André Gazal has been with Crédit Agricole CIB for the past two decades, serving for much of that time as global head of export finance. Prior to this, he spent several years in the US and Canada, where he also worked for Barclays and the Bank of Montreal.
In this instalment of GTR’s Trade Leaders Interviews, Gazal outlines the evolution of the market in recent years and how banks are working to embrace a boom in untied export credit agency (ECA) support.
He also discusses rising competition in the form of multilateral development banks, the need for changes within the OECD Arrangement on Officially Supported Export Credits, and how US President Donald Trump’s trade policies may bring both disruptions and opportunities to the sector.
GTR: Can you provide a brief overview of the bank’s export finance business?
Gazal: Crédit Agricole CIB has had a long history in export finance. We’ve built a strong network across different geographies and today we have dedicated teams in about 20 countries, working with approximately 25 ECAs. We are a global leader, ranking consistently in the top three [banks] globally. Our export finance business spans across various industries, including the traditional markets: aerospace, defence and industrial sectors such as steel, infrastructure, transportation, telecommunications, pulp and paper, and importantly, the energy sector. We are converting our historically strong oil and gas portfolio into sustainable energy and accompanying our clients in the transition. Today, as a result of government reindustrialisation policies and energy transition efforts, our exposure has grown in many new sectors and we are backing investments across these supply chains – for instance, data centres, critical minerals and grids for electrification.
GTR: Has there been a shift in the bank’s export finance offering towards new product areas?
Gazal: Our scope has expanded beyond the traditional sectors and clients in recent years, partly driven by reindustrialisation efforts and the green agenda in Europe. There has been a paradigm shift resulting from the development of new ECA products, which has opened the door to new clients, many of them in Europe. The catalyst has been the emergence of untied facilities, which has enabled the product to be positioned across the whole value chain, helping clients diversify and optimise their financing needs. Some sectors, such as power and steel, are undergoing massive investments.
GTR: Untied ECA volumes are surging at the moment. As an export finance bank, what are the benefits of these structures? In your view, are they now a permanent fixture of the market?
Gazal: Untied products are not new. The Asian ECAs, notably in Japan and Korea, have used these facilities to secure imports of critical goods and boost foreign investments for years. But they have now soared in Europe as ECAs were given a wider mandate by their governments since the start of the decade for multiple reasons. Notably, there has been supply chain disruption resulting from the Covid-19 pandemic, the Ukraine conflict, the green agenda in Europe, and the perceived inadequacy and lack of flexibility of the OECD Arrangement on Officially Supported Export Credits.
All of these factors led to the growth of untied products being seen as a much more valuable and flexible proposition. Investments related to the energy transition touch on a number of sectors such as power – renewables and grids – as well as steel, cement and autos. There are extensive value chains being developed, and these untied products have proven to be a very interesting alternative, offering a stable source of funding to borrowers. They are an alternative to syndicated loans and to bond issuances.
When looking at the massive investment needs and the flexibility and complementarity afforded by the untied ECA products, one can only surmise these are here to stay. At Crédit Agricole CIB, we have shifted our attention to these products and the new clients who are involved in this, and we feel we are well positioned thanks to our strong network and client base.
GTR: Looking at your portfolio, what is the proportion of tied versus untied?
Gazal: Without going into the exact numbers, what I can tell you is that the proportion has risen and is quite significant today. If you exclude sectors that use traditional export financing, such as defence and infrastructure, untied products now account for significant growth of new business opportunities.
GTR: Within the bank itself, have there been any internal organisational changes to respond to this growth in untied? Which desks are booking these deals?
Gazal: The growth in untied has necessitated a shift in terms of our approach and the targeted client base for these products; we are no longer just focusing on exporters. It can be difficult to transition towards new customers and we are working very closely with our coverage teams to develop and find the right solutions for borrowers. Given the bank’s global network, we are well positioned to address this challenge.
We are not changing anything dramatically, just refocusing. Even though it’s a paradigm shift in the export finance sector, at the end of the day, we are still working with partner ECAs and providing the same type of service. We are working through the motions of explaining the product and the value it brings to new clients, but it is not a dramatic shift in our business model. Having said all of this, we have recently changed our name from ‘export finance’ to ‘ECA & multilateral financing solutions’, which I think better reflects the nature of the business and the broader remit.
GTR: The modernisation of the OECD Arrangement was finalised two years ago. How have the reforms impacted your bank’s business and the wider market?
Gazal: The OECD Arrangement modernisation was indeed a step in the right direction. Some new measures were introduced, for instance, amendments were made to the climate change sector understanding (CCSU) to bolster support for energy transition projects. Tenors were extended and the scope of equipment covered was widened.
However, it is still a relatively rigid framework. Rules are needed for an even playing field, but they only apply to the OECD members. When an ECA wishes to step outside of the framework to compete with a non-participant to the arrangement, they can. Untied products are a good example of what willing participants can do outside of the arrangement. State aid rules obviously limit the extent of the untied offerings, but they nevertheless allow for different forms of support. Had the arrangement allowed more flexibility, I believe it could have helped make the ECA product even more competitive.
The Arrangement is still important for the market, but ECAs have developed new solutions which are complementary to it.
GTR: This point has been raised by banks previously, the idea of increasing export financing for social infrastructure projects in regions such as Sub-Saharan Africa. What approach would you advocate for?
Gazal: Today, multilaterals are competing with ECAs in regions like Africa, so it would have been useful if the OECD Arrangement had provided support for social infrastructure loans – projects such as water, energy or hospitals – similar to the CCSU, and provided an incentive, perhaps in the form of a bonus on premia. Changes require a consensus among members and that is difficult to achieve, particularly in the current environment.
GTR: For the past few years, a temporary rule has allowed ECAs to cover up to 95% of a contract’s value – up from 85% – in developing markets, on deals involving sovereign borrowers. This flexibility has now been phased out by the OECD Arrangement participants. What are your views about the unwinding of the rule?
Gazal: Not allowing for this flexibility opens the door for multilaterals to be more competitive, and we are seeing the likes of the African Development Bank and the African Export-Import Bank step in and play a bigger role, which means the ECAs may end-up taking a back seat in Africa’s social infrastructure sector.
I would have liked the option of 95% coverage to be available on a permanent basis to OECD category six and seven countries, but only in instances where the 15% down payment is hard to obtain from other sources, such as credit risk insurance. Additionally, certain criteria would need to be met – as an example, projects might have to qualify as being for green or social purposes.
GTR: Looking at the export finance market over the coming year, what is your forecast for activity? How could rising trade frictions and geopolitical tensions impact the industry?
Gazal: Globalisation is no longer the flavour of the day, so the traditional model of export financing is being challenged. Banks may need to increasingly focus on different ECA solutions. The geopolitical environment is undeniably causing a shift in the dynamics of our business, so we need to embrace these changes.
Nonetheless, we have seen export finance volumes grow over the last couple of years. The defence and energy transition sectors are booming, untied products have encouraged business with new clients. Overall, there is a cause to be optimistic about the growth of the product in 2025 and beyond.
GTR: A recent Berne Union report suggested that US President Donald Trump’s return to the White House may have led to project delays. From what you are seeing, how is the change in administration in the US affecting the export finance market?
Gazal: The global scene is somewhat unpredictable as we are having this exchange. It is undeniable that some projects are going to be abandoned, and new ones will come on stream as companies have to adapt. As an example, Korean electric vehicle manufacturers just announced massive investments in the US. There could be onshoring of production in the US and elsewhere, which creates opportunities. But there could also be reduced volumes from some of the cross-border transactions that were anticipated last year.
