Industry minutes oct 2015 -Final
MINUTES OF THE BRITISH EXPORTERS ASSOCIATION INDUSTRY
COMMITTEE MEETING HELD AT BROADWAY HOUSE, TOTHILL STREET,
LONDON SW1, ON WEDNESDAY, 21ST OCTOBER 2015
Present:
Mr John Goodwin
(Goodwin plc) (In the Chair)
Mr Jon Coleman
Ms Susan Ross
Mr Alan Rides
Ms Maria Malinowska
Mr Guillaume Simonnet
Mr Marcus Dolman
Mr Lyall Syme
Mr Tony Chitty
Mr Chris Siegl
(BAE Systems; BExA Chairman)
(Aon)
(Alan Rides Consulting)
(Bolero)
(Euler Hermes)
(Rolls-Royce)
(Tata Steel)
(Mabey Bridge)
(Sovereign Star Trade Finance)
In attendance: Mr Hugh Bailey
Mrs Michelle Treasure
(BExA Director)
(BExA)
The meeting was joined at mid-day by representatives of Nomura International plc – see note
at foot of these minutes.
APOLOGIES
Apologies for absence were received from representatives of ABC International Bank,
Atradius, GE Capital, Handelsbanken, Hochiki Europe, JLT, London & Scottish Int. Ltd.,
Mashreq Bank, NIS, MAN Diesel & Turbo, R A Watts, the Royal Bank of Scotland, Selex
ES, Tait UK.
MINUTES
The minutes of the Industry meeting held on 3rd June 2015 were confirmed.
MATTERS ARISING
BExA Secretariat
It was noted that Hugh Bailey would be retiring from BExA before the end of the year.
Members welcomed Michelle Treasure,his successor. [A note on Michelle appeared in the
recently circulated Lunch Newsletter].
REVIEW OF CURRENT EXPORT ENVIRONMENT
Members commented as follows on their export business:
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In the steel business, Europe accounted for some 80% of the export market. Demand
was improving a little. With the exception of the London area, the construction sector
was weak. There was a problem in Europe of over-supply.
Low oil prices were bad for the steel industry and also for engineering business, but
good for airlines. In the Middle East, Russia and elsewhere projects were on hold.
Russia was being hit by sanctions. Low oil prices were benefitting Pakistan.
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In the USA, the biggest individual market for steel (and other British exports) the
‘shutters were up’ as a result of trade actions. Other countries were applying similar
protectionist measures. Iran, hopefully, would provide some scope for exports but
sanctions were still in place.
Africa infrastructure budgets were being cut. There were opportunities for power
generation in Sub-Sahara Africa, Latin America and the Far East. There is increased
demand in Africa and SE Asia/India for solar energy and in the production of energy
from waste, etc.
Bolero had increased its user base some 175% in two years. There was increasing
interest in electronic bills of lading – from China, a Japanese steel producer, BHP
Billiton and others. Cost pressures were driving cost efficiency.
Alan Rides business knowledge concerning Iran had been recognised within UKTI
(for whom he works as an International Trade Adviser). He reported that the Trade
Minister would be visiting Iran later in the month.
In the context of the lifting of sanctions, an all-important report from the International
Atomic Energy Agency was awaited. Under a July 2015 agreement between USA,
UK, Germany, Russia, China and the EU (the Joint Comprehensive Plan of Action
(JCPOA)), the IAEA has access to Iran’s nuclear facilities to monitor/verify Iran’s
compliance with various nuclear reduction measures.
Interest was expressed in Free Trade Agreements. BExA receives ‘Stakeholder
Updates’ from BIS (Dept. for Business Innovation & Skills). An Update issued on 2nd
November 2015 is being circulated along with these minutes..
RECENT BExA EVENTS/PUBLICATIONS
Annual Lunch, 13th October 2015
BExA had held another successful lunch at the Mansion House.
Association guests included:
Alderman Ian
David
Louis
Peter
Jeff
Earl of
Jane
Lord
Ben
Gurpreet
Troy
Iain
Luder
Godfrey
Taylor
Gubbins
Kabel
Kilmorey
Owen
Selsdon
Shaps
Singh
Wang
Wright MP
The Rt. Worshipful the Lord Mayor Locum Tenens
UK Export Finance Chief Executive
UK Export Finance Chief Executive designate
GTR
ISTA Chairman
BExA President
UKTI Chief Operating Officer
BExA Past President
CBI Policy Adviser
GTR BExA Young Exporter runner-up (Lakesmere)
GTR BExA Young Exporter 2015 (Rolls-Royce)
Chair, BIS Select Committee
Sum collected for the Lord Mayor’s Appeal: £1,628.95
Raffle Prize: a case of Juniper Green Organic London Dry Gin had been presented by Mr
Chris Parker, London & Scottish International Ltd.
GTR BExA Young Exporter Award 2015
The Winner of the Award was Mr Troy Wang (Rolls-Royce). This year the Interview Panel
had also declared a Runner-up, Mr Gurpreet Singh (Lakesmere).
6th BExA UKEF-ECA Benchmarking Paper
The Industry Chairman congratulated the editors of the Benchmarking Paper - Guillaume
Simonnet, Susan Ross and Jon Coleman – for their work.
Copies would be sent to:
Chancellor of the Exchequer (+ the Concessional Finance response
sent to DfID)
Lord Maude, Trade Minister
Geoffrey Clifton-Brown MP
Sajid Javid MP (BIS Secretary of State)
HM Treasury – Adam Jackson
UKTI – Catherine Raines (Chief Executive)
DfID – David Kennedy, DG Economic Development
British Chambers – Adam Marshall
BBA – Irene Graham
Cabinet Office – Perry and Corinna
Dan Korski – Special Adviser to the Prime Minister
Terry Scuolar – Chief Executive, Engineering Employers Federation
Thomas Aubrey, Senior Adviser, Policy Network
BExA’s Annual Review 2014/15
The Annual Review had been tabled at the Annual Lunch. Copies had been emailed and
posted to All Members. Noted.
BExA’s Annual Lunch Newsletter
Copies of the Lunch Newsletter had been emailed and posted to All Members. Noted.
UK EXPORT FINANCE
Meeting with Trade Minister
Following up BExA’s meeting with the Trade Minister, Lord Maude, on 29th May, a letter
dated 9th July had been received from the Minister covering the following points:
Further developments to UKEF’s product range: Fixed Rate Export Finance (FREF), Export
Refinancing Facility (ERF), Direct Lending to SMEs, Foreign Exchange Risk – Tender to
Contract (TTC); Alignment of UKEF short term cover to the private market offer;
Improving UKEF accessibility; Resourcing. He also made a short reference to UKTI.
New Chief Executive
Mr Louis Taylor taking up his post as Chief Executive on 19th October 2015.
Dept. for International Development: Consultation on Concessional Finance
Mr Tony Chitty and Mr Ed Harkins (Fieldstone Africa Ltd) had prepared a paper for BExA to
submit in response to DFID’s consultation on concessional export finance. BExA’s paper,
inter alia, called for the reintroduction of tied aid.
Foreign Exchange (Tender to Contract Cover)
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This was one facility which was shown as being unavailable from UKEF in last year’s
benchmarking paper. It was understood that Coface, France, offered TTC but it was
no longer available from credit insurers in the UK.
In the Minister’s letter to BExA dated 9th July 2015 he commented as follows on TTC:
“You proposed that TTC should be reintroduced. It would be, in effect, a subsidy
scheme and the design of TTC support would be complex. However, against this
background, more analysis is required before it can be determined if a market gap
exists around managing foreign exchange risks for exporters that would justify UKEF
filling it. However, I agree that it should be looked at, particularly given the problems
faced by smaller exporters, and UKEF will take this forward in conjunction with
BExA and the BBA”.
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The need for this facility was subsequently highlighted at BExA’s meeting with the
Cabinet Office Implementation Unit on 16th September.
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BExA met UKEF – Richard Wade – to discuss the Association’s request for this
cover.
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Nomura International Ltd had approached BExA regarding a scheme akin to TTC
which they were considering introducing to the market. They had agreed to join this
Industry meeting to give a presentation on this product. (See note at foot of these
minutes).
Review of SME Finance by Oliver Wyman
Oliver Wyman had been engaged by the British Business Bank and UKEF to conduct a
review of the market conditions of export finance for UK SMEs. The Chairman, Susan Ross
and Debby Bass held a meeting with Oliver Wyman on 10th August. Oliver Wyman’s final
report is awaited.
EGAC – Export Guarantees Advisory Council
Under cover of an email dated 12th October, Andrew Wiseman, Chairman of EGAC had
summarised the work of EGAC as follows: “The Council is a statutory body that provides
independent advice to the Secretary of State for Business, Innovation and Skills on the ethical
policies UK Export Finance applies when doing business, including in relation to:
• environmental impacts and human rights
• anti-bribery and corruption
• sustainable lending
• disclosure (freedom of information)
EGAC’s Chairman invited BExA to a meeting on 7th December ‘to hear BExA’s views on
UKEF’. The composition of BExA’s team at this meeting would be finalised by the
Chairman.
UKEF Digitalisation Programme
A member reported that there was a major digitalisation programme within the Government
whereby various applications would be required to be submitted online rather than in hard
copy. UKEF was discussing the possibilities for introducing the digitilisation of its
application procedures. Bolero was in a position to assist. The matter would be kept under
review.
SHORT TERM CREDIT INSURANCE
A member commented that underwriters were expecting to receive many claims. Exporters
should ensure that their policy administration was up-to-date. A member requested a review
of the usefulness of short term credit insurance policy wordings faced with many contracts
currently suffering contract creep causing cash flow problems for exporters whilst insurers
maintain a reservation of rights attitude. It was agreed the points be sent to those on the
committee with wider experience but opportunity may exist here for government to help UK
exporters.
Insurance Act 2015
The Industry Chairman drew attention to the Insurance Act 2015, which would be coming
into force in August 2016. It replaces certain provisions of the Marine Insurance Act 1906.
As a general comment, a member advised that the changes arising from the new Act would
be in favour of policyholders. Remedies would have to be proportionate: a policy could not
be voided because of a mistake. [“The Act replaces the insured’s current duty of disclosure
with a requirement that the insured must make a ‘fair presentation of the risk’. …. Insurers no
longer have the right to avoid an insurance contract for breach of the duty of utmost good
faith” [Taken from the web:
www.klgates.com/files/publications/.../New_UK_Insurance_Act.pdf ]
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It was suggested that a memo might be prepared by BExA on the Act.
FORTHCOMING BExA ACTIVITIES
Shortage of time precluded a discussion of the following agenda items:
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BExA Commentaries & Guides
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BExA website; BExA Logo
[Note: Reference was made to a new BExA logo in the minutes of the Council
meeting held on 15th September 2015. The logo was incorporated into a pop-up
banner displayed at the recent Annual Lunch and was also shown on the cover of
the new Annual Review and the Newsletter, both tabled at the lunch].
[BExA’s website has been updated. One feature is a new password-protected
Members’ Area].
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BExA media arrangement
[As agreed at the last Council meeting, BExA has signed up with Journolink, ‘an
interactive platform enabling (BExA) to manage (its) own PR and send out
business stories to journalists’.]
Officials BExA aims to meet
Mr Louis Taylor (Chief Executive designate), UKEF
Dr Catherine Raines (New Chief Executive, UKTI)
Mr David Kennedy (DFID, DG Economic Development)
Mr Iain Wright MP (Lab., Hartlepool) new Chair, BIS Select Committee
Ms Carolyn Fairbairn (CBI D-G elect) - a recent meeting was held with her
ANY OTHER MATTERS
Date of Next Meeting
The next Industry meeting would be held on Tuesday, 15th December 2015 at the Greenford
office/factory of Ultra Electronics Sonar Systems.
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PRESENTATION BY NOMURA
Attached: Tender Risk Hedging BExA Final.pdf
Paper on Tender to Contract protection for SMEs presented to the Industry meeting by FX
and corporate banking solutions executives from Nomura:
Tim Owens, Managing Director – Global Head of FX Structuring, Nomura
International plc
Darrell Porter, Head of Risk Solutions Group, N. Europe
Benoit Duhil de Benaze, FX Structuring
Sanja Jovic, Risk Solutions Group
The product seemed to members to be very much like the old TTC offered by Atradius with
an element of the cost paid upfront at the bid stage and the balance paid when the export was
won.
At BExA’s suggestion, Nomura subsequently discussed the proposal with UKEF.
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ATTACHMENTS (being circulated separately from these minutes).
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Nomura’s Presentation on Tender Risk Hedging (a pdf. file)
Free Trade Agreements - Update: paper dated 2nd November 2015 received from BIS
– the Dept. for Business, Innovation & Skills.