Export finance and international trade
Export finance supports cross-border trade by providing the financing, guarantees and insurance needed by exporters and importers to complete transactions and manage commercial and political risks. These solutions may be provided by banks, insurers and, where applicable, Export Credit Agencies (ECAs), either individually or in combination. Typical instruments include letters of credit, which give exporters a bank's payment undertaking conditional on presenting compliant trade documents, and buyer credit or supplier credit facilities, under which a bank lends either to the foreign buyer or against the exporter's receivable, often complemented by ECA cover for a large share of the financed amount.
Export Finance in the EU
Exports are a major driver of the EU economy, accounting for around half of EU GDP, and export finance helps EU companies enter international markets, pursue commercial opportunities and compete globally. Private financing may be complemented by officially supported export credits, typically provided through national Export Credit Agencies for medium- and long-term transactions under the international framework set out in the OECD Arrangement on Officially Supported Export Credits. This support can help facilitate viable transactions where commercial or political risks might otherwise restrict access to funding.
The role of banks supporting exporters
Banks play a central role in export finance by structuring and providing financing and risk mitigation solutions to exporters and importers, either independently or with the support of ECAs. In ECA backed transactions, banks typically act as the lender of record, extending buyer or supplier credit while the ECA provides cover, generally up to 85% of the financed amount, against the buyer's default or political risk in the destination country, with most of the remainder usually covered by a down payment from the buyer. Banks also issue letters of credit and other guarantees that give exporters and importers confidence that payment or performance obligations will be honoured, and they assess transaction, country and counterparty risk throughout the life of the financing.
Through these activities, banks facilitate international transactions, broaden access to financing and help EU companies compete in global markets.
The EBF’s work on Export Finance
The EBF Export Finance Experts Group brings together experts from member national banking associations and banks to follow regulatory and policy developments affecting export finance.
Its work focuses on banking regulation and the international framework governing officially supported export credits, with the objective of supporting international trade and a level playing field for European companies.
EBF Priorities
1. OECD Arrangement modernisation
The OECD Arrangement keeps exporters competing on the price and quality of their goods rather than on public financing terms. Building on the July 2023 reform, the EBF is calling for a second phase of modernisation across two areas.
On financial terms, the EBF wants reduced premiums for green and social projects in both emerging and developed markets. On down payments and cover, it favours a permanent alternative to the existing 5% down payment flexibility: keep the standard 15% down payment but let ECAs raise cover from 85% to 95%, focused on the most challenging country categories. It also supports raising eligible local costs to 100% of export value, and clearer rules placing sovereign, non-commercial transactions, such as coast guard or emergency service acquisitions, under standard Arrangement conditions rather than the stricter Aircraft Sector Understanding.
On environmental and social issues, the EBF wants a simpler Climate Change Sector Understanding, whose repayment and drawdown provisions are currently scattered and create uncertainty for cross category projects like green public transport. It also wants social projects, health, education, water, housing, inclusive transport, given a defined category with conditions equivalent to those already available for green projects.