Britain's Department for Business is considering using a £10 billion working capital guarantee fund to make letters of credit (L/Cs) more available for overseas companies wanting to buy goods and services from British companies.

The Export Credits Guarantee Department (ECGD) is preparing to manage the scheme, which taps into one of its existing funds.

Bank consultations

According to ECGD, it is about to begin a consultation process with banks about sharing the risk from confirming exporters' L/Cs.

The move responds to the overall shortage of L/Cs and to increased demand for L/Cs since credit insurers have proved less willing to provide exporters with insurance cover against non-payment.

More guarantees

The consultation process between ECGD and the banks was announced alongside the British government's plans to intervene in the trade credit insurance market with a temporary £5 billion of state guarantees.

Britain's Business Secretary Peter Mandelson has indicated that the government is prepared to provide more support for exporters, possibly through additional export guarantees.

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