Euler Hermes, the German export credit agency, is unlikely to start direct lending in the short to medium-term.

Speaking at Exporta’s Europe Trade & Supply Chain Finance Conference in Hamburg, Dr Matthias Koehler, head of export financing and export credit guarantees for the German Federal Ministry of Economics and Technology told delegates and GTR that the possibility has been “discussed internally”, but that the ECA would always “prefer to have banks in the deal”.

Currently, Euler Hermes offers securitisation guarantees and an export refinancing scheme (through KfW, the German development bank). Other major ECAs, such as US Exim, Kexim and K-sure, provide foreign companies with direct loans in order to purchase goods or services from their respective countries.

Just this week, US Exim provided a US$500mn loan to Rio Tinto for the Oyu Tolgoi mining project in Mongolia on the condition that the company will use American equipment. It’s expected that the transaction will directly support 2,000 US jobs.

Koehler suggested that the German government is keen to maintain the separation between the public and commercial banking sectors. However, he did acknowledge the fact that German industry has benefitted from direct lending through its participation in the “mega-deals” bankrolled by the aforementioned Korean ECAs.

Koehler described Hermes as a “traditional” agency: as well as staying out of direct lending, it also maintains a 51% local content ruling, which again separates it from some other ECAs.

The volume of the transactions Hermes covers has grown from an average of 20% from 2006 to 2009, to 30% from 2010 to 2012. 2013 is expected to continue the trend. Last year, it played an active role in more than 30% of Germany’s aircraft and shipping transactions.

The role of the ECA has become statistically critical, according to Koehler, but he feels Euler Hermes can continue to support German exports without direct lending.

He also indicated that progress has been made in devising a uniform global framework for export finance arrangements. Koehler said discussions with the governments of India and China had advanced satisfactorily and that he is hopeful that global standards may be established in the near future.