Shopping Line Cover
Cover for export transactions as a bank
Shopping Line Cover - access to international procurement programs
As one of six measures within the package of measures for Export Credit Guarantees, the improved Shopping Line Cover creates new incentives for importers abroad to expand their supplier base in Germany. This makes it easier for German industrial companies, and small and medium-sized enterprises in particular, to access international procurement programs and major projects. In future, such financing will be offered to importers with a good credit rating worldwide. The cancellation of verification requirements, simplified disbursement conditions, flexible repayment profiles and other improvements will create an attractive competitive environment for German companies.
Advantages of optimized Shopping Line Cover
The package of measures considerably simplifies Shopping Line Cover and makes it more open. This will enable German exporters, especially SMEs, to strengthen their position in international competition.
- Support for German exporters: Easier access to international procurement programmes and major projects.
- Flexibility for importers: Shopping Line Cover is now available to importers with a good credit rating, without rigid buyer category requirements.
- Flexibility with credit lines: Credit lines can be utilised without being tied to specific export transactions and without the need for time-consuming proof of origin.
- Plausibility checks instead of verification requirements: Purchases made by the importer in Germany are checked for plausibility before cover is granted.
- Better conditions: Companies benefit from early drawdown options, simplified disbursement requirements and a more risk-orientated due date for payment.
Securing credit lines as the financing bank
Shopping Line Cover aims at providing access to the procurement programmes of large foreign customers with good credit ratings. To achieve this, it offers banks the possibility to obtain cover for a credit facility granted to be drawn on for this purpose. It may be used for export transactions which have been executed and paid for in full (reimbursement procedure). For the utilisation, the transactions of various German exporters are pooled in one or several tranches each with a uniform repayment profile. The respective loan receivables are covered by the Federal Government.
Worth knowing: For this type of business, Shopping Line cover provides a solution in the form of a Buyer Credit Guarantee modified by Special Terms and Conditions.
Shopping Line Cover at a glance
Target group
- German banks
- Branch offices of foreign banks in Germany
- Foreign banks (under certain conditions)
Payment term of the covered transactions
- Short-term (up to two years)
- Medium/long-term (2 years and longer)
In this context, the internationally permissible credit period is reduce by the time during which the credit facility can be drawn on.
Insurable risks
Shopping Line 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
Supplementary cover
If required, Shopping Line cover can be supplemented with
- Securitisation Guarantee (to refinance export loans – enhanced conditions in favour of the refinancing institution)
- Covered Bond Guarantee (for German Pfandbrief Banks to facilitate refinancing in the their own covered bond business – cover of the receivable seizure risk in favour of the creditors of German covered bonds)
- Securitisation Guarantee for the KfW Refinancing Programme (offers the possibility to participate in the KfW Programme with which funds can be made available by means of refinancing receivables covered under a Federal export credit guarantee)
- the exporters may apply for cover of their own apart from Shopping Line cover in favour of the bank (e.g. manufacturing risk cover).
Special features
Shopping Line cover has the following distinctive features:
- Issuing of a Letter of Interest (LoI) to the foreign buyer including an indication as to the amount of the credit line possible at an early stage
- Foreign content of up to 49% of the amount of the credit tranche permissible (rules governing local costs must be respected)
- Special arrangements for small tickets (transactions worth up to EUR 5 million)
- Option to retroactively include transactions already undertaken before the application was made (“reach back”)
- Simplified administrative procedures (among other things: only one credit documentation required, uniform repayment profile, bundling of loan disbursements in tranches)
Shopping Line cover is also available for short-term credits 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, USA and United Kingdom).
Additional information
The Association of German Banks (Bundesverband deutscher Banken e.v. – BdB) and the Association of German Public Banks (Bundesverband Öffentlicher Banken – VÖB) have jointly obtained a legal opinion on the validity and enforceability of buyer credit cover for the purpose 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. Requests should be directed to the BdB or the VÖB via the respective national banking association of which the institution in question is a member.
Premium
- One-off premium calculated as a percentage of the credit facility covered (interest excluded) as well as specific administrative fees
- For a detailed calculation, there is an premium calculation tool available
Uninsured percentage
- 5% for all risks
Shopping Line cover: Your advantages at a glance
Digital
You can apply for Shopping Line Cover quite easily in our customer portal myAGA.
Combinable
Shopping Line Cover can be combined with many other forms of cover – for example with a Securitisation Guarantee, a Covered Bond Guarantee or a Securitisation Guarantee for the KfW Refinancing Programme – in order to enhance the risk protection.
How does Shopping Line Cover work?
Shopping Line cover allows German exporters to gain access to large foreign customers’ procurement programmes. It combines multiple transactions on the part of various German exporters to form one or more credit tranches, each with a uniform repayment profile. The financing bank can obtain cover from the Federal Government for the credit facility drawn upon for this purpose.
Applying for Shopping Line Cover
You can apply quite easily for this product online in the myAGA customer portal (DE). Please submit your digital application there in order to apply for cover for your export transaction under Shopping Line cover. For this purpose please register once and comfortably with just a few steps with our myAGA customer portal. If you already use myAGA (DE), you can log on directly with your access data.
If you need assistance with the application or if you have any questions regarding the suitable product for you, please contact our business consultants.
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FAQs Shopping Line Cover
What additional forms of cover are available?
If required, cover under a Buyer Credit Guarantee can be supplemented with
- a Securitisation Guarantee (for refinancing on the capital market – improved conditions in favour of the refinancing institution)
- a 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)
- a Securitisation Guarantee for the KfW Refinancing Programme (creates the possibility to participate in the KfW Programme with which funds can be made available by means of refinancing receivables covered under a Federal Export Credit Guarantee)
What are the special features compared to traditional Buyer Credit Cover?
With shopping Line Cover, banks can utilise their experience with the Federal Government's tied Buyer Credit Cover (FKG). In comparison to this, however, numerous improvements have been implemented that facilitate processing in particular. To this end, the General Terms and Conditions (FKG) are modified by special conditions. A letter of interest (LOI) can be issued at an early stage at the request of the foreign customer or the bank that will later provide the credit line.
By assuming Shopping Line Cover, the Federal Government covers receivables from a utilising credit line granted by the bank to a foreign customer. This foreign customer can then place procurement orders with various German exporters. All parties involved benefit from administrative simplifications. The main advantage for the bank is that only one set of credit documentation is required, for example.
The environmental, social and human rights assessment (ESHR assessment) complies with international standards, in particular those of the OECD. Processing is facilitated by the fact that certain assessment elements are already brought forward where necessary.
How can the cover be used by the bank providing cover for refinancing?
The claims arising from the Shopping Line Cover can be assigned - together with the loan claim - to other banks. It is also possible to use the Shopping Line Cover for refinancing in your own Pfandbrief business by means of additional Covered Bond Guarantee. Furthermore, a Securitisation Guarantee can be used to improve the conditions of Shopping Line Cover in favour of the refinancing assignee so that the bank can refinance at a lower interest rate.
Do you have any additional questions regarding Shopping Line Cover?
Our experts will be pleased to answer any questions regarding Shopping Line Cover and will guide you step by step through the application process if desired.
