ING to facilitate clients by moving centre of expertise to Frankfurt
With ING Commercial Banking expanding its export finance department in Frankfurt, it is de facto creating yet another centre of expertise facilitating international business opportunities for its clients. Jonathan Bell talks to Eric de Jonge, global head of structured export finance at ING, about the benefits of the reorganisation.
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It is no coincidence that at the end of 2012 ING Bank was top of the tables in terms of Euler Hermes, the German export credit agency-backed lending. Over the last few years, the bank has worked tirelessly to develop further relations with German exporters and arrange the financing of the flow of German-produced capital equipment, technology and services. Consequently, the bank is the leader in the field.
With this background, earlier this year the bank decided to move the global head of structured export finance seat from Amsterdam to Frankfurt – and by so doing effectively create two main hubs for the business line in Europe, next to those in Asia and the US. As such, in June 2013, Eric de Jonge, global head of structured export finance moved to Frankfurt to head up the business line from that location. With the dual hub approach in Europe, the Amsterdam office handles the Dutch market and much of north-west Europe.
The German office handles Germany, mid and south Europe, Austria, the Czech Republic, Italy, Spain and Switzerland – all on a direct basis. De Jonge comments: “It was a logical move, and one that was also designed to help facilitate clients that are covered by our teams outside Europe with more attractive and competitive propositions. We can do this much more competitively through Frankfurt, also making use of economies of scale.” Developing more international business And it is this development of international business through Germany that gives ING clients a distinct advantage. In an example of this, ING has recently signed a transaction with Korean Airlines for the supply of one Airbus A380 aircraft with the deal funded through ING in Germany.
The financing is for up to a 200 million, with Coface of France acting as the leading export credit agency (ECA) on the transaction. In another recent international example, ING acted as sole underwriter, sole bookrunning mandated lead arranger and ECA coordinator on the $1.75 billion financing for Sevan Drilling in Singapore, a subsidiary of Seadrill of Norway. In this landmark transaction, ~ING^ handled the $350 million GIEK Norwegian ECA-backed tranche through the bank in Germany.
The GIEK-backed tranche has a five-year tenor. The Sevan Drilling financing partly supports the acquisition by the company of two new-build oil rigs. The transaction, which was signed in October, helped to optimise the Sevan Drilling’s capital structure. While in an example of Euler Hermesbacked business, ING has also recently delivered a financing solution for a client in Ireland, an OECD market not normally associated with ECA-backed financing. De Jonge explains: “We recently closed a Hermes covered export facility to finance the 87.5 MW Knockacummer/ Glentane wind farm. The project is part of the renewable energy generation portfolio expansion plan of Bord Gáis Éireann (BGE), Ireland’s state-owned integrated gas utility company. BGE’s five new wind farms were financed on the basis of an ECA-covered framework facility, comprising of Euler Hermes-covered facilities totalling a185 million.
Germany is a strong exporting nation, and the largest export finance market in Europe is Germany. So the product is very familiar here, the profile fits, it is at the heart of the trade sector and it is in support of our exporting as well as importing clients. With these strong dynamics there is a win-win situation in driving our growth forward
The facility was structured as a club deal, with each of the participating banks financing the import of turbines for a different wind farm. ING, together with KfW participated in the facility concerning the 87.5 MW Knockacummer/Glentane wind farm, whereby ING’s participation (50%) reached a40 million. The turbines for this wind farm will be supplied by Nordex. The facility has a 2 +14 years tenor and is covered by a 95% comprehensive guarantee from the German state (AAA).
The competitive world of export finance Several years on from the height of the global financial crisis and the export finance market is marked by a high degree of liquidity in certain corners – particularly with the highly active Japanese banks and Chinese institutions,as well as banks in the US with easy access to dollar funding. And competing with these institutions requires the ability to deliver the right solutions for clients as well as affordable financing. De Jonge asserts: “We will be working here on deals in many parts of the world – whether it be the Netherlands, Korea or the US – that have emanated out of our global platform. We can compete with the best in the class and we are not really constrained within our German base” The team, well run by Michiel de Vries here in Germany, has for years successfully paved the way and we can now expand on that even further.
We want to broaden that success out with the headquarters of the business line centred in Frankfurt,” adds de Jonge. With many export finance transactions and most project deals being so large these days, de Jonge feels that the Frankfurt base helps exporting as well as importing clients of ING. And looking specifically at European business, he points out how strong the bank is overall in the European market. “ING is well positioned in Europe – both East and West, and we are particularly strong in the importing markets like Russia and CIS countries. This is important for us here in Germany as much of the Euler-Hermes backed business is for exports into those markets. Our client relationship managers in Russia and elsewhere are able to link with our team in Frankfurt and provide added-value to the importer of equip- ment etc.
Thus we can work from both sides, the exporter in Western Europe and the corporate borrower in Russia & CIS.” With such success and the desire to build on this, it is not surprising that ING is looking to recruit. “We have the intention to expand Michiel’s team in Frankfurt, building it up where we see the need,” states de Jonge. “The total team in Frankfurt is now 13. We are also recruiting for our international export finance offices, where we have been hiring recently and will continue to make some key appointments in both areas. In this way we create a real centre of expertise, capable of working on transactions generated by export finance teams outside Germany, as well as on transactions generated by the strong structured finance sector teams or relationship managers, both close to the eventual borrowers.” De Jonge also stresses: “Germany is a strong exporting nation, and the largest export finance market in Europe is Germany. So the product is very familiar here, the profile fits, it is at the heart of the trade sector and it is in support of our exporting as well as importing clients. With these strong dynamics there is a win-win situation in driving our growth forward.”
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