Norway’s government proposed on Sunday nearly doubling the country’s credit guarantee package for export companies and boosting aid to other industries hard-hit by the global financial crisis.
The government aims to increase guarantees available through the Norwegian Guarantee Institute for Export Credits (GIEK) from 60 billion kroner (US$8.4 billion) to 110 billion kroner, Norwegian Prime Minister Jens Stoltenberg and Trade and Industry Minister Sylvia Brustad told reporters.
“By significantly expanding the GIEK framework we will secure Norwegian companies contracts abroad and investments at home,” Stoltenberg said.
“We’ve seen a huge need for better loan financing and better guarantee arrangements at a time when the private bank market is not working the way it should because of the global financial crisis,” he said.
Norway, Brustad said, was especially vulnerable to the ongoing financial turmoil because it “has a small and open economy, and half of everything we produce here is sold abroad.”
Oslo also plans to hike loan guarantees for ship builders by 3 billion kroner to a total of 8 billion and to increase the loans available from Innovation Norway, a state-held company that provides financing to small and medium-sized businesses, by 1 billion kroner to a total of 2.5 billion kroner, Brustad said.
“We are facing the most serious blow to the world economy seen since the 1930s [and] Norway will also be affected,” Stoltenberg said, adding that the crisis “will affect many parts of the Norwegian economy and many areas of Norwegian society.”
“It is the government’s role to do all that is possible to secure jobs and create new jobs for those who will lose their jobs in areas hit by the financial crisis,” he said.
The government plans to present its proposal to parliament on Friday and the house is expected to vote it through before the end of the year.
Meanwhile, Swiss authorities said they may inject more money into UBS a month after offering the country’s largest bank tens of billions of dollars in aid, remarks published on Sunday said.
“We must ask the question if whether our measures were sufficient,” Swiss Federal Banking Commission head Daniel Zuberbuehler told the weekly Sonntagszeitung.
“If the situation gets worse, we must ... proceed with a new capital increase,” Zuberbuehler said, adding that another state intervention “was not excluded.”
But he dismissed speculation about a merger between UBS and the country’s second largest bank Credit Suisse, saying such a deal was likely to create more problems than it would solve.
On Oct. 16, Switzerland unveiled a rescue package worth almost US$60 billion for UBS — one of the biggest losers in the US subprime crisis.
The bank’s problems have been compounded by a UBS executive being charged with conspiracy to defraud the US of tax revenues, and of concealing around US$20 billion of assets from the Internal Revenue Service.
UBS clients have withdrawn more than 83.6 billion Swiss francs (US$70.1 billion) between July and September.
A finance ministry spokesman said he “there was no need to take new measures” to help UBS for the moment, but did not rule out another capital injection if the global situation worsened.
Swiss authorities already have 9 percent of UBS’ capital and any new rescue package would only increase their stake in the bank.
But their efforts have failed to boost investors’ confidence, with UBS shares in freefall. They closed on Friday at SF11.35, sharply down from SF80 in June last year.
“It’s hard to say just how far the shares will fall,” one analyst said.
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