Supplier credit discounting insurance (Facility KV)
MEHIB offers this product to banks engaged in trade / structured financing.
The object covered by the KV-facility insurance is the bank’s receivable purchased from a Hungarian exporter, originating from a medium or long-term supplier’s credit facility related to a foreign trade contract. The insured is the bank purchasing the receivable, or in the case of a bank consortium, the lead member of the consortium.
The KV facility offers the insured bank the same insurance cover as the buyer’s credit insurance facility, so as to ensure that even in the event of unsatisfactory performance by the exporter or a commercial dispute, it will receive its indemnity payment from MEHIB, in respect of the suppliers’ receivables that it purchases, if it incurs damage due to the occurrence of an insured event.
MEHIB has elaborated the terms and conditions of this product to ensure that, based on the Basel II capital allocation guidelines, the risks of the commercial transaction and of the financing are separated from each other. MEHIB assumes the performance risk, while stipulating its right to enforce a recourse claim against the exporter, as the most important condition of the insurance.
The insurance cover extends to both the commercial and the political risk.
The insured is liable for the deductible of 5% of the amount of damage incurred.
The grace period for indemnification is ninety days from the occurrence of the damage. The indemnification grace period is not applied where the insured event is the insolvency of a private debtor.