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France, Germany halt Airbus export credit – Move follows UK corruption probe

PARIS/BERLIN, April 8, (RTRS): France and Germany have joined Britain in suspending export credit facilities for Airbus jet deliveries, expanding the fallout from a potential corruption probe in the UK, several people familiar with the matter said on Friday.

The move follows Britain’s decision last week to suspend financing and alert the Serious Fraud Office after Airbus Group said it had found anomalies over the declaration of overseas agents and that it had itself notified the UK authorities.

Unusually, it leaves the world’s two largest planemakers, Airbus and Boeing, without a government financing lifeline for part of their exports as Congressional delays leave US Export Import bank unable to support Airbus’s rival.

In Europe, Airbus draws on financing support for some sales from Britain, France and Germany where its main factories are.

The nations typically act in concert, offering guarantees in proportion to the industrial work in each country, but declining to take up the slack whenever one of them withholds credit.

A German economy ministry spokesman confirmed that the financing, provided on its behalf by Allianz unit Euler-Hermes, was no longer available on this basis.

Berlin is also examining whether the UK episode could have consequences for export credits already awarded, he added.

In France, three sources said export credits were no longer available for the time being. French government officials could not immediately be reached for comment.

Declined

Airbus Group declined to add to a previous statement that it was co-operating with export credit agencies and that it expected financing to be resumed in the near future.

For now, the market impact is seen as limited as the use of export credits has dwindled to around 6 percent of deliveries from 40 percent at the height of the 2008-10 financial crisis.

The halt however raises doubt over the financing for some deliveries, creating extra demand for commercial loans and placing pressure on Airbus to offer bridge financing.

The agency which underwrites aircraft exports in Britain says it will not support Airbus deliveries until it gets assurances about Airbus’s current practices on overseas agents.

The UK case involves discrepancies over the amount of fees for agents disclosed in applications for support, as well as the absence of some agents’ identities, in some cases dating back several years, two people familiar with the matter said.

The problem was brought to light by Airbus itself, which like many aerospace companies has introduced tough compliance procedures after a series of industry scandals.

The company says it adheres to an industry code that stresses “the correct use of advisers”.

A person with central responsibility for providing some information used in export credit applications is no longer with Airbus Group, people familiar with the matter said. Airbus declined comment.

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