§ Mr. John TownendTo ask the President of the Board of Trade if he will make a statement about the remuneration paid to banks under the Export Credits Guarantee Department's fixed rate export finance scheme.
§ Mr. NeedhamThe British Bankers Association, representing the banking community, and the Government have reached agreement on revised arrangements for remunerating banks providing fixed rate export finance under guarantees given by the Export Credits Guarantee Department. The new agreement, which will last for five years, will come into effect on 5 July. The agreement will provide significant savings for the Government, but the greater part of these will not represent an increased burden on the banks since they will be achieved by mutually advantageous changes in the settlement mechanism which will in particular match the timing of interest payments with the funding arrangements of the banks. This measure has been welcomed by the banks, many of whom were concerned that the previous global arrangements exposed them to mis-matches between remuneration and funding costs at a time of highly volatile commercial interest rates. The Government and the BBA are confident that the new arrangements, which are the result of several months of constructive discussions, will enable banks to continue to provide the financial support our exporters need and they are an excellent example of the way in which banks and the Government can work together in support of the Government's export strategy. The changes will apply also to the Home Shipbuilding credit guarantee scheme.