated buyer credit cover:

• If an exporter, for example, does not want supplier credit cover, the bank can take out isolated buyer credit cover against the risks arising from a buyer credit. However, in this case, too, an export transaction eligible for support must be the basis (tied buyer credit).

Supplementary cover

If required, cover under a Buyer Credit Guarantee can be supplemented with

• Securitisation Guarantee (for refinancing on the capital market – improved conditions in favour of the refinancing institution)
• Covered Bond Guarantee (for refinancing in the bank’s own covered bond business – cover of the receivable seizure risk in favour of the covered bond creditors)
• Securitisation Guarantee for the KfW Refinancing Programme (opens the possibility to participate in the KfW programme aimed at providing liquidity by means of refinancing Hermes-covered receivables)

Special features

As a rule, cover facilities are available for all countries, with the exception of exports on credit terms of up to two years to EU and core OECD member states (i.e. EU member states, Australia, Canada, Iceland Japan, New Zealand, Norway, Switzerland, United Kingdom and USA); for a limited period of time until 30.06.2021, Export Credit Guarantees of the Federal Republic of Germany are also available for these normally marketable countries (German version). Additional information.

Additional Information

The Association of German Banks (Bundesverband deutscher Banken e.V. - BdB) and the Association of German Public Banks (Bundesverband Öffentlicher Banken Deutschlands, VÖB, e.V.) have jointly obtained a legal opinion on the validity and enforceability of the Buyer Credit Cover for the purposes of Art. 194 (1) subpara. 1 of the Regulation (EU) No 575/2013 (CRR). Under certain circumstances the opinion can, upon request, be made available to institutions within the meaning of the CRR. Request should be directed to the banking association the relevant institution is a member of, which in turn should then contact the BdB or VÖB.

Premium

• One-time premium calculated as a percentage of the order value covered (interest excluded) as well as specific processing fees
• For a detailed calculation there is an interactive premium calculator (German version only) available.

Uninsured portion

5 % for all risks

This product can be applied for online.