COMMISSION STAFF WORKING DOCUMENT  accompagning REPORT FROM THE COMMISSION TO THE COUNCIL  AND THE EUROPEAN PARLIAMENT  comprehensive report on the functioning of the Guarantee Fund    COM(2010)418
Date: 2010-08-03
Institutions: European Commission
Subjects: Community loan, activity report, credit guarantee, financial management, fund (EU), third country

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EUROPEAN COMMISSION 

Brussels, 3.8.2010 
SEC(2010) 968 final 

COMMISSION STAFF WORKING DOCUMENT 

accompagning  

REPORT FROM THE COMMISSION TO THE COUNCIL  
AND THE EUROPEAN PARLIAMENT 

comprehensive report on the functioning of the Guarantee Fund  

COM(2010)418 

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TABLE OF CONTENTS 

1. 

2. 

3. 

4. 

5. 

6. 

7. 

8. 

9. 

Organization chart of the Fund – financial flows......................................................... 3 

Graph 1: Guaranteed Amounts covered by the Fund (end of year) ............................. 4 

Graph 2: Cover of defaults by Fund Resources and recoveries (in EUR million)....... 4 

Graph 3: Geographical distribution of lending operations by group of countries 
covered by the Fund at 31 December 2009 (% of the total outstanding amount 
covered, EUR 16.361 billion). ..................................................................................... 5 

Risk profile of the loans covered by Fund in 2006 and 2009 ...................................... 6 

Table 1: Flows in and out of the Fund since 1994 ....................................................... 7 

Table 2: Use of the budget line during the financial framework 2007-2013 (In EUR)8 

Table 3: Ratio between total annual capital outstanding and interest due and the 
amountof the Fund ....................................................................................................... 8 

Projections of provisioning needs 2009 -2013 and beyond ......................................... 8 

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1. 

ORGANIZATION CHART OF THE FUND – FINANCIAL FLOWS 

Source: GHK Consulting  

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2. 

GRAPH 1: GUARANTEED AMOUNTS COVERED BY THE FUND (END OF YEAR) 

in EUR million

18 000 

15 000 

12 000 

9 000 

6 000 

3 000 

-

1.8

1.5

1.2

0.9

0.6

0.3

0.0

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Guaranteed Lending

Fund's Assets

3. 

GRAPH  2:  COVER  OF  DEFAULTS  BY  FUND  RESOURCES  AND  RECOVERIES  (IN 
EUR MILLION) 

2 000 

1 800 

1 600 

1 400 

1 200 

1 000 

800 

600 

400 

200 

-

1 774 

1 646 

1 592  1 612 

1 432 

1 280  1 313 

1 324 1 321 

1 240 

1 152 

1 091 

862 

557 

303 

301 

294 

185 

241 

-

-

36 

53 

56 

54 

45 

15 

16 

5 

17 
-

10 

-

-

5 

-

4 

8 

-

-

-

-

-

-

-

-

-

-

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Calls to the Fund

Fund ressources Recoveries

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4. 

GRAPH 3: GEOGRAPHICAL DISTRIBUTION OF LENDING OPERATIONS BY GROUP 
OF  COUNTRIES  COVERED  BY  THE  FUND  AT  31  DECEMBER  2009  (%  OF  THE 
TOTAL OUTSTANDING AMOUNT COVERED, EUR 16.361 BILLION). 

South Africa. 4%

Asia. 5%

Potential candidate countries. 
9%

candidates countries. 31%

Asia
candidates countries
Eastern Europe, Southern Coucasus and Russia
Latin America
Mediterranean
Potential candidate countries
South Africa

Mediterranean. 41%

Eastern Europe, Southern 
Coucasus and Russia. 2%

Latin America. 8%

Details of countries belonging to each geographical area (at 31.12.2009): 

Asia: 

Afghanistan,  Bangladesh,  Bhutan,  Brunei, 
Cambodia,  China,  India,  Indonesia,  Iraq, 
South  Korea,  Laos,  Maldives,  Mongolia, 
Nepal, 
Philippines, 
Singapore,  Sri  Lanka,  Taiwan,  Thailand, 
Vietnam, Yemen, Kazakhstan, Kyrgyzstan, 
Tajikistan, Turkmenistan, Uzbekistan; 

Pakistan, 

the 

Candidate Countries: 

Croatia,  Turkey,  The  former  Yugoslav 
Republic of Macedonia; 

Eastern  Europe,  southern  Caucasus  and 
Russia: 

Republic  of  Moldova,  Ukraine,  Belarus, 
Armenia, Azerbaijan, Georgia, Russia,; 

Latin America: 

Brazil, 

Bolivia, 

Argentina, 
Chile, 
Colombia,  Costa  Rica,  Ecuador,  El 
Salvador,  Guatemala,  Honduras,  Mexico, 
Nicaragua,  Panama,  Paraguay,  Peru, 
Uruguay, Venezuela; 

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Mediterranean: 

Potential candidate countries: 

Algeria,  Egypt,  The  West  Bank  and  the 
Gaza Strip, Israel, Jordan, Lebanon, Libya, 
Morocco, Syria, Tunisia; 

Albania,  Bosnia 
Montenegro, Serbia, Kosovo;  

and  Herzegovina, 

South Africa: 

South Africa 

5. 

RISK PROFILE OF THE LOANS COVERED BY FUND IN 2006 AND 2009 

Distribution of loans covered by the Fund by group of rating (Moody's or equivalent) in 2006

N/A
2%

A1; A2; A3
1%

Caa1; Caa2; Caa3
0%

B1; B2; B3
11%

Baa1; Baa2; Baa3
22%

Ba1; Ba2; Ba3
64%

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Distribution of loans covered by the Fund by group of rating (Moody's or equivalent) in 2009

N/A N/A
1%

Caa1; Caa2; Caa3 
0%

A1; A2; A3 
1%

B1; B2; B3 
13%

Baa1; Baa2; Baa3 
23%

Ba1; Ba2; Ba3 
62%

6. 

TABLE 1: FLOWS IN AND OUT OF THE FUND SINCE 1994 

Flows in and out of the Fund since 1994

Recoveries 

Impact of 

Year

Tranfert from 
Union Budget

Interests + 
gains on 
assets sold

(including 

Fair value 

penalties 

adjustment 

a

b

c

interests)

(IFRS)1
d

1994
1995
1996

1997

1998
1999
2000
2001
2002
2003
2004
2005*
2006
2007
2008
2009
total

294
251
235
286
272
300
186
207
167
152
182
140
128

92
2892

24
20
35
50
49
63
74
81
67
62
54
55
55
49
42
778

36
56
45
185
5

241

7

576

47
-32
-19
15
16
28

Financial 
flows to 
the Fund

Calls

EIB 
commission 
and other 
charges

Amount back 
to Union 
budget from 
the Fund

Financial 
flows 
from the 
Fund

Financial 
flows for 
the year

Fund's net 
assets2

e=(a+b+c+d) 
294
310
311
366
508
354
249
522
247
219
251
242
151
36
64
150
4273

f

g

h

i=(f+g+h)

j=(e+i)

-303
-53
-54
-15
-16
-17
-10

-5
-4

-478

-2
-7
-8
-7
-5
-5
-4
-4
-4
-4
-3
-2
-1
-1
-55

-303
-54
-61
-89
-321
-131
-180
-376
-272
-231
-530
-96
-263
-127
-1
-3035

-66
-298
-108
-165
-372
-263
-223
-526
-93
-261
-126

-2501

294
7
257
304
419
32
118
343
-129
-53
20
-288
55
-227
-63
149
1239

294
301
557
862
1281
1313
1432
1774
1646
1592
1612
1324
1379
1152
1090
1239

EUR million
Amount to 
be 
recovered 
from 
defaults3

-268
-271
-291
-134
-145
-163

-5
-2
-1

1 First time application of IFRS standards in 2005. Portfolio valued at "Mark-to-Market".
2 Fund's net assets (EIB commission and other charges deducted)
3 Amount to be recovered from defaults = capital + interest + penalty interest for late payment.

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7. 

TABLE  2:  USE  OF  THE  BUDGET  LINE  DURING  THE  FINANCIAL  FRAMEWORK 
2007-2013 (IN EUR) 

Year

 Amount available in Budget    

1

Transfers from the Budget to the 
Fund or surplus ( - ), transfers from 
the Fund to the Budget                   2

Used percentage

Accumulated amount 
used for the 
provisioning of the 
fund

2007

2008

2009

2010

2011

2012

2013

Total

*

*

200 000 000

200 000 000

200 000 000

200 000 000

200 000 000

200 000 000

200 000 000

1 400 000 000

0

-125 750 000

91 960 000

93 810 000

138 880 000

326 000 000

271 000 000

795 900 000

0%

0%

46%

47%

69%

163%

136%

57%

0

-125 750 000

-33 790 000

60 020 000

198 900 000

524 900 000

795 900 000

8. 

TABLE  3:  RATIO  BETWEEN  TOTAL  ANNUAL  CAPITAL  OUTSTANDING  AND 
INTEREST DUE AND THE AMOUNTOF THE FUND 

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010*

2011*

2012*

2013*

EUR million (rounded)

Amounts  of loans and interest due

1 328

1 547

1 591

1 803

1 939

1 304

1 594

1 203

1 322

1 494

1 548

1 870

2 648

3 250

Guarantee Fund's asset

1 432

1 774

1 646

1 592

1 612

1 324

1 321

1 152

1 091

1 240

1 359

1 561

1 946

2 287

Risk coverage ratio

* estimated figures

108%

115%

103%

88%

83%

102%

83%

96%

83%

83%

88%

83%

73%

70%

9. 

PROJECTIONS OF PROVISIONING NEEDS 2009 -2013 AND BEYOND 

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Target Amt

1 118

1 276

1 472

1 840

2 159

2 390

2 537

2 670

2 763

2 807

Provisioning calculation for PDB (financial flow in n+2)

Financial flow for the year

Estimation of Fund assets ending year

92

0

0

93

-126

-126

139

92

326

93

271

139

173

326

78

271

56

173

12

78

0

56

1 240

1 375

1 561

1 946

2 287

2 536

2 695

2 837

2017

2 783

0

12

2 938  

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