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New country risk classifications for Russia and Belarus

16.03.2022

Due to current developments in connection with the Russian attack on Ukraine, the country risk experts of the OECD performed an extraordinary review of the country risk classifications of Russia and Belarus.

The seven-level country risk classification (1 = lowest risk, 7 highest risk) was introduced on OECD level in 1999 and constitutes one parameter for the calculation of the premium. Compared with the classification so far, there have been the following changes that will take effect on 18 March 2022:

 

Country   New categorie    Previous category
Belarus

7

6

Russia   

7

4

Suspension of cover for Russia and Belarus

28.02.2022

In view of the Russian attack on Ukraine the Federal Government suspended the granting of Export Credit Guarantees (so-called Hermes Cover), United Loan Guarantees and Investment Guarantees of the Federal Republic of Germany for Russia and Belarus on Thursday, 24.02.2022, until further notice. Any applications for state guarantees in respect of these countries will not be processed.

Besides, an EU-wide ban on export credit and investment guarantees for Russia entered into force on Saturday, 26.02.2022. Already existing export credit and investment guarantees will continue to protect exporters, financing banks and investors against bad debt losses and political risks in Russia and Belarus.

Moreover, the Interministerial Committee decided to suspend all existing cover facilities under Wholeturnover Policies (APG) for future deliveries and services. On application, exceptions may be granted for humanitarian goods.

With regard to applications for cover of exports to Ukraine, the Federal Government is closely monitoring the constantly changing situation. The Federal Government’s primary objective is to continue supporting Ukraine economically in the best possible manner. Decisions on applications for cover will be taken on a case-by-case basis taking into account the actual risk situation. Here, too, cover under existing export credit guarantees remains in force.

We will keep you informed of further developments. 

ADDITIONAL INFORMATION

Here you will find a collection of news items from the Federal Ministry for Economic Affairs and Climate Action (BMWK) and the Federal Office for Economic Affairs and Export Control (BAFA):

Cover policy export credit guarantees

Russia

country risk category 7 of 7

On Thursday, 24.02.2022, the Federal Government suspended the granting of export credit guarantees for Russia until further notice. Besides, an EU-wide ban on export credit guarantees for Russia entered into force on Saturday, 26.02.2022. 

 

short-term business

No cover available.

 

country-related provisions (Wholeturnover policies (APG))

No cover available. Deliveries under existing APG-limits must no longer be made. On application, exceptions may be granted for humanitarian goods. 

 

medium/long-term business

No cover available.

Belarus

country risk category 7 of 7

On Thursday, 24.02.2022, the Federal Government suspended the granting of export credit guarantees for Belarus until further notice.

 

short-term business

No cover available.

 

country-related provisions (Wholeturnover policies (APG))

No cover available. Deliveries under existing APG-limits must no longer be made. On application, exceptions may be granted for humanitarian goods. 

 

medium/long-term business

No cover available.

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Questions and answers

Here, you will find answers to the most frequently asked questions. If you need any further information, please do not hesitate to contact us.

In view of the Russian attack on Ukraine the Federal Government suspended the granting of Export Credit Guarantees (so-called Hermes Cover) and Investment Guarantees of the Federal Republic of Germany for Russia and Belarus on Thursday, 24.02.2022, until further notice. Any applications for export credit guarantees and investment guarantees in respect of these countries will not be processed. Besides, an EU-wide ban on export credit and investment guarantees for Russia entered into force on Saturday, 26.02.2022. 

Any already existing export credit and investment guarantees will continue to protect exporters, financing banks and investors against bad debt losses and political risks in Russia and Belarus.

After receiving the letter informing about the increase of risk of 21.03.2022, any manufacturing, deliveries/services and disbursements under buyer credits may only be made with prior consent of the Federal Government. The same applies to the provision of (covered) contract bonds. 
 
Regarding Wholeturnover Policies/revolving cover, the following shall apply: Cover for deliveries already made will continue to exist. Any new deliveries made after 02.03.2022 are not covered.

Exceptions for the delivery of humanitarian goods are, in principle, possible provided that the deliveries are made under existing cover and an existing export contract. Proof of a safe method of payment must be provided, i.e. the bank remitting the invoice amount and the receiving bank must be named. The receiving bank must confirm in writing its willingness to accept the payment beforehand. The Federal Government must give its consent to the delivery in advance.The following supplies come into question     - for agricultural purposes        - for medical purposes       - for humanitarian purposes.

The current situation constitutes a change in the legal and factual situation. Offers of cover cannot normally turned into a final commitment to cover. Therefore, the  policyholder should, by all means, contact Euler Hermes before signing the contract with his foreign customer.

What you can do depends on what is stipulated in the export contract. Contractual penalties are not covered under manufacturing risk cover or buyer credit cover. The same applies to Wholeturnover Policies/revolving cover. 

Please try to persuade your customer to apply for an exemption so that the payment can be made in the contractually agreed currency. If your customer pays in rouble via a C account, the following shall apply:


 
The C account is opened by your Russian customer on your behalf. You are not involved in the opening of the account; the account will be opened even if you do not want that. 


 
If, in individual cases, payments made in roubles result in the discharge of the covered account receivable on the basis of the applicable law, then the following shall apply: As far as it is not possible to use the monies in RUS, you should try to have them transferred from Russia. If the monies are used in RUS (e.g. by a subsidiary in Russia) or a transfer from Russia is possible, the amounts have to be included in the calculation of the indemnification. 

 
If the payment made in roubles into the C account does not result in the discharge of the covered account receivable due to the regulations in the loan agreement and the applicable law (normally when the contract is governed by other than Russian law), then 
 the amounts in the C account shall remain untouched for the time being 
 the rouble amounts in the C account will not be taken into account in the indemnification process. 
The above explanations do not predetermine when a payment into a C account results in a (political/commercial) event of loss.Further clarifications are under way.

It is still possible to process orders from buyers in these countries against advance payment.If you receive the money before you dispatch the goods, the transaction does not involve any risk for the Federal Government. The money will not be set off against older, unpaid accounts receivable, if it is explicitly designated as advance payment for goods to be dispatched soon. 
 
The waiver of the provisions in the General Terms and Conditions governing the offsetting of monies received will not release you from your obligation to take all necessary and suitable measures dictated by sound business practice to mitigate any loss. The Federal Government therefore presupposes that the new business against advance payment helps to settle and/or pay existing debts; this will be checked in the event of a loss if necessary.Existing contracts which provide for a delayed payment term can be changed to advance payment prior to the dispatch of goods.

Regarding Wholeturnover Policies/revolving cover, the following shall apply: Such dispatches are not covered by the Federal Government and need not be reported.

Deliveries under existing supplier credit and buyer credit guarantees continue to be possible if you can demonstrate to us that it is actually possible to deliver the goods and a functioning method of payment exists. Deliveries require the explicit consent of the Federal Government. Pursuant to the General Terms and Conditions you are obliged to check in the individual case whether there are any risk increasing circumstances which must be reported to the Federal Government and require its consent.

Regarding Wholeturnover Polies/revolving cover, the following shall apply: Deliveries may only be made with the consent of the Federal Government. The consent to the covered delivery requires a confirmation that the payment will be made through a letter of credit from Ukreximbank, Oschadbank or Privatbank. By means of the letter of credit the bank checks whether “crucially needed goods” are concerned.
 Contrary to what is stipulated in the Wholeturnover Policy Light, accounts receivable resulting from deliveries to Ukrainian buyers may also be covered if a letter of credit is opened prior to dispatch.The rules set out in the country letters dated 22.03.2022 for the Wholeturnover Policy and 24.03.2022 for the Wholeturnover Policy Light shall apply.

Lieferungen unter bestehenden Lieferanten- und Finanzkredit[HA1] -Deckungen sind weiterhin möglich, wenn Sie uns darlegen, dass faktisch geliefert werden kann und ein funktionierender Zahlungsweg besteht. Die Lieferungen bedürfen einer expliziten Zustimmung durch den Bund. 
Gemäß den Allgemeinen Bedingungen obliegt es Ihnen, im Einzelfall zu prüfen, ob gefahrerhöhende Umstände vorliegen, die eine Mitteilungs- und Zustimmungspflicht des Bundes bedingen.
 
Für Sammeldeckungen gilt: Versendungen können nur mit Zustimmung des Bundes erfolgen. Für eine Freigabe der gedeckten Versendung ist eine Bestätigung erforderlich, dass die Zahlung mittels Akkreditiv der Ukreximbank, der Oschadbank oder der Privatbank erfolgt.  Über das Akkreditiv erfolgt die Prüfung durch die Bank, ob es sich um ein „crucially needed good“ handelt.
Abweichend zum APG-Light-Pauschalvertrag können Forderungen für Lieferungen an ukrainische Abnehmer auch gedeckt werden, für die vor Versand ein Akkreditiv eröffnet wurde.
Es gelten die Regelungen der Länderbriefe vom 22.3.2022 für die APG und vom 24.3.2022 für die APG-Light.

Overview of the handling of existing sanctions

Both the EU and the Federal Office for Economic Affairs and Export Control (BAFA) have published practical information on how to deal with the sanctions, which contain the relevant information as well as useful explanations:

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