Representatives of major U.K. Based banksare meeting here today to consider a new plan for reducing the
cost of financing British exports guaranteed by the Export
Credits Guarantee Department (ECGD), senior banking sources
said.
    The plan is being developed in conjunction with the ECGD
and the Bank of England.
    Neither the ECGD nor the Bank of England would comment on
the plan. However, bankers said one of the main points under
discussion is a plan to refinance the bulk of the ECGD's medium
term credit portfolio in the international capital markets.

    The proposals involve introducing a set of interest margins
on ECGD backed debt of 5/16 to 7/8 pct, depending on the size
and maturity of the credit and the currency.
    The banks are likely to push for a higher margin. Bankers
said that while these rates would reduce a bank's return they
would still be more than those proposed about a year ago when
the government attempted unsuccessfully to initiate another
cost reduction plan.
    At the same time, the banks would be expected to allow the
ECGD to realise additional savings by refinancing existing
government backed credit in the capital markets.

    On credits that are refinanced an original lender would
receive a residual margin of 7/16 pct for loans up to 10 mln
stg and 3/16 pct on larger transactions.

 REUTER
