Siemens Financial Services expands business opportunities
Partnership with Euler Hermes credit insurance on receivables financing
Munich, Aug 2, 2006, Siemens Financial Services (SFS), the Siemens Group responsible for financial solutions, has formed a partnership with Euler Hermes, the market leader in the credit insurance business. The goal of the partnership is to offer more flexible solutions to customers’ financing needs. Credit insurance minimizes the default risk of receivables, sometimes eliminating it entirely. As a result, companies can draw more liquidity from their receivables portfolios in a secure way. Credit insurance is part of the SFS receivables financing program “ABS Light”, which was designed especially for medium-sized companies. This SFS program focuses on companies that are looking for a collateralized financing solution that is independent of a bank.
With credit-insurance coverage, receivables now can be bought from companies in all creditworthiness categories as part of “ABS Light”. The program was added to the product portfolio at Siemens Financial Services in January 2005 and has been growing at double-digit rates.
With this solution, SFS acquires receivables starting at a volume of EUR 3 million on a revolving basis. “ABS Light” combines elements of factoring with those of asset-backed securitization (ABS). Like factoring, SFS adds the acquired receivables to its own balance sheet and carries up to 100 percent of the default risk. Now, nearly all companies whose receivables qualify for a receivables purchase can be considered for this program. Even international portfolio acquisitions or those with a high concentration of debtors are now possible. In standard factoring, an advance of no more than 90 percent of the acquired receivables is common. But with “ABS Light”, Siemens Financial Services is offering advances of up to 100 percent of the sold receivables. Thanks to simple contract-drafting procedures based on German law and standardized processes, “ABS Light” can be implemented very quickly. “ABS Light” is thus an alternative to the sale of receivables through ABS and factoring.
The target portfolios for “ABS Light” are trading receivables of mid-sized companies in all industries. Both the liability for the receivables and debtor management remain with the seller of the receivables. In general, the receivables are acquired in a confidential process. A notified transfer of the sold receivables is also possible.
“The sale of receivables is becoming increasingly important for the diversification of corporate financing. This is also reflected in the sales figures released by the German Factoring Association. In addition, any type of receivables financing is a modern instrument that is perfectly suitable for managing key financial ratios,” says Arno Geschwender, Senior Sales Manager at Siemens Financial Services GmbH. “The partnership with Euler Hermes now allows companies with a revolving receivables volume of at least EUR 3 million to expand their liquidity latitude by selling receivables on a secure basis.”
Siemens Financial Services manages receivables totaling about EUR 3.5 billion with more than 120 individual portfolios. Siemens Financial Services has been offering its extensive experience in receivables financing to external companies since 1998.
About Siemens Financial Services (SFS)
With its roughly 1,700 employees and an international network of financial companies coordinated by Siemens Financial Services GmbH, Munich, the Siemens Financial Services (SFS) Group offers a broad range of financial services. This covers everything from sales and investment financing to treasury services, fund management and insurance brokerage. SFS’s key customers are above all internationally active industrial and services companies, as well as public-sector operators. More information under www.siemens.de/sfs.
About Euler Hermes
The Euler Hermes group is the leading credit insurance company in the world and one of the leading businesses in surety bonds. With 5,400 employees in 43 countries, Euler Hermes offers a wide range of services for the management of receivables. In 2005, the company’s sales totaled EUR 2 billion. The group and its most important subsidiaries in the credit insurance business received the rating AA- from Standard and Poor’s.
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