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Insurer signs deal with banks to help boost credit

CHINA Export & Credit Insurance Co today signed a policy financing deal with banks in Shanghai amid the city's push to support small business credit.

The insurer, known as Sinosure, signed the deal with banks including Bank of China, Bank of Shanghai, Citibank, HSBC and Standard Chartered to help small and medium businesses get financing with its policies.

Six companies today got a combined credit quota of US$22.9 million with the policy financing deals.

"The policy financing is a financial innovation to help small business get financing," said Fang Xinghai, director of the Shanghai Financial Services Office, today. "It's novel and not yet fully tapped."

Today's agreement has been encouraged by the Shanghai authorities.

Yesterday four Shanghai government bodies, including the Financial Services Office and the Shanghai bureaus of the banking and insurance regulators, jointly issued a guideline to boost policy financing in Shanghai to expand the financing channels for small and medium enterprises.

Not only banks but small credit companies can also team up with insurers to offer financing.

The policy financing works like this: Export-oriented companies buy an export credit policy from the insurer to cover the risk of buyers defaulting. The exports companies can then get a loan by transferring the rights of the policy to banks. If the company defaults on the loan, the insurer pays the money to banks.

Sinosure has helped companies get a banking credit of 1.8 billion yuan so far this year in Shanghai. The figure is expected to top 10 billion for the whole year of this year, said Nie Qingshan, deputy general manager of Sinosure.

This year, Sinosure has insured exports of US$3.1 billion in Shanghai. The insurer has paid US$3.5 million for more than 20 companies in the period.


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