The renewal of our international rules

In 1978 I celebrated my fourth birthday and went to kindergarten for the first time. It was the year in which the Netherlands reached the final of the World Cup for the second time - unfortunately, without the result, we had hoped for - while part of the home front thought that the Dutch team should not have travelled to the dictatorship of Argentina at all. Bernard Hinault won the Tour de France for the first time (out of five) and Johan de Muynck was the last Belgian to win a major stage race, the Giro, so far. As I write this, Remco Evenepoel is in the process of becoming his successor. In the cinemas, Grease with the recently deceased Olivia Newton-John and John Travolta was a huge hit, and the most popular song of that year was 'You're the one that I want, yes, from Grease.

OECD countries and their agreements date back to 1978

This all sounds like a long time ago, I suppose. The international rules that we as Atradius DSB have to abide by also date from 1978. At that time, a group of relatively rich OECD countries agreed with each other on the rules they have to abide by when providing export credit insurance: the so-called Arrangement. Those agreements have, of course, been regularly amended since then. That is, all kinds of new rules have been added. Very importantly, in 2011, for instance, the rules on insurance premiums took their final form. In 2012, broader conditions for climate change-related transactions were allowed. Loans for such projects are allowed to be repaid over a longer period of time, making it easier for the client.

The problem, however, is that all sorts of rules have been added over time, but never taking a step back and asking the question: are all these rules actually still of this day and age? When my parents took out a mortgage to buy their first house in 1975, the bank allowed them to choose between a mortgage with straight-line repayment or, um, nothing really. When my girlfriend and I asked the bank for the same thing in 2006, we could choose from linear, annuity, savings or investment mortgage, of course, repayment-free and maybe more, something with UFOs or something.Exactly that development is where our international rules are now going wrong. Ultimately, export credits are issued by banks, which we then insure. And those banks can and do now issue very different loans than they did in 1978. But the rules still stipulate that only a linear profile with mandatory six-monthly repayments is allowed. Moreover, the first repayment must be made on the day off six months after delivery of the property. This falters and hinders us in supporting exports. Much more is possible but not allowed, while countries that never joined the group of countries that started in 1978 are allowed to do all sorts of things, simply because that is how things work in the financial world nowadays.

So it is high time to renew those rules. The maximum duration of a loan is another thing. There is a forest of rules for that, and new ones have only been added since 1978. There are at least 22 categories with their own rule, and I'm not even counting those for aircraft. In 1978, loans were actually only granted to governments, while today it is much more often to companies. Loan maturities should then be much more related to the depreciation periods of the insured assets.

We are working hard on this. European countries all agree on this, but we also have to convince other countries like the US, Canada, Japan and South Korea, and that takes more effort. Decisions have to be taken unanimously. But there is good hope that maybe we will come out of it this year.

So hopefully next year, you can also come to us to secure a 15-year loan with a UFO profile!