At mid-year 2016, GIEK’s guarantee liability amounted to NOK 92.2 billion, compared with NOK 100.2 billion at the end of 2015. This is due in part to a stronger NOK and ordinary downward adjustments. GIEK issued 34 new guarantees with liabilities totalling NOK 4.2 billion, of which building loan guarantees constituted approximately NOK 0.3 billion.
Deliveries to the oil- and offshore-sector dominate GIEK’s guarantee portfolio, accounting for 88 per cent of it. This market is cyclical and the current downturn in the industry is deeper than previous. The situation is exacerbated by overcapacity in the market, which is expected to increase further next year. GIEK is participating with other financial institutions in a variety of restructuring negotiations in the offshore-sector, and will work to find long-term financial solutions that help preserve Norwegian industry and expertise.
New building loan and buyer credit guarantees also play a role in securing Norwegian shipyard orders for ship types other than offshore vessels. GIEK’s framework agreement of up to NOK 5.2 billion with the Italian oil services company Saipem is also of benefit to the maritime industry.
After the mid-year point, GIEK entered into two memorandums of understanding with the Iranian government that are intended to facilitate Norwegian exports. Additionally, GIEK is working to promote export guarantees as an option for businesses that seek new markets in addition to the oil and gas sector. GIEK cooperates closely with Export Credit Norway on a joint financing arrangement aimed at small and medium-sized businesses and has taken part in a number of client meetings across the country to reach the relevant enterprises.
Through 30 June 2016, new applications totalling NOK 19.8 billion were registered, with mainland industries accounting for NOK 9.2 billion. NOK 14 billion in new guarantee offers were made in the first half of 2016.
The financial result for all schemes through 30 June 2016 shows a loss of NOK 295 million, as against a loss of NOK 119 million in the same period last year. In this year’s first half, the downturn for companies in the offshore sector materialised in GIEK’s accounts in the form of increased loss provisions and payments under guarantees. GIEK increased its loss provisions and write-downs from NOK 5.9 billion as at 31 December 2015 to NOK 6.6 billion at 30 June 2016.
“Norwegian export industries are undergoing change. To meet the new financial needs among exporters, GIEK is working with banks to further develop our financing solutions. We are working both with mainland industries and the maritime industry. The banking sector is positive to strengthen the cooperative efforts to assist export enterprises in a challenging restructuring process. We are already at work on exciting projects from shipyards and other maritime exporters. It’s all about facilitating exports from around Norway to around the world,” Nistad says.
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