Finnvera's Annual Review and Corporate Responsibility 2020
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Finnvera’s Annual Review and Corporate Responsibility 2020
Finnvera’s Strategy and Responsible Corporate responsibility
Annual Report 2020 year 2020 role in society financing management 2
In 2020, we have combined the
traditional Annual Report and the GRI
Standards corporate responsibility report.
Finnvera’s year 2020
CEO’s review.................................................................. 4
Strategy and role in society
How Finnvera creates value......................................... 7
Strategy.......................................................................... 8
Operating environment............................................... 13
Corporate governance................................................ 17
Stakeholder cooperation............................................ 23
Responsible financing
Domestic financing..................................................... 27
Export financing.......................................................... 32
ESG risk management in financing operations......... 37
Asset management..................................................... 41
Key figures................................................................... 42
Risk management at Finnvera.................................... 43
Corporate responsibility management
Corporate responsibility management at Finnvera.... 47
Impacts of Finnvera’s own operations....................... 52
Reporting principles.................................................... 56
Finnvera finances various stages of business with loans, guarantees and export credit GRI Standards Content Index..................................... 57
guarantees. Finnvera is a specialised financing company owned by the State of Finland.
Finnvera has official Export Credit Agency (ECA) status. When creating the PDF documents of Finnvera’s
Annual Report, the accessibility requirements for
online services have been taken into account, and
the publications can be read using a screen reader.
Finnvera’s Strategy and Responsible Corporate responsibility
Annual Report 2020 year 2020 role in society financing management 3
Finnvera’s year Finnvera’s year was characterised by the coronavirus pandemic
The crisis caused by the coronavirus pandemic had a strong impact on Finland’s and the world’s
Figures from the year 2020
2020 economy and, from mid-March onwards, also on Finnvera’s operations: financing, the strategy and
organisational operations. This Annual Review describes how Finnvera, as a specialised financing
EUR 25.0 billion
Finnvera’s total exposure
company, adjusted its operations to meet the financing needs of the enterprises. We have combined
amounted to EUR 25.0 billion
the traditional Annual Review and the Global Reporting Initiative (GRI) Standards corporate
responsibility report into a single publication.
Clients’ willingness to recommend
us (NPS) was on average
Demand for financing was several times higher than usual
In the spring, Finnvera’s
authorisation to grant domestic
the loans granted by the banks.
The cooperation made it possible 56
(2019: 64)
financing was raised from to respond to the several times
EUR 4.2 billion to EUR 12 billion higher demand for financing.
by a legislative amendment. Finnvera was also able to secure
Finnvera and banks created an financing of large corporates Domestic financing granted by
operating model in which clients during the coronavirus crisis and month in 2020, MEUR, Loans,
primarily dealt with their banks and complement the financing offering guarantees and export guarantees
Finnvera focused on guaranteeing by granting working capital. 350
299
300
250 207
200 184 187
150 146
The first sectors to be Enterprises primarily In the autumn, demand 150
104
100 80 88
hit by the crisis were the needed working capital for financing returned to 49 61 54
50
service sector, tourism and financing to ensure close to normal levels.
0
the hospitality industry. the continuity of their Enterprises adjusted 1 2 3 4 5 6 7 8 9 10 11 12
Granting instalment-free operations. In the second their operations and
periods was among wave of the crisis, demand used support solutions
Finnvera’s first measures for financing increased offered by other parties. Month 1 2 3
Finnvera’s task was4 to 5ensure
6 7
that8 9 10 11 12
during the crisis. in larger enterprises. Finnvera shifted its focus 49 61 150 299 207 184 146 54 80 104 88 18
enterprises could operate even
to enabling new growth
during the crisis year. Our vision is:
by means of financing.
Our clients’ success strengthens
the Finnish economy.
Finnvera’s Strategy and Responsible Corporate responsibility
Annual Report 2020 year 2020 role in society financing management 4
CEO’s review Finnvera was given capabilities
for responding to growing demand
At the beginning of 2020, the economy It was crucial that Finnvera was given comprehensive
was prepared for subdued development, capabilities for responding to the needs of enterprises.
Finland’s Government and Parliament prepared and
but the year was still expected to be ordinary.
implemented amendments to the legislation and regulations
Everything took an exceptionally drastic concerning Finnvera’s domestic financing, enabling us to
turn when the coronavirus pandemic was respond to demand for financing and to reduce the pricing
declared in March. Its impacts could been seen of financing.
Our authorisation to grant domestic financing was
dramatically in Finnvera’s year. Our main task
raised from EUR 4.2 billion to EUR 12 billion. We utilised our
was to help enterprises overcome the crisis guarantee products, which the bank applies for on behalf
by means of financing. of the enterprise. We created a new fast track for major
financing needs: we can grant guarantees for financing of
Although risk forecasts had recognised a pandemic, up to EUR 1 million with a quick decision once the bank has
a pandemic as rapid and global as this, leading to lockdowns conducted a credit risk assessment.
in many societies was not anticipated. Its impacts became We introduced an 80 per cent guarantee model across
apparent in virtually one week in March. Demand for Finnvera’s the line, and in May, a guarantee of up to 90 per cent
financing and re-arrangements related to existing loans became possible.
multiplied and reached a record-breaking level in March–April. We were given the authorisation to guarantee
We had very little time to prepare for the situation, but theworking capital requirements of large corporates up
we managed to make significant process changes quickly. to EUR 100 million. The preconditions for export were
Together with the financial sector and banks, we created an strengthened by special permission from the European
operating model in which clients primarily dealt with their Commission, which made it possible to grant export credit
banks and Finnvera focused on guaranteeing the loans granted guarantees with short payment periods also for exports to
by the banks. The cooperation made it possible to respond to Western industrial countries.
the several times higher demand for financing. We tailored our Since October, enterprises have also been able to apply
service model according to the amount of financing applied for, for direct loans from Finnvera if a bank loan is not possible "Clients primarily dealt with
and the processing of financing applications and the related even with Finnvera’s guarantee. their banks and Finnvera
decision-making were streamlined. The above measures made it possible for us to meet focused on guaranteeing the
The pandemic made us focus on two tasks: securing the goals of our strategy for the exceptional circumstances. loans granted by the banks.”
the availability of lending to viable enterprises and ensuring For a long time already, we have normally granted some
that conditions for export financing could be maintained EUR 1 billion in new financing in Finland per year, but in
during the crisis. 2020, we reached the level of EUR 1.7 billion. We made more
Finnvera’s Strategy and Responsible Corporate responsibility
Annual Report 2020 year 2020 role in society financing management 5
than 23,700 financing and change decisions. The export for potential future losses. The reserves were sufficient
financing volumes showed that the preparation of new for covering the loss provisions made, but their amount
major projects slowed down, but in terms of the number of decreased significantly. Finnvera Group’s result showed
financing arrangements, demand remained high. a loss of EUR 748 million after the State Guarantee Fund
Even in the exceptional circumstances, the spearhead payment of EUR 349 million.
of our strategy was the impact of our financing and the The amount of realised losses will be determined later.
foundation of our operations was responsibility. The year
underlined Finnvera’s role as a driving force in the financial Networks and expertise play a key role
market and highlighted the significance of our financing The year highlighted the significance of partnerships and
in enabling economic activity and ensuring the operating stakeholders. Finnvera supplements the financial market,
conditions for enterprises. and cooperation between providers of financing was
successful, as was the digitalisation of joint processes.
The cruise shipping crisis and loss provisions Digitalisation made quick financing decisions possible.
took the result to a significant loss Our skilled personnel played a key role in enabling us
The coronavirus crisis affected different sectors in very to make rapid changes. The organisation demonstrated
different ways. After the initial shock, most export sectors its agility in the critical situation. For the peak period
returned to their normal volumes or even achieved growth. in financing applications, we recruited 48 temporary
Other sectors were profoundly shaken by the crisis. One agency workers.
of these is cruise shipping. Cruise operations all over the We quickly moved to remote work, for which we were
world were suspended with official decisions. This was a well prepared. The transition contributed to accelerating the
major blow in the United States, which covers half of the organisation’s digital leap.
cruise shipping market. In the autumn, demand for financing returned to close
The collapse of shipping companies’ revenues and to normal levels. Enterprises adjusted their operations and
the deterioration of their financing situation gradually primarily used support solutions offered by other Team I would like to thank our personnel, partners and clients
weakened their credit ratings to a significant extent. Finland organisations, for instance. We shifted our focus for 2020, which was an exceptionally challenging year. The "The reserves were
According to the IFRS 9 standard, poorer credit ratings to enabling new business growth by means of financing. year 2021 will show how the coronavirus situation develops sufficient for covering
and macroeconomic forecasts change the expected loss The Finnish economy will need this growth for the post- and how enterprises perform. For the Large Corporates the loss provisions
amounts, which creates deferred loss provisions. In 2020, coronavirus recovery. According to a study commissioned business, the recovery of cruise shipping is a crucial factor. made in export credit
Finnvera had to make extensive loss provisions in export by us, there is a bottleneck in financing small export The future outlook is full of uncertainty, but at least one guarantee and special
credit guarantee and special guarantee operations, transactions of less than EUR 20 million after the banks thing is certain: our work to enable enterprises to operate guarantee operations,
totalling EUR 1.2 billion. withdrew from this financing. We have started preparations will continue. but their amount
Finnvera’s operations had been profitable during for granting direct export credits to boost small export decreased significantly.”
the company’s 21 years of operation, until 2019. During transactions and especially SMEs’ export trade. This Pauli Heikkilä
this period, the company increased its loss reserves requires legislative amendments. CEO
Finnvera’s Strategy and Responsible Corporate responsibility
Annual Report 2020 year 2020 role in society financing management 6
Strategy and The strategy focused on the crisis
The coronavirus crisis made Finnvera focus on two tasks: securing the availability of lending to
The coronavirus pandemic
role in society
brought cruise shipping, an
viable enterprises and ensuring that conditions for export financing could be maintained. However, important sector for Finnish
the Finnish economy overcame the crisis year quite well compared to other countries. exports, to a standstill around
the world. The recovery of
the sector will be monitored
closely. The “Operating
environment” section
provides an overview of the
Unlike previous crises, The organisation and The year brought a swift outlook of cruise shipping.
the coronavirus crisis was not administration demonstrated digital leap. Finnvera moved
a crisis of the financial system. their agility in the exceptional almost completely to remote In 2020, the number of
The financing system worked circumstances. Resources work. Information systems client calls increased by
40%
well and secured the availability were allocated to critical client were updated and many
of financing to enterprises. work and the personnel was measures were taken to
supplemented by recruiting ensure information security.
temporary agency workers.
Finnvera’s “Financing & growth”
overview of financing and growth
estimates that economic recovery
Cooperation ensured
will take several years. According to
well-functioning
Chief Economist Timo Lindholm, new
corporate financing
structures and operating methods
The crisis underlined the importance
will be needed in many respects.
of a well-functioning financial market
and flexible and active cooperation
with stakeholders. Finnvera
supplements the financial market,
and cooperation between providers
66,000
Early on during the crisis, Finnvera
of financing was successful, as was launched the finnvera.fi/eng/corona
the digitalisation of joint processes. website that offers information about
There was also very close cooperation corporate financing and services in
with the owner, organisations and the crisis. The website was visited
the Team Finland network. about 66,000 times in March–April.
Finnvera’s Strategy and Responsible Corporate responsibility
Annual Report 2020 year 2020 role in society financing management 7
How Finnvera creates value
Financial resources Number of clients 31 Dec 2020: 26,500 Impact on society
• Balance sheet EUR 12.7 billion • Micro-enterprises: 87% & financial impacts
• Equity EUR 0.7 billion, of Our vision is: Our clients’ success strengthens the Finnish economy • SMEs and midcap enterprises: 13% • We reinforce the capacity and
which non-restricted equity • Large corporates: 0.6% competitiveness of Finnish enterprises
account for EUR 0.5 billion • Number of financed start-ups: 2,697
• Funding from international • Number of new jobs created with
bond markets amounts to Products and services 1–12/2020 the help of domestic financing: 8,717
EUR 1.0–1.5 billion per year Loans and guarantees granted • 768 transfers of ownership financed,
EUR 1.4 billion in total
EUR 141 million
Export credit guarantees and
• Exports covered by export credit
Personnel Impact special guarantees granted
guarantees: EUR 3.2 billion to over
• In average 360 employees EUR 3.2 billion in total
Financing and controlled risk-taking 90 countries
in 16 locations in Finland. Export credits granted
EUR 1.1 billion in total • Our risk management ensures
• Average length of financial self-sustainability
employment relationship • Development of target countries
15.6 years Authorisations and exposures
31 Dec 2020 through export financing projects
• Extensive experience and Targeting International Loans and guarantees
competence in the financial of financing competitiveness • authorisation EUR 12.0 billion
sector and risk assessment
• exposure EUR 2.5 billion including Social impacts
Clients
Customer guarantee receivables EUR 32 million • Personnel expenses EUR 29 million
Loans and guarantees
Stakeholder relations experience Export credit guarantees and EUR 0.3 million to training
Export credit guarantees
• 4,500 meetings and contacts Export credit • authorisation EUR 38.0 billion • Personnel’s job satisfaction index 4.2/5
with clients and stakeholders financing • exposure EUR 22.1 billion including • Sick leave rate 1.7%
• Partner networks with Competent personnel Partnerships export credit guarantee recivables • Assessment and monitoring of
banks and private providers EUR 40 million social and human rights risks of
of financing Export credits the financed transactions
• The Team Finland network that • authorisation EUR 35.0 billion
promotes internationalisation Basis of the strategy: Values: • exposure EUR 7.6 billion Environmental impacts
among enterprises Responsibility: Self-sustainability, Trust, Special guarantees • Assessment and monitoring
• Domestic organisations, such Risk management, Environmental Partnership, (shipping and environmental guarantees of environmental risks of
as the Federation of Finnish and social responsibility A focus on solutions and raw material guarantees) the financed transactions
Enterprises, the Chamber • authorisation EUR 3.2 billion
of Commerce and the • exposure EUR 0.4 billion Impacts on stakeholder relations
Confederation of Finnish • Continuous measurement of the
Industries (EK) customer experience: average NPS of 56
• International organisations, The exposure defined in the Act on the State’s Export • Large customer and stakeholder
such as the Berne Union, Credit Guarantees includes commitments and half satisfaction survey every 2. year:
The Montreal Group, the OECD, of offers given at the closing date’s exchange rate. willingness to recommend Finnvera,
The exposure according to the Act on the State’s
the EU, the Paris Club, NEFI Export Credit Guarantees was EUR 19.5 billion on average NPS (net promoter score)
and AECM 31 December 2020. The total exposure arising from of 74.8 (2019)
export credit guarantees and special guarantees
In an exceptional situation, Finnvera’s key task is to focus on managing the crisis. includes current commitments and offers given at
the reporting date’s exchange rate.
Finnvera’s Strategy and Responsible Corporate responsibility
Annual Report 2020 year 2020 role in society financing management 8
Strategy
When the coronavirus crisis started in the
spring, enterprises’ operating environment
and financing needs changed quickly. Finnvera
also needed to adjust its strategy in line with
the exceptional situation. From the outset of
the crisis, the aim was to ensure the operating
conditions of enterprises as well as, for
example, the continuity of exports.
A short-term strategy for the exceptional circumstances
was established for 2020–2021. It provides a more
detailed description of actions in Finnvera’s SMEs
and Large Corporates business operations during
the coronavirus crisis.
In normal circumstances, Finnvera’s strategic goal is to
allocate the majority of its financing to enterprises seeking
growth and internationalisation as well as to investments,
transfers of ownership and exports. During the pandemic,
we have expanded the allocation of financing to help all Finnvera’s strategic choices at the company level in 2020–2021:
viable enterprises to overcome the crisis.
• Communications about the company’s role and solutions are
• In domestic financing: We secure the availability of
lending to viable enterprises in all stages of the crisis.
active and in line with the strategy – every Finnvera employee also
understands the significance of communications.
• In export financing: We ensure that conditions for export
financing can be maintained over the crisis.
• We highlight Finnvera’s ability to react quickly to changes, without
forgetting the responsibilities and risks associated with our operations.
Resources were heavily concentrated on achieving these
• We ensure sufficient resources and expertise for the implementation of
the strategy and use external advisors, if necessary.
goals in the exceptional circumstances. In March–April,
Finnvera quickly adjusted its services and products to
• We work in close cooperation with the MEAE group and
the Team Finland network and make a good use of our active
according to the needs of enterprises and the increased expertise network in our work.
application volumes. From the outset of the crisis, the aim
Finnvera’s Strategy and Responsible Corporate responsibility
Annual Report 2020 year 2020 role in society financing management 9
was to ensure the operating conditions of enterprises as
well as, for example, the continuity of exports. Clearer strategy story
In 2020, the clarification
Finnvera focused on ensuring the of Finnvera’s brand and
operating conditions of enterprises strategy story was launched.
In the early stages of the crisis, the first measures taken in The goal is to ensure that
domestic financing included instalment-free periods and all Finnvera employees can
other payment arrangements. At the beginning, the need for embrace the strategy and
financing was greatest among the smallest enterprises. Efforts that it can be communicated
were made to ensure fast service for enterprises and find ways more clearly also to our
to make decisions on a large number of applications within cooperation partners.
a few days, in line with the normal service promise. The primary
means of responding to the multiplied demand were Finnvera’s
guarantees and the simplification of processes. The granting
of direct loans was temporarily suspended.
Finland’s financing system worked well throughout the
crisis. Enterprises were able to re-arrange their payment
schemes and acquire additional financing with the aid of
cooperation between Finnvera and banks. Finnvera’s digital maturity
Clients were supported with effective financial advisory
services and clear communications. Information about took steps forward
the services was collected on the finnvera.fi/eng/corona In 2019, the dTEM programme, extending until 2025,
website, which was visited 66,000 times already during was launched in the Ministry of Economic Affairs and
March–April. Employment’s branch of administration, setting the common
In the second stage of the crisis, from May onwards, mission and goals for guiding digital development.
it could be seen that working capital needs were increasing The digital maturity re-evaluation conducted in the
also among larger enterprises, in industry, for instance. autumn 2020 in the branch of administration compared
However, demand for financing levelled off during the the self-evaluations of the organisations with those of
summer and the autumn, compared to its peak in March– external experts. Finnvera received good reviews from
April. Towards the end of the year, Finnvera’s strategic experts regarding the development of the digital vision
focus shifted to the reconstruction stage and securing and strategy and the development of digitalisation control
the conditions for new growth in cooperation with other and management. The strongest area in digital maturity is
providers of financing. For instance, Finnvera highlighted cybersecurity and data protection. The main development
the importance of transfers of ownership as part of healthy areas are the organisation and culture.
Finnvera’s Strategy and Responsible Corporate responsibility
Annual Report 2020 year 2020 role in society financing management 10
corporate restructuring. Even in normal circumstances, of enterprises, correct the deficiencies in financing services,
financing transfers of ownership is a key priority in and contribute to regional development in Finland. In the autumn, all
Finnvera’s strategy. Finnvera’s vision, “Our clients’ success strengthens the Finnvera employees were
With the European Commission’s special mandate, Finnish economy”, also holds true in the strategy for the invited to participate in
Finnvera was given the opportunity to grant export credit exceptional circumstances. strategy work survey.
guarantees with a short risk period (less than two years) The coronavirus spring
also for exports to so-called marketable risk countries, such Engaging Finnvera’s personnel in strategy work could be seen in the
as the EU Member States. This change was important for In the autumn, all Finnvera employees were invited to answers, for example in
securing the conditions for exports. participate in strategy work in the form of a survey, which was views of the importance
In order to respond to the working capital needs of taken by half of the personnel. The effects of the coronavirus of Finnvera’s impact.
large corporates in the situation caused by the coronavirus spring could be seen in the answers when respondents were
pandemic, Finnvera can guarantee financing for them up to asked to indicate where Finnvera’s impact is most evident. One
EUR 100 million – however, in a manner that ensures that third of the respondents highlighted working capital financing Finnvera is prepared to secure
Finnvera does not become the main provider of financing. provided to Finnish enterprises during the coronavirus crisis. the availability of lending with
The goal of risk management is to maintain long-term Nearly the same number emphasised the financing of export both guarantees and loans
economic self-sustainability: The income from Finnvera’s transactions of enterprises acting as drivers in the sector The reconstruction of economy is likely to proceed
operations covers the expenses of operations in the long and the financing of their subcontractors. The financing of at a different pace in different sectors. Finnvera’s
term. The review period is 10 years for SME financing and investments in Finland was also considered important. financing still focuses on guarantees. Finnvera is
20 years for export financing. Other questions focused on themes such as the prepared to secure the availability of lending to viable
development of one’s own expertise, the digital agenda enterprises in all stages of the crisis.
Finnvera’s social role grew significantly and the issues that the management and Finnvera should
Read more (in Finnish) >
Finnvera’s long-term strategy and targets are still valid, even pay particular attention to when preparing for 2021. An AI
if they are now in the background. application was piloted in analysing the responses under the
The spearhead of the strategy is impact: our financing last theme. The topics identified by AI were the organisation,
enables our clients to improve their turnover and profit in resourcing, development, clients and products, especially in preparedness was high. Working at the office was allowed if
a way that would not have been possible otherwise. Our relation to the coronavirus crisis. remote work was not possible, for one reason or another.
most important means of achieving impact are financing As the situation continued, Finnvera’s IT function improved
and controlled risk-taking. We complement deficiencies in Digitalisation and robotics the operation of remote connections and applications.
the financial markets. accelerated the financing process Priority was given to information system changes related
The impact of financing and Finnvera’s role in society The coronavirus situation also induced a digital leap in the work to the coronavirus situation, and IT cooperated closely in
became very important in the exceptional circumstances of Finnvera employees, when almost the entire organisation particular with the SME financing business to ensure that
caused by the coronavirus pandemic. moved completely to remote work practically in a few days. product changes, processing and granting processes could
According to our mission, Finnvera’s task is, by means The transition was facilitated by the fact that remote work had be streamlined through agile development. More than 330
of financing, to promote the internationalisation and exports already been possible before this and therefore the level of Jira development tasks related to the coronavirus situationFinnvera’s Strategy and Responsible Corporate responsibility
Annual Report 2020 year 2020 role in society financing management 11
were carried out during the year. The status of IT development
was visualised with Lean methods on virtual walls and The digital agenda
dashboards to improve the efficiency of the process and describes the direction
make tasks visible. Increasing transparency is one of the key of development and the
targets of the digitalisation unit and the IT function, and it desired outcome. The aim
could also be promoted during the coronavirus crisis. is to provide an excellent
The use of robotics was an efficient aid in managing customer experience
the growing number of applications. The Ronja robot, deployed with smooth and fast,
in 2019, entered enterprises financial statements data into straightforward services.
systems, which accelerated processing also when the number
of applications increased during the pandemic. The number
of financial statements processed by Ronja increased by
approximately 130 per cent from the previous year. In 2020,
financial statements entries totalled nearly 3,000.
The digital agenda guides development
The digital agenda, updated twice a year, describes the direction
of development related to the digitalisation of Finnvera’s
operations and services as well as the desired outcome. The Crisis accelerates
digital agenda helps units in their annual planning. The aim
positive structural changes
is to provide an excellent customer experience with smooth
transactions and fast, straightforward services. Another aim is As a post-cyclical economy, Finland will experience the long-
to integrate Finnvera with the increasingly digitalised operations term effects of the pandemic with slight delay. However, our
of its partners. Finnvera’s goal is to operate efficiently and industry, even though hit hard by the coronavirus crisis, is
with high quality and to increase preparedness for change in also showing positive signs. Marjo Miettinen, Chairperson
a transparent manner while also controlling the risks. of Technology Industries of Finland, believes that both
The extensive financing system renewal project, technology companies and other industries will find the keys
launched at Finnvera in 2019, proceeded as planned during to new growth in competence development, digitalisation
2020, and the project is now in the competitive tendering and green innovations.
phase. The project will be linked with Finnvera’s case She encourages the Finnish export sector to renew itself
management and the online service renewal. even in quiet times – positive things have also emerged in
In addition to the financing system project, the most the midst of the crisis.
important future development areas will be the development
Read more (in Finnish) >
of Finnvera’s data management and data quality.Finnvera’s Strategy and Responsible Corporate responsibility
Annual Report 2020 year 2020 role in society financing management 12
Finnvera's role in society
Transfers of ownership financed Export credit guarantees
MEUR 141
Domestic financing offered and special guarantees offered
2020 MEUR 1,693 768 companies MEUR 2,947
Restructurings of financing Jobs created with the help Guarantees that came into effect
13,951 pcs MEUR 1,990
of domestic financing
8,717
Start-ups launched Exports covered by
with the help of financing Financing per new job export credit guarantees
2,697 pcs EUR 194,000 MEUR 3,151
Number of clients
Micro Other SMEs Large
enterprisest and midcaps enterprises
87% 26,500 13% 0.6%Finnvera’s Strategy and Responsible Corporate responsibility
Annual Report 2020 year 2020 role in society financing management 13
Operating environment
During the entire year
In 2020, the economy was dominated by 2020 global trade
remained around 10 per
the unprecedented global coronavirus
cent lower than in
pandemic, which pushed economies into a deep the previous year.
recession, complicated business operations and
created the need for a massive economic policy
response to mitigate the effects of the crisis.
The crisis also underlined the importance of
the functioning of financial markets.
2.2%
According to the Bank
In the first stage, the pandemic complicated industrial
of Finland’s forecast,
production, disrupted international supply chains and
Finland’s GDP will
undermined the business of many service sectors. Global
grow 2.2% in 2021.
trade in goods declined sharply right at the beginning of the
crisis, and during the entire year 2020, global trade remained Finnvera's "Financing & growth” overview:
around 10 per cent lower than in the previous year.
The unprecedented crisis caused great uncertainty
for businesses, consumers, investors and economic policy
Many enterprises are
makers. The eurozone economy contracted more than facing critical times in
the US economy in the second quarter, and the differences
between European countries in terms of adjustment to
the first half of 2021
the crisis have been quite large. The rise from the pit dug by the coronavirus crisis is
The exceptionally light monetary policy continued in a long and demanding journey, which requires new growth
the eurozone, aiming to ensure bank lending and corporate and improved productivity of work. The journey is made
liquidity. Unlike in the financial crisis, financial markets even more difficult by the fact that Finland has long lagged
contributed to mitigating the impact of the crisis on the real behind Sweden, for instance, when it comes to economic
economy. The good functionality of financial markets and the growth. Competitiveness is now needed in international
rapid response of providers of financing to the crisis made markets more than in normal times, which underlines
the situation of enterprises considerably easier. Economic the significance of export financing.
uncertainty tends to increase the need for the services of public
Read more (in Finnish) >
providers of export financing, which was evident now, too.Finnvera’s Strategy and Responsible Corporate responsibility
Annual Report 2020 year 2020 role in society financing management 14
Even before the outbreak of the pandemic, the economic In the export financing, the crisis caused by the pandemic
Finnvera’s credit
situation in Finland was deteriorating, which was could be could be seen as the slowing down and prolongation of Countries and Markets review:
insurance used more
seen as a decline in the number of new orders in industry, for export project preparations, as companies postponed their The COVID-19 pandemic slows down export
than in the previous
instance. However, our economy overcame the crisis year quite significant investments. The number of guarantees granted – the role of export credit agencies
year – credit insurance
well compared to other countries. Still, the GDP fell by several for export transactions by mainly large corporates was increases in importance
safeguards exports and
per cent and the outlook is rather weak. According to the Bank 44 per cent lower than in the previous year. Companies around the world are waiting to see what
improves the exporter’s
of Finland’s forecast, the GDP will grow at a rate of 2.2–2.5 per On the positive side, the situation in the international direction the pandemic will take and have postponed
competitiveness.
cent in 2021–2022. According to the OECD, the growth rate economy began to improve in the autumn, and the number of their planned investments; this also manifests
is only 1.5–1.8 per cent. Growth is maintained by consumer new orders in Finnish industry also started to rise. as declining order books of Finnish exporters. Read more >
spending and the upturn in exports. A growing economic and political uncertainty
The short-term outlook for SMEs was clearly weakened Demand for export financing grew typically increases the need for financing guaranteed
by the business restrictions and uncertainties caused by the in trade with Latin America by export credit agencies, and export credit agencies
pandemic. In the autumn’s SME barometer survey, the growth In 2020, the strongest demand for Finnvera’s export such as Finnvera are prepared to continue export
orientation of enterprises decreased significantly, especially in financing was related to trade with Latin America: demand financing for good projects.
SMEs employing more than 50 people. for export credit guarantees grew in trade with Brazil,
Read more >
Colombia, Peru and Chile. In Finnvera’s export financing, the
Enterprises’ financing needs geographically largest country exposure by far is the United
increased at different rates States, where the extremely long economic boom seemed to
The rapidly changing state of the economy was reflected in be turning into a period of slower growth and a shutdown in quarter of the year ended with China’s normal growth rates
very different ways in the financing of Finnvera’s SME clients the cruise sector caused by the pandemic. of 6.5 percent. The country is one of the few to be able to
and large corporates. Political risks remained high especially in Argentina sustain economic growth in 2020. The value of Finland’s
The domestic financing granted by Finnvera grew and Turkey. exports to China decreased by about one fifth, which was
significantly in 2020, when the coronavirus crisis made Especially in trade with Russia, export financing has felt in the entire Finnish goods export trade, as China is still
enterprises ensure financing for their operations in the been an important competitive factor for export companies. Finland’s fifth largest export country, accounting for slightly
exceptional circumstances. During the spring, SMEs actively Finnvera’s largest politically risky country exposure is Russia, more than five per cent of Finland’s export trade.
applied for instalment-free periods for their loans. The first which is one of Finland’s key export markets, accounting Due to the coronavirus crisis, the European Commission
sectors to be hit by the crisis were the service sector, tourism for little less than six per cent of total exports. The outlook increased Member States’ possibilities to grant export credit
and the hospitality industry. In the second wave, demand for for trade with Russia became gloomier during the year guarantees with short payment periods to their enterprises
financing for larger companies increased. New financing was when there were closures in the Russian economy and at its also for exports to so-called marketable risk countries,
needed especially for ensuring working capital but also for borders due to the coronavirus pandemic. Finland’s goods such as the EU Member States and other Western industrial
development projects. The availability of financing remained exports to Russia decreased by approximately one fifth and countries. The special permission is valid until the end of
good even in the exceptional circumstances, and financial service exports by approximately 40 per cent. June 2021. Indeed, Finnvera’s credit insurance was granted
market cooperation worked well. However, the demand of In China, the tight restrictions to combat the coronavirus to a larger extent than in the previous year, also for exports
financing returned to close to normal level in the autumn. resulted in an economic upturn in the summer, and the last to most European countries.Finnvera’s Strategy and Responsible Corporate responsibility
Annual Report 2020 year 2020 role in society financing management 15
Industry analysis:
and ship quarantines would have a very negative impact on
long-term demand in the sector.
The coronavirus pandemic In the autumn, the number of coronavirus cases started
At the moment we estimate that
brought cruise shipping to rise again steeply in Europe and the United States.
demand in the sector will recover,
In Asia, the infection situation remained better, which
to a standstill means that the recovery of cruise shipping business will
thanks to its competitive advantages
and especially Asia’s growth potential.
probably also be fastest in Asia. COVID-19 vaccination
The spread of the pandemic from Asia to Europe The earlier levels will probably not
programs have begun but have progressed relatively slowly
and North America brought leisure travel largely be reached before 2023–2024.
so far. Due to the infection situation, it seems inevitable,
to a standstill and forced cruise shipping companies
that the ship capacity used by shipping companies as well
to suspend their cruise offering and to wind down as demand for cruises will remain very low in the United
their business operations in March 2020. States and Europe at least until the summer 2021.
In the first stage of the crisis, enterprises focused on Longer-term development and factors influencing it
strengthening liquidity and paying their monthly running costs. Estimating the long-term development of cruise shipping
Cruise shipping companies tried to adjust their cash flow by is more challenging than usual. There certainly is demand
renegotiating financing agreements and payment schedules, for cruises. Some clients have postponed their cancelled
for instance. Led by Germany, five European countries agreed cruises, and international shipping companies have received
to allow cruise shipping companies to suspend the repayment new bookings for 2021. At the moment, we estimate that
of export credit instalments associated with cruise ships demand in the sector will recover, thanks to its competitive
financed by state export credit guarantees for a period of one advantages and especially Asia’s growth potential, but
year. Finland and Finnvera participated in the arrangement. even after the fear of infection has disappeared, consumer
The so-called debt holiday initiative strengthened the liquidity demand will likely be reduced by the weak global economic
of shipping companies and contributed to their ability to situation. The earlier levels will probably not be reached, at
negotiate changes to other financing programmes and least not before 2023–2024.
acquire new financing. Cruise shipping grew strongly during the past decade.
In 2015–2019, cruise shipping companies invested heavily
Near-term outlook for the industry in new cruise ships, which also resulted in an estimated
The key factors for cruise shipping are the conditions for 12 per cent annual increase in the turnover of the European
the continuation of shipping companies’ business and the shipbuilding industry during the same period. The
recovery of demand. Ultimately, the continuation of business investments have benefited the value chain of the entire
depends on official regulations and the development of industrial cluster. Therefore, the future investment decisions
the coronavirus pandemic, especially in North America and of cruise shipping companies will be very important for
Europe, the main markets of the industry. New epidemics the industry.Finnvera’s Strategy and Responsible Corporate responsibility
Annual Report 2020 year 2020 role in society financing management 16
Total exposure, export credit guarantees and special guarantees 31 Dec 2020 Exposure by country classification
31 Dec 2020
EUR 22.2 billion, Finnvera had exposure
in over 90 countries on
including commitments and binding offers. 31 Dec 2020.
Exposure by sector
31 dec 2020 0 Advanced economy, 76%
Other Europe 1 Very low risks, 0%
Cruise shipping
EUR 10.9 bn
EUR 1.8 bn 2 Low risks, 5%
3 Relatively low risks, 5%
(49%) (8%)
4 Intermediate risks, 5%
5 Relatively high risks, 7%
Telecommunications EU countries
6 High risks, 1%
EUR 3.7 bn
(17%) EUR 6.0 bn 7 Very high risks, 1%
(27%)
Pulp and paper The biggest country exposures
EUR 2.9 bn 31 Dec 2020, EUR billion
(13%)
10
Others* Middle East 8
EUR 2.5 bn 6
North America and North Africa Asia 4
(11%)
EUR 9.8 bn EUR 1.0 bn EUR 1.2 bn Legend
2
00Advanced economy
Value in % Exact value
Other industries (44%) (5%) (5%)
76% 16762569220
rm s
Ru nd
ia
Fi any
ile
ra il
Tu ia
ne y
Sp ia
n
EUR 1.2 bn 1 Very low risks 0% 0
do e
i-A az
Ge ate
ai
ss
b
s
In rk
Ch
a
ud Br
nl
St
(5%) 2 Low risks 5% 1112926135
d
ite
3 Relatively low risks 5% 1119063316
Sa
Un
Energy EUR billion
4 Intermediate risks
Commitments 5% Offers1198871889
5 Relatively high risks
EUR 0.6 bn United States 9.5 7% 0.31589902852
6 High risks 1% 122233206
(3%) Germany 2.7 0.0
South and Sub-Saharan 7 Very high risks
Finland 0.5
1%
1.2
266604103
Mining and metals Central America Africa Total
Russia 0.8
100%
0.3
22172170721
EUR 0.3 bn
(1%) EUR 2.3 bn EUR 0.1 bn Chile
Brazil
0.7
0.7
0.2
0.0
(10%) (1%) Saudi-Arabia 0.3 0.4
Turkey
Year
vallat
0.5
Yhdys Saksa Suomi 0.1
Venäjä Chile Brasi Saudi-
lia Arabia
Tu
ki
* Including other risks such
Indonesia
Voimassa, 0.5 0.0
as sovereign risks related to 9.5 2.7 0.5 0.8 0.7 0.7 0.3 0.5
states and bank risks. Spain
mrd. e 0.5 0.0
Tarjous,
0.3 0.0 1.2 0.3 0.2 0.0 0.4 0.1
mrd. eFinnvera’s Strategy and Responsible Corporate responsibility
Annual Report 2020 year 2020 role in society financing management 17
Corporate governance Services were adapted to
the exceptional circumstances Finnvera’s key guidelines,
During the year, the coronavirus pandemic In mid-March, Finnvera’s entire organisation and offices principles and policies include
was strongly reflected in the operations of moved almost completely to remote work. Customer service the following:
Finnvera’s governing bodies and management,
and other operations were continued remotely.
• Code of Conduct
both as increased decision-making needs and
Finnvera’s internal audit was strengthened by the
• risk management principles
appointment of the Head of Internal Auditing. Heli Pietiläinen,
• credit and guarantee policy
as exceptional arrangements. Cooperation M.Sc., B.Sc. (Econ.), CIA, CISA, started in the position at the demand-driven basis. Financing is not allocated to specific
• asset management policy
with the Ministry of Economic Affairs beginning of June 2020. Petri Einovaara, LL.M., B.Sc. (Econ.),
was appointed Internal Auditor in September 2020.
industries. Finnvera’s Board of Directors makes the largest
liability decisions itself and has in other respects delegated
• principles for managing equities
and capital adequacy
and Employment was close and concrete.
The organisation was agile in the exceptional
At the beginning of 2020, Intrum Oy also started carrying
out voluntary recovery operations in accordance with the
the decision making to the operative management. Finnvera
can also take into account the State’s industrial policy goals
• risk protection policy
associated with export credit
circumstances, and resources could be agreement. Finnvera has the overall responsibility for and, if necessary, include projects in the special risk-taking guarantee operations
allocated to critical client work. recovery, its steering and decision-making. article defined in the Act on the State’s Export
Credit Guarantees.
• environmental and social risk
management policy
When the coronavirus crisis hit in March 2020, Finnvera’s Close cooperation with the Ministry
• country policy
Board of Directors adopted the practice of weekly meetings. The seriousness of the crisis caused by the coronavirus Board’s Risk Committee
• anti-bribery policy
After the situation calmed down slightly in the autumn, the pandemic for enterprises required rapid and concrete At the end of February, the Board of Directors set up
• tax haven policy
Board of Directors started meeting every two weeks.
Finnvera’s Management Group also adopted a more
measures to secure corporate financing and resources.
There was close cooperation with the Ministry of Economic
a new Risk Committee from among its members to
assist the Board in matters related to risk-taking and risk
• publicity policy in export credit
guarantee operations
frequent meeting schedule in the spring, starting to Affairs and Employment, which guides Finnvera. In the spring, management. The committee works alongside the Audit and
• personnel policy
meet weekly. To continuously maintain an overview of Finnvera’s authorisation to grant SME financing was raised Remuneration Committees.
• IT policy outlines
the situation, a separate preparedness task force was
established in accordance with the company’s contingency
to EUR 12 billion by a legislative amendment and Finnvera’s
credit and guarantee loss compensation from the State was Finnvera’s Code of Conduct and key policies
• information security and data
protection policy
plan. The task force consists of the representatives of
different areas of the company: business operations,
increased to 80 per cent by a government decision. The
Ministry set updated ownership and industrial policy goals for
Finnvera’s Code of Conduct principles include good
corporate governance and transparency throughout
• communications and
marketing principles
risk management, IT, facilities and security, personnel,
and communications. From mid-March onwards, the
Finnvera due to the coronavirus pandemic. Finnvera reported
financing volumes to ministries more frequently than usually.
the organisation. The Code of Conduct, ratified by the
company’s Board of Directors, brings together the legal rules
• principles for cooperation
agreements
preparedness task force met first on a daily basis and
then on a weekly basis. The work of the preparedness Finnvera makes financial decisions independently
and ethical principles which apply to Finnvera’s employees
and the members of the governing bodies. Read more on
• guidelines and procedures
for procurement
task force still continues. Its task is to monitor the
impact of the coronavirus situation on the organisation,
Finnvera makes financial decisions independently based on
careful risk assessment and analysis of each project
Impacts of Finnvera’s own operations.
Finnvera operates according to its ISO 9001 certified
• development operating model
and ISO 9001:2015 certified
agree on the necessary measures and plan how they as well as takes into account the national and international operating system, which underwent a follow-up audit towards operating system.
are communicated. regulation regarding the company. Finnvera operates on a the end of the year.Finnvera’s Strategy and Responsible Corporate responsibility
Annual Report 2020 year 2020 role in society financing management 18
Industrial and Monitoring of the attainment of industrial and ownership policy goals for 2020
ownership policy goals Goal
guide Finnvera's operations At least 80 per cent of Finnvera’s SME financing is allocated to enterprises seeking growth or internationalisation, start-ups, investments, and transfers of ownership.
The State of Finland owns the entire In investments promoting productivity and competitiveness, Finnvera’s guarantee coverage in debt-based financing may be at the maximum 80 per cent
stock of Finnvera. The Innovations Domestic financing per project, especially outside urban growth centres. The position of a main provider of financing requires that Finnvera assess the enterprise’s business
operations to be profitable and the own contribution to be sufficient, as well as that the project does not distort competition between enterprises.
and Enterprise Financing By the end of 2023, a total of 50 per cent of SME financing is allocated to clients seeking growth and internationalisation (LTA3 segment).
Department of the Ministry of The Pillar Assessment required by the European Commission is completed in spring 2020. The establishment of EU financing expertise, goals and
practices is launched during 2020 if Finnvera is accepted as an implementer or intermediary of financing. The company continues to provide EU financing
Economic Affairs and Employment EU financing advice in line with the Ministry of Economic Affairs and Employment’s policy and cooperates with other parties in the MEAE group.
is responsible for the ownership and If Finnvera is accepted as an implementer or intermediary of financing, new solutions based on EU financing cooperation will be introduced in 2021 according to the decisions made.
industrial policy steering of Finnvera. The aim of public export financing is to offer internationally competitive financing for exports and domestic ship deliveries. Efficient risk management is an
integral part of a competitive export financing system. Finland’s public export financing system consists of Finnvera’s export credit guarantee operations, the
In April, the ministry gave export credit and ship credit financing operations of its subsidiary Finnish Export Credit Ltd, and state-managed interest equalisation operations.
Finnvera a guidance letter of Finnvera Group and the Ministry of Economic Affairs and Employment continue in cooperation to develop the system of financing exports and ships so that Finnish exporters have access to an
Export financing export financing system with terms and instruments that are as competitive as possible. At the same time, the company develops risk management and improves its efficiency as described below.
goals arising from the coronavirus
Export financing advice and training for SMEs are developed and continued to increase the number of export companies and enterprises using export financing
pandemic to help enterprises to services (including private services) from the situation at the end of 2019. Finnvera’s clients benefit from its national and international networks.
overcome the crisis. The goals Information exchange and cooperation are increased especially with Business Finland, Finnfund and client enterprises in the field of financing offered to promote Finnish enterprises’ export projects.
included adjusting Finnvera’s Finnvera ensures self-sustainability through risk management: in most years, credit losses stay well below the level of income received from
operations and even large unexpected losses remain below the buffers formed by the balance sheet and the State Guarantee Fund.
services and operations to meet the
As the maximum authorisations and exposures of Finnvera’s export financing, as defined by law, have increased, it has been noticed that risk concentrations increase
needs of enterprises. The goals set Risk management
and need to be managed. The aim is to make it possible to respond to the growing demand especially from cruise shipping and telecommunications in order to
ensure Finland’s exports and the related considerable impacts on employment. Especially with regard to major transactions, the company assesses, as part of
were reached in 2020. its decision-making, the transaction’s impact on the risk position and the amount of reserves needed in the coming years when the credit is drawn.
Out of the nine original industrial As far as possible, Finnvera sees to the mitigation of exposure risks with reinsurance and other protection arrangements.
In addition, the company aims to share risks with other countries’ ECAs and other providers of financing.
and ownership policy goals set
Finnvera provides the Ministry of Economic Affairs and Employment with an assessment framework by 30 June 2020. The assessment conducted on the basis of the assessment
for the year 2020, two goals were Impact framework is delivered to the Ministry of Economic Affairs and Employment by the end of 2020, using data based on client enterprises’ financial statements for 2019.
reached, five were reached in part Self-sustainability
Finnvera conducts its business so that the income from the company’s operations covers the expenses of the operations over a period
exceeding a business cycle. The review period is 10 years for SME financing and 20 years for export financing.
and two were not reached partly due
Operational efficiency Finnvera develops its operations in accordance with the Government Programme and its implementation plan. Finnvera continues to pursue operational efficiency.
to the corona pandemic.
The company’s capital adequacy in domestic financing operations must be at least 15 per cent when calculated according to the principles of the standard method. If there is threat that capital adequacy
falls below this limit, the company must submit a proposal to the Ministry of Economic Affairs and Employment regarding the measures with which capital adequacy is kept at the required level.
Solvency and The adequacy of export financing reserves in relation to current and future exposures is primarily assessed with so-called VaR 99.5%, C-VaR and Expected Loss models to ensure that there
capital adequacy would be adequate capital to cover credit risks in normal circumstances. When it comes to major transactions, the company must assess their impact on risk position development and the
adequacy of reserves. If forecasts seem to indicate that reserves are inadequate to cover losses caused by exposures and the exposure forecast, the company must inform the Ministry of
Economic Affairs and Employment of this and submit a proposal of potentially necessary measures. In addition, risk scenario calculations are made for export financing exposures and the
main exposures are monitored separately. Export credit guarantee operations are ultimately based on the State’s balance sheet and entail risk-taking that differs from commercial risk-taking.
Transfer of Finnvera’s
financial supervision
Preparations are made in a legislative project launched in 2020.
to the Financial
Supervisory Authority
Goal achieved Goal partly achieved Goal not achievedYou can also read
