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The statements contained herein constitute “forward-looking statements” within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended and Section 21E of the U.S. Securities Exchange Act of 1934, as amended. These forward-looking statements rely on a number of assumptions concerning future events. These forward-looking statements involve known and unknown risks, uncertainties and other factors, many of which are outside of our control, that may cause actual results to differ materially from any future results expressed or implied from the forward-looking statements. As a result, the forward-looking statements included herein should not be regarded as a representation that the plans and objectives discussed herein will be achieved. See the Company's Annual Report on Form 20-F filed with the US Securities and Exchange Commission for a discussion of certain factors that may cause actual results, performance or events to be materially different from those referred to herein. Eksportfinans disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
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GENERAL
Q: Will a transcript of the conference call be made available? Updated 1th Dec
A: A transcript of the conference call will not be available, although a replay of the call is available as follows:
Japan Free Call: 0053 1120 941
Singapore Free Call: 800 441 1242
Switzerland Local Dial: 044 580 3456
UK Free Call: 0800 953 1533
USA Free Call: 1866 247 4222
Or as a mp3 file : http://www.gatesec.no/dl/efinans/EF01.mp3
Japanese translation:
International Dial in: +44 (0) 1452 55 00 00
Japan Free Call Dial in: 0053 112 0941
Please use the following code when requested: 32781437#.
Q: What business will Eksportfinans do going forward? New 1 Dec
A: Eksportfinans currently plans to alter its approach to certain of its business activities over a period of several years. It is anticipated that no new lending will be offered and that raising of new funding in the capital markets will be limited, but the existing portfolio will be run in the ordinary course of business. Currently we have a loan book of NOK 120 billion, and the typical loan has 8 – 12 years maturity. Given that the loan portfolio will run until contractual maturity, it is expected the management and run off of the portfolio will continue for 5-10 years. In 2014, the loan portfolio is expected to be around NOK 60 billion, and still in 2017, the loan book will be in excess of NOK 20 billion. During this 5-10 year period the company will have ordinary client relations, loan administration and follow-up, including prepayments, interest rate fixing, hedging, follow-up of default situations and loan documentation, accounting etc. The company will need to keep a large number of skilled staff to run our loan portfolio operations and other business over a long time period.
The existing long term funding portfolio, currently NOK 205 billion, has a long maturity profile. The funding transactions are mainly documented under our EMTN program or USMTN Program. The longest funding transactions mature in April 2048. The company will need to manage documentation related to funding and hedging, updating programs, reporting, fixing of economic parameters of both issues and swaps, information to investors, managing collateral exchange and CSA’s – and daily payments to counterparties.
Eksportfinans currently runs a liquidity portfolio of around NOK 60 billion. As the loan portfolio is run off, the company will have substantial surplus liquidity, which will be managed actively by the company’s investment department and internal bank.
Eksportfinans has a substantial derivatives portfolio of around NOK 400 billion, which will have to be managed actively in the market until the loans in the Company's portfolio are repaid.
The company will actively manage its asset and liability situation and liquidity management at least until the loans in the Company's portfolio are repaid.
Eksportfinans is a financial institution subject to all rules and regulations related to such, and the decision to not engage in new lending does not change that. This means that risk management activities, compliance, reporting to Norwegian and international regulators, assessments of the capital requirements etc will be continuing in the ordinary course of business . Eksportfinans has bonds listed at stock exchanges globally, and is subject to reporting requirements as a consequence of this, e.g. compliance with Sarbanes Oxley Act in the United States.
Eksportfinans is subject to IFRS accounting, and has chosen the fair value principle as a main accounting principle. The company will continue to publish quarterly and annual reports in a normal manner . The majority of the assets are calculated at fair value on a monthly basis for the accounts.
LEGAL
Q: Questions regarding event of default under any debt instruments or financing arrangements
A: We have seen that there is speculation in the press and in the market as to whether an event of default has occurred under our EMTN programme. There is a condition which states that there is an event of default if the company ceases or threatens to cease to carry on the whole or substantially the whole of its business, but only if the Trustee certifies that this is materially prejudicial to the interests of the bond holders. This is of course a legal test which will have to be analysed in its legal context and we need to involve the trustee under the bonds in the legal analysis. Eksportfinans has taken legal advice from two separate English law firms. Having considered such advice, we do not believe that there is an event of default. For an event of default to occur, and without going into the detail, at least two relevant conditions have to be satisfied. First we would have to have decided to cease substantially all of our business. Since the loan portfolio historically has accounted for between 55 and 70 per cent of the business (measured on the relevant criteria for the legal analysis) and that we shall be continuing with the rest of the business, then this has not occurred. Second the situation would need to be materially prejudicial to bond holders. Since the company has adequate resources to make all payments on the bonds issued under the EMTN programme as and when due, including repayment at maturity, in accordance with their respective terms, we do not believe there is any material prejudice to bond holders. We are in close dialogue with the Trustee regarding this issue.
In relation to the analysis under our Samurai bonds which are governed by Japanese law, we are in close contact with our Japanese lawyers in exploring this issue, but no conclusion has been made.
Our US MTN Program does not have a similar clause.
Since the Company believes that there is not an event of default, we do not believe it is appropriate to comment on what the consequences of an event of default are or whether it has analyzed or prepared for this contingency.
Regarding the reference to an Event of Default in S&P press release, we refer to that press release. S&P make their own assessments of Eksportfinans as a company. We do not believe that we are in breach of the terms of our EMTN programme.
We prefer not to share the information on the law firms being consulted or rendering legal opinions, however, we can confirm that they are highly reputable international law firms, specialized within that area.
New 19 Dec:
Q: There is a clause in the Samurai bond documentation whereby there is an event of default if the issuer "ceases or threatens to cease to carry on the whole or substantially the whole of its business". The Samurai bond documentation does not have a Trustee, so it is up to each bond holder to manage its positions.
A: On 19 December, Eksportfinans released the following press release:
“Eksportfinans has received a purported declaration of default from a holder of the institution’s Japanese bonds. On advice from counsel the declaration will be resisted vigorously. This is done on the basis that there is no default and the declaration is therefore of no effect. On this basis such purported declaration does not constitute a cross default under its other financial obligations.””
To be clear, Eksportfinans has taken legal advice and on the basis of this intends to defend the claim vigorously in the court system if we have to. This claim has come from a US based hedge fund specialising amongst other things in companies in special situations, holding bonds in both Samurai series for a total of JPY 2.6 billion, which is approximately NOK 200 million. Since we do not believe there has been an event of default there is no cross default on other obligations. We do not have any information at this time on whether the holder will take this to court or any timeframe should they do so .”
New 23 Dec
Q: What is the status of the event of default considerations under the EMTN programme?
A: Please see the notice to bondholders sent by Eksportfinans on December 23, 2011. Link to Notice
Q: Questions regarding large exposures to one single client
A: 5 counterparties will be in breach of the EU directive end 2012, if no measures are taken. The over-exposure is expected to amount to around 7 billion NOK at the end of 2012. Eksportfinans is currently working on solving this issue
There are several alternatives, but we would rather not comment on progress at this stage. It is fair to say that, we do expect to have this resolved before the expiry of the exemption period on 31 December, 2012. We do not anticipate having to raise new capital in order to solve this issue.
The reduction from 9 (as stated in our third quarter report per 30 September 2011) to 5 counterparties' exposure being in breach of the regulation is due to the fact that as of 30 September, 2011, Eksportfinans only had an exemption to 31 December, 2011. In October, the exemption was extended to 31 December 2012. At such date, the previously reported 9 exposures will be reduced to 5.
We may not comment on who these clients are or within what area they operate.
Q: What is the legal status of Eksportfinans?
A: Eksportfinans is incorporated as a limited liability company under the Public Limited Liability Company Act of the Kingdom of Norway. It is a financial institution supervised by the Norwegian Financial supervisory Authority. For further on supervision, please have a look at our Form 20-F Supervision and Regulation.
Q: What are the secured/senior liabilities of Eksportfinans, that are priority ranked ahead of unsecured debt/bonds?
A: There are no secured/senior liabilities with a priority ranked ahead of unsecured debt/bonds. However, there may be mandatory exceptions from time to time applicable under Norwegian law.
Q: Has Eksportfinans decided to cease all lending operations and will the company actively seek new funding?
A: Given the fact that the Government has chosen to take over the administration of the government supported lending scheme, Eksportfinans announced that it would cease new lending activity, which would effectively mean the run-off of its loan portfolio over a number of years.
Q: Norway is not a member of the European Union so why did you introduce the EU Capital Requirement Directive covering single client exposures?
A: Norway is a member of the European Economic Area and according to the EEA Agreement has to implement Directives and Regulations with EEA relevance. The Capital Requirement Directive clearly states that it has EEA relevance
Q: Would a downgrade by S&P to sub investment grade status trigger any further margin calls, liabilities or maturities beyond those already sensitised for within the presentation dated 27th November 2011? New 1th Dec
A: According to the CSAs, there are no further triggers of the Threshold beyond BBB+. Consequently a further downgrade by S&P will not have an impact on the margin calls
Q:Can it be assumed that a cross default threshold of NOK 50 million equivalent exists for most of your international bonds? New 2 Dec
A: No, there are different thresholds for different bonds.
Q: Is the English prospectus for your ¥30 bln samurai issue due July 2016 available? New 6 Dec
A: The English version of the Samurai prospectus is not publicly available. Only the Japanese original is a public document which we do not provide.
Q: Do the ISDAs governing your derivatives positions allow for netting? New 6 Dec
A: All our ISDA Master Agreements have standard netting provisions applicable in conformity with the relevant netting opinions provided by ISDA
Q: You mentioned on the call that you were still investigating whether there may be an event of default under some of your JPY bonds. What is your current view? Can you provide an English language translation of the Event of Default clauses in the relevant bond documents? New 9 Dec
A: Unfortunately, the English version of the Condition of Bonds is not a public document
Q: In the Australian medium term note prospectus, the event of default seems to be defined in the same way as in the EMTN (cease substantially the whole of its business) but without the "materially prejudicial to bondholders" qualifier. An event of default would therefore seem more likely here. Can you comment on this? New 9 Dec
A: There are no outstanding bonds under the Australian program.
LIQUIDITY / CAPITAL
Q: When taking into account short term debt, can you please clarify your liquidity and capital position? Updated 1 Dec
A: As stated in the conference, Eksportfinans expects that it will have substantial surplus liquidity situation enabling it to pay interest and principal on its outstanding bonds and other obligations when due under their respective terms. It had a core capital ratio of 12.8 per cent as of September 30, 2011. The Company currently believes that its core capital ratio will increase during the period in which the loans in its existing portfolio are repaid. We expect it to be in excess of 20 per cent by 2014/2015, and continue to increase thereafter. I draw your attention to the information released by Eksportfinans on 27th November for more detail on projected capital ratios.
In addition, for a maturity breakdown of assets and liabilities I would draw your attention to our Annual Report for 2010 and our form 20F.
Eksportfinans has a liquidity reserve portfolio of 37 billion NOK as well as a 26 billion NOK investment portfolio guaranteed by its owners since 2008 – know as the PHA portfolio.
The liquidity reserve portfolio has investments in senior debt issued by highly rated financial institutions, government related entities and covered bonds – primarily from Scandinavia and Northern Europe. This portfolio has limited market volatility, duration and credit risk and has an average rating of AA and an average maturity of only 6 months. The lowest rated security in this portfolio is A-. More detailed information on this portfoliocan be found in this table
The investment portfolio is, as stated, referred to as the PHA or Portfolio Hedge Agreement portfolio. The PHA portfolio of NOK 26 billion (as at September 30th 2011) consists of financial investments in senior debt issued by highly rated financial institutions and asset backed securities. This portfolio has an average rating of AA- and an expected maturity of 2.7 years. This portfolio also has some exposure to peripheral European countries (approximately NOK 8 billion out of NOK 26 billion). Please see linked tables below for breakdown by country and rating class.
Breakdown of the portfolio by rating as at September 30 2011 (market values):
During the last financial crisis the mark to market value of this portfolio decreased and so a hedge was put in place by our shareholders to immunize the Eksportfinans balance sheet from further movements in this portfolio linked to mark to market movements. The hedge covers up to NOK 5 billion of realized and unrealized losses of which NOK 1 billion has been used as of September 30th. We believe this amount to be more than adequate to cover potential portfolio losses in the future and the hedge maturity coincides with the final maturity of securities in the PHA portfolio.
More information on the Portfolio Hedge Agreement can be found in our Form 20F.
Securities in both of these portfolios (that is together 63 billion NOK) can be sold or used as collateral by banks for central bank financing in order to fund any potential liquidity gaps.
Eksportfinans has 2 billion USD in undrawn repo lines with its largest owner banks. In its own conference call on Wednesday 23 November, DNB stated that renewing this kind of facility was part of their intention and shows their commitment to Eksportfinans.
Q: Please discuss the USD 2bn Repo facility provided by shareholders
A: The Repo facility with our owners was renewed for 1 year in June 2011.
DNB mentioned on their webcast on Wednesday the 23rd of November that renewing this facility was part of their intention and shows their commitment to Eksportfinans. We will begin the process of renewing these facilities in the near future.
Assets in our PHA portfolio can be used for repos under the facility.
Q: Are there any ongoing discussions with your owners about the possibility of them providing an explicit debt guarantee?
A: We can unfortunately not comment on ongoing discussions with our owners.
Q: Who are the underwriters in the PHA-agreement? New 2 Dec
A: The PHA-agreement is entered into with the owners, and participation mainly reflects their share of ownership in Eksportfinans. Please see announcement of the agreement in May
2008 and list of shareholders for further information.
Q: The new bill adopted in the Statsråd states that the Government may transfer about NOK 13.2 bn of loans related to either existing loans not fully disbursed or loans where the fixed-margin-period runs out. Could you quantify the impact on your liquidity and balance sheet runoff profile based on such a transfer? New 9 Dec
A: The transfer of fixed-margin loans (NOK 6.2 bn)will not affect our liquidity, as we are not obligated to renew these loans. However, the action taken from the Government will be helpful for the borrower. The transfer of the existing loans not fully disbursed (NOK 7 bn) will improve our liquidity, but we will not distribute new forecasts at this moment.
FINANCIAL FIGURES
Q: Can you please discuss your projections on profitability and expense levels going forward?
A: The company does not want to give more detailed information on profitability than what is already given through the capital ratios. The company is in the process of evaluating the cost base and the infrastructure it will require to run the business going forward.
Q: Please explain the significant change in equity and bond debt in the debt and capitalization table published 20 December 2011. New 21 Dec
A: The reason for the much higher equity end of November, is the Mark to Market effect on Eksportfinans own debt. This is due to the market effects on Eksportfinans Bonds since November 18 and the Norwegian government decision on the Export Financing Arrangement in Norway. This is, however, an unaudited figure, and the year end accounts will show the appropriate figure, which might differ considerably from the November figure.
DEBT
Q: What does Eksportfinans’ funding portfolio look like? New 1 Dec
A: Our total outstanding senior unsecured debt amounts to approximately NOK 205 billion, of which about NOK 100 billion are structured notes and the remainder is plain vanilla notes.
These note issues rank pari passu and without any preference among themselves. The structured notes include NOK 18 billion of notes with fixed maturity but where the coupon or redemption payment is linked to foreign exchange rates, interest rates, single stocks or equity and commodity indices. This means that circa NOK 120 billion of the outstanding debt portfolio has fixed maturity.
The rest of the structured notes of approximately NOK 82 billion include optionality in terms of maturity dates. These structured notes have calls and triggers based on movements in external factors, in particular foreign exchange rates (JPY/AUD, JPY/USD), interest rates (US interest rates), single stocks and equity and commodity indices. The equity triggers and calls are primarily related to the Nikkei index and US and Japanese stocks and baskets.
Q: Where can I find more information regarding the EMTN / USMTN programmes (size and currencies)?
A: The EMTN and USMTN programmes are both available on our website http://www.eksportfinans.com/Funding/FundingPrograms.aspx
The outstanding amounts under the Eksportfinans programmes, as of 30 September 2011, are as follows:
US Shelf (USMTN program and Global issues): NOK 82.9 bln
EMTN programme: NOK 115.5 bln
2 Samurai transactions: NOK 4.6 bln
Other: NOK 2.3 bln
TOTAL NOK 205.3 bln
Q: Can you give us more details on the structured notes with uncertain maturity? New 1 Dec
A: This portfolio of NOK 82 billion consist of NOK 22 billion which can be called by the swap counterparty, and NOK 60 billion with trigger features.
Callable notes:
NOK 22 billion of notes are callable by the swap counterparty at different points in time going forward. These can be called at contractual points, typically quarterly. In normal market conditions, Eksportfinans would ordinarily call the bond once a swap is called, however Eksportfinans is not under any obligation to call the bond. The company is at liberty to replace the hedge with a new counterparty if it does not call the bonds, or continue unhedged.
During 2012, NOK 19 billion can be called, of which NOK 6 billion is already included in Eksportfinans’ Asset and Liability prognosis (based on current market conditions). For the remainder NOK 13 billion, these swap counterparties can call these at certain points in time in 2012. These calls are typically exercised if the swap counterparty does not see it as economically profitable to continue with the swap. Our analysis does not expect the swap to be called on these terms in 2012 as we estimate that this could have a combined cost to our swap counterparties of circa NOK 2 billion.
Notes with triggers:
The remainder of the structured funding with uncertain maturity, circa NOK 60 billion, has trigger features and not calls. Of these, NOK 40 billion have FX linked triggers, and NOK 36 billion has equity linked triggers (there is some overlap between the two). The structured notes have triggers based on movements in external factors, in particular foreign exchange rates (JPY/AUD, JPY/USD), interest rates (US), single stocks and equity and commodity indices. The equity triggers are primarily related to the Nikkei index and US and Japanese stocks and baskets.
Eksportfinans has made very significant investments in sophisticated risk management systems, and the company is able to value and simulate its entire portfolio of outstanding debt and derivatives and actively calibrates individual valuations with those supplied on credit support annex valuations from its dealers. Key risk factors are stress tested in our internal risk system, Numerix. The structured funding will typically come under stress due to currency movements or by movements in equity markets but not simultaneously.
To provide an example of our stress testing, our base case for 40 billion NOK of FX linked transactions shows an average life of around 14 years. When stress testing USD/JPY and AUD/JPY with 10 % (yen weakening) the average life moves to 12.4 years and stress tested with 30 % this number moves to 8 years. On the other hand with a stress test of -30 % (yen strengthening), these notes expected life moves to 17 years from 14 years.
Our base case for 36 billion NOK of our equity linked transactions shows an average life of 2.3 years. Stress tested with +10 % (equity strengthening) the average life of these moves to 2 years and stressed with +30 % this moves to 1.5 years. On the other hand a 30 % fall in equity markets would move the expected life of these transactions to 2.6 years.
We define a severe risk factor shock as a move of 50 % in FX rates (yen weakening) and 70 % (strengthening) in equity. If one of these two should occur in our 60 billion NOK portfolio with triggers we expect the maximum impact on our liquidity would be 20 billion NOK.
Other
Finally, the structured notes portfolio contains one note of EUR 1 million which can be put by the investor.
Q: Is Eksportfinans able to accommodate buybacks requests on its outstanding debt (including Commercial Paper programmes)? A: Eksportfinans is not currently accommodating buyback requests on its outstanding debt, but may review this policy in the future. For further information regarding the current liquidity situation please refer to the Eksportfinans conference call on the 28th November. Replay is available, for further information: http://www.eksportfinans.com/News/News%20articles/Investor%20conference%20playback.aspx and the Investor Information Statement from the 23rd of November http://www.eksportfinans.com/News/News%20overview.aspx
Q: Where can I find further information regarding the Eksportfinans facilities and the Commercial Paper programmes?
A: Information regarding the Eksportfinans facilities is available in the 20F, please refer to the Eksportfinans website http://www.eksportfinans.no/Omoss/FinansielleFakta.aspx?sc_lang=en Information regarding the Commercial Paper programmes is available in the 20F, please refer to the Eksportfinans website http://www.eksportfinans.no/Omoss/FinansielleFakta.aspx?sc_lang=en , and in the Investor Presentation, please refer to the Eksportfinans website http://www.eksportfinans.com/DebtInvestors/StartsideDebtInvestors.aspx
Q: What are the future plans regarding funding at Eksportfinans?
A: As stated in the Eksportfinans conference call on the 28th November. Replay is available, please refer to the website for further information, http://www.eksportfinans.com/News/News%20articles/Investor%20conference%20playback.aspx and in the Investor Information statement from the 23rd of November http://www.eksportfinans.com/News/News%20overview.aspx , Eksportfinans intends to maintain its funding programmes, but the Company currently does not intend to actively seek new funding transactions going forward. Eksportfinans currently has no need to obtain funding in order to honor its existing commitments, but new funding enquiries will be considered on a case by case basis.
Q: Is the outstanding debt issued by Eksportfinans guaranteed and does Eksportfinans intend to honour its’ obligations?
A: Eksportfinans debt is not guaranteed, but as stated in the Eksportfinans conference call on the 28th November. Replay is available, please refer to the website for further information, http://www.eksportfinans.com/News/News%20articles/Investor%20conference%20playback.aspx and in the Investor Information Statement from the 23rd November http://www.eksportfinans.com/News/News%20overview.aspx, Eksportfinans believes that it has a good liquidity situation, and it has every intention to honor all of its obligations as they come due.
Q: Can you elaborate on your expectations regarding the subordinated debt?
A: As shown in the forecast, the company expects all subordinated debt to be gone from our balance sheet in 2015. One of these, a capital contribution security, is perpetual, with a call right for the company at February 19, 2013 and every third month thereafter. As stated in the telephone conference, the company has the intention to execute the call in 2013, but the formal process of this would of course involve a dialogue with the Norwegian FSA (Finanstilsynet) as normal.
Q: Can you explain the change from Q3 outstanding bonds of NOK 205 bn, to the estimations of NOK 167 bn end of Q4 in the forecast.
A: The figure 205 bn at September 30, 2011, is related to all bonds at nominal value. There are substantial down payments of this debt in Q4 of 2011, which will reduce this number significantly. The figure of NOK 167 bn at end of 2011, reflects this, but it is a slightly differently defined figure, as the forecast figures for Bond Debt is based on Bond Debt net of derivatives.
Q: Does the company intend to continue to pay dividends during the run-off of the loan portfolio and if so what is the general policy around proportion of earnings? New 1th Dec
A: We believe the company is well capitalized, and the core capital ratio will increase during the run-off of the loan portfolio, but we cannot give more details regarding dividends in the future at this time.
Q: Can you clarify the difference between NOK 213bn of bond debt in the 20F and NOK 200 bn in the annual report? New 1 Dec
A: The difference is due to interest payable in the higher figure.
Q: Could you give detailed information of your loan book with regard to guarantees? New 1 Dec
A: Please see our Annual report, note 30, for further details. See also note 4 in our quarterly report.
Q: How will the current market prices of your own debt impact the core capital? New 6th Dec
A: Unrealized gains and losses on our own debt due to credit spread effects do not affect our regulatory core capital.
Q: Which line item on the balance sheet includes the collateral for the derivatives?New 6 Dec
A: Cash collateral provided is included in Other assets, while Cash collateral received is included in Other liabilities. See note 10 and 12 in our quarterly report.
Q: There are financial derivatives on both the asset side and liability side in the balance sheet. Could you please explain? New 6 Dec
A: See note 13 in our annual report for a description of our financial derivatives.
Q: In note 2 in the Q3’11 report, there are large movements in the unrealized gains/losses of financial derivatives and bond debt. Could you explain? New 6 Dec
A: See note 15 in the same report for effects from economic hedging.
Q: Why are the amounts received from the Norwegian government as a result of guarantees (p.24 of the 20F) so much higher than the non-performing loans for those years (p.32 of the 20F). For 2008, you received 332M NOK but NPLs were only 51M that year. New 9 Dec
A: The table on page 24 of the 20F shows information regarding the amounts paid or payable to Eksportfinans by the Norwegian Government under 108 agreement. This agreement does not cover guarantees, and the amounts are not related to the non-performing loans. Please read the text above the table on page 24. For guarantees, see note 30 in the annual report.
Q: Are all bonds issued under the EMTN programme in euro and all bonds issued under the USMTN program in dollar?
A: In both of these programmes we are able to issue in all currencies and have outstanding debt in a number of currencies on each programme. The breakdown is not publicly available per programme, however a breakdown of total outstanding debt by currency is available in our investor presentation (p13). http://www.eksportfinans.com/DebtInvestors/StartsideDebtInvestors/~/media/4B2A8946DFEC4CFDBC0680091282D87C.ashx
LENDING
Q: Can you provide a breakdown of non-performing loans? New 20 Feb
A: With the exception of the Glitnir case, the following is a breakdown of non-performing loans per sector as at 31 September 2011. Please note that all loans are guaranteed by either GIEK or a highly rated financial institution.
|
Oil/Gas |
80.852.000,00 |
|
IT |
569.837,01 |
|
Fish farming/equipment |
2.882.669,99 |
|
Shipping/equipment |
71.741.087,53 |
Q: How much of the loan book is GIEK guaranteed?
A: As stated in the conference call, about NOK 50 billion of the loan book has public guarantees. In some investor presentations we are referring to “government supported loans”. This refers to loans under the 108 agreement, which was stated to be NOK 36.3 billion end of September 2011.
Q: What is the percentage of loans backed by collateral, and what is the collateral?
A: Currently Eksportfinans has a loan book of NOK 120 billion, and the typical loan has 8 – 12 years maturity. Approximately 43 per cent of the loan book is guaranteed by public guarantors, while the remaining loans are guaranteed by highly rated banks. For some of the loans, Eksportfinans has claims on the underlying asset, typically ships, linked to the guarantee. We do not specifically categorize loans backed by collateral and are thus unable to disclose a percentage.
Q: Is it possible to give a breakdown on the loans to ship owners?
A: As of 30 September 2011, Eksportfinans had an outstanding loan balance related to ship financing of NOK 43.1 billion. We do not categorize vessel type in our lending systems but we estimate that oil and gas related vessels account for between 80 to 90 % of the outstanding loan balance.
Q: What was Eksportfinans’ competitive advantage? New 2 Dec
A: Prior to the government’s decision on 18 November and the resulting rating downgrades by Moody’s and S&P, Eksportfinans enjoyed a higher credit rating than most Norwegian and international banks. Eksportfinans thus had access to funding in international capital markets at a lower cost than the banks. This access to relatively inexpensive funding, coupled with our position as sole operator of the Norwegian government’s scheme for officially supported export credits, meant that we were in a position to offer long-term loans on competitive terms. Eksportfinans is currently Norway’s third largest lender to the private sector.
Q: Please provide additional information about the guarantees backing your loans.
A: When involved as guarantor, GIEK typically provide guarantee coverage for between 60 and 90 % of a loan extended by Eksportfinans. In some cases, GIEK may cover 100% of an Eksportfinans’ loan. Conversely, Eksportfinans has a number of loans that are 100% bank guaranteed, that is, without GIEK participation. High quality Norwegian and international banks provide coverage for the loan amount not covered by GIEK in the form of on-demand guarantees. Our risk management team analyses bank risk, and Eksportfinans only accepts highly rated banks from high income countries as guarantors. A small number of loans are guaranteed by Norwegian savings banks that do not have international credit ratings.
If a borrower is unable to meet its loan obligations, the guarantors will reimburse Eksportfinans for any losses. The guarantors are responsible for the pro rata shares of their guarantees. For Eksportfinans to experience a normal loss on a loan, the borrower and one or more of the guarantors must default at the same time. In Eksportfinans’ 50 years of operations, this has never occurred.
MISCELLANEOUS
Q: How will Eksportfinans be able to retain key members of its work force?
A: We are currently in the process of assessing the personnel situation going forward. It is of course important for us to try to maintain the key competencies in the company, but we do not wish to comment on this process in more detail now.
Q: Will there be a notice of a draw under the USD 2bln committed line provided by Nordea and DnB that was recently provided? New 1 Dec
A: No, this would not be normal practice.
Q: Have Eksportfinans been in contact with the government regarding, why the government didn't simply take over the company in its existing form, instead of creating a separate export financing scheme? New 1 Dec
A: We cannot comment on questions related to the government's actions.