SEK has for almost 50 years provided customized financial solutions to the Swedish export industry. The Swedish state founded AB Svensk Exportkredit in 1962 togehter with the major Swedish banks. Since 2003, SEK is 100-percent owned by the state.
The stranglehold of World War II led to an enormous shortage of goods worldwide. The production apparatus was rebuilt comparatively fast, however, creating an influx of goods which met demand. Competition in the marketplace soon intensified which meant that buyers starting making increasing demands on sellers. These demands resulted in lower prices, higher quality and faster deliveries.
Furthermore, buyers insisted on increasingly generous credit terms. Demands for increasingly generous credit terms weighed heavily on the Swedish export industry. The lean war years, and the period immediately afterwards, provided no scope for the buildup of financial preparedness. Industry simply lacked the funds for credit to be extended on such a large scale. External refinancing was needed so that Swedish export companies could survive.
The demand for banking services was enormous and the Swedish banking system soon found it hard to meet this demand. At the end of the 1950s, this prompted the commercial banks to suggest the formation of a new, jointly owned export financing institution supported by government guarantees.
So that it could guarantee the credits, the Government demanded joint ownership and a majority on the Board. The demand that the State should own 50 percent and the commercial banks the remaining 50 percent was agreed and adopted. Following an extensive study, AB Svensk Exportkredit was formed on September 3, 1962. SEK's very first financing deal came shortly afterwards, for the cargo ship M/S Berit. The ship was built at Stockholm's Finnboda Shipyard in 1963. (See the picture above.)
Demand for credits was lean in the early years. But during the 1960s, SEK revised its articles of association and its methods for SEK’s own borrowing. The rules for lending were also simplified. This new approach was gratefully received by both bankers and other customer representatives.
The oil crises in the 1970s left new credit requirements in their wake. The economies of the OECD countries, where a large number of SEK's competitors were operating, were shaken. At the same time the economic situation in the developing countries, which were becoming an increasingly important market for the capital goods industry, was seriously affected.Most of the world's lenders were forced to make a growing number of concessions to their borrowers which led to lower profitability. For this reason a number of international agreements were concluded in the credit market in the period 1976-1978. These included the adoption of common guidelines for minimum advance payments, minimum interest rates and maximum credit periods.
The State-supported credit system (the SEK system) was introduced in 1978. Under this system SEK administered the granting of credits at subsidized interest rates. SEK received compensation for the difference between borrowing costs and lending rates, as well as for exchange losses. This allowed SEK to offer its customers far more advantageous terms than any other player in Sweden.
In 1979, special credit agreements were signed with the Soviet Union and the People's Republic of China. In order to promote Swedish exports to these countries, SEK was able, under special conditions, to grant export credit with Government support. At the beginning of the 1980s these activities were really flourishing and new products were developed to meet customer demands. The balance sheet total grew fast and the granting of credits under purely commercial terms became increasingly important.
Until the end of the 1990s, SEK was jointly owned by the Swedish state (50%) and the commercial banks (50%). After a short period when ABB took over as part-owner instead of the banks, the Swedish State is since 2003 sole owner of SEK.
SEK's early focus not only provided valuable insight into and experience of the international capital market. It also gave a deep understanding of the cultures and circumstances of different countries. Our competence in international borrowing and lending is now recognized as among the best in the world. This competence embraces knowledge of local markets, currencies, financial instruments and the contexts in complicated financial structures.
Swedish Export Credit Corporation (publ) Klarabergsviadukten 61 - 63 P.O. Box 194 SE-101 23 Stockholm, Phone:+46 8 613 83 00 Email: email@example.com Org. No. 556084-0315