Enterprises suffered loss from the closure of foreign banks
- Details
- Category: Ningbo Business
- Published: Tuesday, 26 August 2014 09:09
“I have never expected that there is risk for banks. It is the first time since I started my foreign trade business more than 10 years ago. Without insurance, the result would have been unbelievable.” After getting the indemnity, a boss of small household appliance export enterprise felt very lucky.
Recently, several small household appliance export enterprises received their indemnity from China Export and Credit Insurance Corporation Ningbo Branch. The total amount exceeded 4.7 million yuan. All the cases were caused by the closure of U banks of Ukraine, which involved 10 Ningbo enterprises, with a loss of 40 million yuan.
“The Eastern Europe including Ukraine is a key emerging market for the export enterprises in Ningbo. Many firms in Ningbo have Usance Letter of Credit issued by U bank and have trade with certain buyers. Before the Russia-Ukraine conflict, the trade went smoothly. Since the clearing is based on letter of credit, export enterprises think it very safe. Under this circumstance, less than 10 firms bought insurance. Quite a few did not buy credit insurance,” said an export from China Export and Credit Insurance Corporation. With the tension on the border of Russia and Ukraine, U bank was stuck in trouble and had to shut down in the beginning of July. “We have successively got loss reports from export enterprises. More than 30 due payments under letter of credit from about 10 enterprises were unable to have normal negotiation. The involved amount reached 39 million yuan,” said the expert. It is a typical case of payment risk by letter of credit caused by political risks.
