Czech Export Bank may cut lending by 10% this year.

By bne IntelliNews August 3, 2010
The state-owned Czech Export Bank (CEB) is likely to be required to limit its support for exports by 10% (CZK 92mn) to CZK 827mn (EUR 33.4bn) this year, daily E15 reported. This will follow the CZK 10.2bn freezing of budget spending for this year approved by the government so that the earlier pledged target for the general government deficit at 5.3% of GDP is met. The freezing of the fund is contrary to the agreement to support exporters signed between the industry ministry and the industry confederation. The industry ministry is required to freeze some CZK 215mn from its spending this year. Industry ministry spokesperson Pavel Vlcek underlined that CEB, like other state institutions, will have to optimise its activities and spending in order to meet the requirements for expenditure freeze. In 2009, CEB provided loans and guarantees to local exporting companies in the value of CZK 23.5bn (EUR 888.6mn), which represented a 14.6% y/y growth. The value of provided loans grew by 16% y/y to CZK 19bn. CEB shareholders approved a 47.5% capital hike to CZK 2.95bn in April 2009 with the objective to support exports as part of the country's anti-crisis package. After the capital hike, the stake of the state institutions will be 72.9% and that of the state insurance company Export Guarantee and Insurance Corporation (EGAP) - 27.1%. CEB mediates state support to exporters by granting and financing export credits among others. In August 2009, the international rating agency Moody's downgraded CEB's long-term foreign currency issuer and senior unsecured ratings to A1 from Aa1 with a stable outlook.

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