Fincantieri, what Sace and Mef must do according to the Court of Auditors
Not only Fincantieri and the cruise sector. What emerges from the report of the Court of Auditors on the Sace 2020 financial statements
Greater sector diversification also given the “high concentration” in the cruise sector (with Fincantieri).
The Court of Auditors suggests this to Sace, in the financial report for 2020.
According to the Court, the concentration of risks is a traditional problem for Sace as well as for Export Credit Agencies (ECAs) in general: in fact, the exposure in the cruise sector (45.8%) is significant, the accounting judiciary points out.
Precisely in 2020, the Mef approved, among other things , the Sace guarantee on credit lines of 1.15 billion granted by a pool of banks to Fincantieri, the Trieste naval group controlled with 71% by Cdp Industria (Cdp group ).
For this reason, the accounting judiciary "recommends that the corporate bodies monitor the evolution, suggesting greater sector diversification".
Sace is back under the aegis of the Mef "ten years after the sale of the company to the Cassa Depositi e Prestiti (CDP)". As reported by La Stampa on 25 January, the State Accounting Office has stamped "the inter-ministerial decree just signed by Franco and Di Maio" which sanctions the handover from the CDP to the Treasury.
All the details on Sace's financial management report for the year 2020.
THE CONCENTRATION OF RISKS IN SACE UNDER THE LENS OF THE COURT OF AUDITORS
First of all, the accounting judiciary explains in its report on Sace's 2020 management that “the concentration of risks is a traditional problem of Export Credit Agencies (ECAs) in general and of Sace in particular. After all, the very reason for the existence, in various national legal systems, of publicly owned ECAs is to be found in the assumption according to which this activity could not be carried out with equal effectiveness by a "market" insurer, subject among other things the rules laid down by the sector authorities on the prohibition of excessive risk concentration ".
THE TOTAL EXPOSURE
“For this reason – continues the Court of Auditors – during the preliminary investigation it was decided to conduct a specific study on the concentration of the risks present in Sace's portfolio. At 31 December 2020, the total exposure of the "export portfolio", calculated as the sum of the loans and guarantees completed (principal and interest), was equal to € 70.5 billion, with an incidence of 83 per cent of operations export credit on the total annual flow of operations. The share of the risk portfolio transferred to reinsurance increased compared to 2019, with an incidence that, at the end of the year, amounted to 81.9 per cent of the total gross exposure (43.5 per cent in 2019) ".
INCREASE DUE TO THE TRANSFER OF A SHARE OF RISKS TO MEF
"The increase in exposures ceded in reinsurance is attributable to the transfer to the Ministry of Economy and Finance, carried out in compliance with Legislative Decree 23 of 2020, of a portion of risks previously retained by Sace, for an amount of 30.2 billion, corresponding to 90 per cent of the outstanding closed exposures as of April 2020 ”underline the accounting magistrates.
GREATER EXPOSURE TO THE MIDDLE EAST AND NORTH AFRICA
As regards the level of risk concentration by geo-economic area, the Court of Auditors "highlights the persistence, compared to the previous year, of the prevalent incidence of exposures to countries in the Middle East and North Africa, with a level of concentration equal to 27.3 per cent (27.4 per cent in 2019), and the main exposure by country, with a concentration of 15.6 per cent, attributable to the USA ".
WHAT EMERGES FROM THE CONCENTRATION OF RISK BY SECTOR
The concentration of risk by sector is more problematic.
As noted by the Court of Auditors, "the incidence of exposure to the first five sectors is equal to 85.8 per cent of total exposures to private counterparties, a slight increase compared to 2019 (84.1 per cent) ".
LARGE EXPOSURE OF SACE TO THE CRUISING SECTOR (WITH FINCANTIERI)
According to the accounting magistrates, “the exposure to the cruise sector (45.8 per cent) is particularly significant, up compared to the previous year (41.4 per cent). The Oil & Gas sector is confirmed as the second largest exposure, with a weight of 19.6 per cent, slightly down compared to the previous year (20.1 per cent in 2019), followed by the chemical / petrochemical sectors, with an incidence of 7.6 per cent (down from 9.2 per cent in 2019), infrastructure and construction (7.3 per cent vs 7.8 per cent), electricity (5.5 per cent vs 5.6 per cent) and banks (2.5 per cent vs 3.1 per cent) ".
THE FINDINGS OF THE ACCOUNTING MAGISTRATES
“As has been repeated many times, now a large part – 90 per cent – of the risks assumed by Sace has been and will be transferred to the Mef, generating a similar concentration of risks at the Treasury as well. In relation to what is proceeding, and in particular to the great exposure to the cruise sector, it is emphasized the need for the corporate bodies to carefully monitor the evolution of the concentration of risks assumed by Sace, implementing behaviors aimed at ensuring greater sector diversification ".
THE 2020 SACE REPORT
With regard to the 2020 management, the accounting judiciary found that "in the year of the explosion of the pandemic, the Sace group mobilized resources for 46 billion euros, of which 25 billion in the traditional export and internationalization sector, up by 18 % compared to 2019, and a further 21 billion through the offer of the new 'Green Guarantee' and 'Guarantee Italy' products ".
Overall, explains the Court of Auditors, "the company reacted promptly to the relevant regulatory changes which, during 2020, provided the company with a new role to counter the economic effects of the Covid-19 pandemic, which it is flanked by traditional operations aimed at exports and the internationalization of Italian companies, laying the foundations for a change in governance ".
In particular, Sace closed its 2020 financial statements with shareholders' equity of € 4.8 billion, an increase of 0.3% compared to 2019.
THE ECONOMIC RESULT
The economic result was 79.7 million, down by 43.7% compared to the result for the corresponding period of 2019.
THE SALE OF 90% OF THE PORTFOLIO TO MEF WEIGHS
Therefore, the Court highlights that "Sace's balance sheet data relating to 2020 are strongly affected by the repeated regulatory changes, in particular the transfer to reinsurance to the Ministry of the Economy and Finance of 90% of the performing portfolio resulting at the date of 8 April 2020 ".
THE RECOMMENDATION ADDRESSED TO THE MEF
Finally, the Court of Auditors addresses a wish to Sace's controlling shareholder, that is Mef.
As mentioned at the beginning, Sace returned "to the Treasury, for 4.25 billion euros and ten years after the sale of the company to the Cassa Depositi e Prestiti (CDP), thus completing the operation designed in 2020 by the former Conte government, with the Liquidity and August decrees ". "The interministerial decree just signed by Franco and Di Maio to allow the change of hands" reports La Stampa .
Even if, as Carlotta Scozzari points out in the newspaper, “The decree just signed, which says nothing about Sace's governance, puts on paper the prices of the operation already agreed in recent months”. "" With regard to governance, – the Court notes – considering that the Sace statute appropriately provides that the directors must possess the requisites of integrity and professionalism envisaged for corporate representatives of banks and financial intermediaries "and given that the transactions with Sace guarantee have often large dimensions and a very complex contractual structure, the accounting judiciary deems it necessary that "the shareholder, at the next renewal of the members of the administrative body, strictly adheres to the spirit and letter of the statutory provision".
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/fincantieri-cosa-devono-fare-sace-e-mef-secondo-la-corte-dei-conti/ on Tue, 01 Feb 2022 15:20:23 +0000.