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Country Commercial Guides FY 2000: Belgium Report prepared by U.S. Embassy Brussels, released July 1999 Note*

CHAPTER VIII. TRADE AND PROJECT FINANCING

Brief Description of Banking System

The National Bank issues the Belgian currency, acts as a state banker and intervenes as lender of last resort in credit operations. The mainspring of its monetary policy is the management of interest rates on three-month treasury bills. The Banking Commission's role includes the supervision of private institutions such as deposit banks, savings banks, finance companies, holding companies and mutual funds. However the public credit institutions fall under the authority of the Minister of Finance.

Using the banks' external assets as a yardstick, the Belgian banking sector is the fourth largest in Europe and the seventh largest globally. Belgian banks are very active in the Eurocurrency sector, as are numerous foreign banks established in Belgium, which have made such operations their principal activity.

There are three main trading banks in Belgium: the Fortis Bank (previously the General Bank), Brussels Bank Lambert and KBC (formerly the Kredietbank). Each one has a well-developed correspondent bank network in the U.S., as well as a local representative office in at least one major U.S. city. Due to few restrictions, easy tele-electronic communications, and widespread use of English, banking relationships with the U.S., as well as other countries, are smooth.

The Euro

On May 3rd 1998 Belgium was selected, along with ten other countries, to participate in the European common currency. The implementation of this new currency, the Euro, is expected to benefit American corporations. The Euro is designed to dramatically increase market transparency and will also enhance intra-European competition thereby offering U.S. corporations far clearer and significantly better business opportunities.

On January 1, 1999, the euro was officially introduced to the market. Irrevocable conversion rates between the euro and eleven participating currencies within the EMU were set on December 31, 1998. The eleven countries that are included in Euroland are Belgium, Austria, Spain, Ireland, France, Italy, the Netherlands, Portugal, Germany, Luxembourg, and Finland. The fixed rate between the euro and one Belgian Franc is 40.3399. These rates are always given in six digits and are the only official rates that exist for the member currencies. Therefore, the conversion of one national currency into another must always be carried out via the Euro.

On the day of the euro's introduction, one euro was equivalent to $1.1789. On the financial markets, the Euro is quoted per unit against currencies that do not belong to the currency union such as the USD, the JPY and the GBP. At this time, the euro exists only in non-cash form. This will change in January 2002 when Euro notes and coins will be issued. Currently, companies and individuals can conduct their financial transactions in euros, but this is not obligatory. However, by July 1, 2002, only Euro notes and coins will be in circulation in Euroland.

According to the terms of the Treaty of Maastricht, European Common Units (ecus) have now been replaced by euros at a rate of one to one. Any reference to ecus in existing contracts will automatically become a reference to euros.

Foreign Exchange Controls Affecting Trading

There are no foreign exchange regulations or limitations on the transfer of capital or profits in Belgium, except in exceptional situations; i.e. UN sanctions against Iraq and Libya. Though Belgium has a very high public debt, 85 percent of that debt is domestically held, therefore, there are no foreign exchange problems. Moreover, the balance of payments situation is very healthy, and there are no problems related to the country's ability to maintain its extensive import program.

General Financing Availability

Belgium is a country where exports and imports amount to roughly two thirds of GDP. Consequently, the process of paying for imported goods is well understood by banking staffs - even in the smallest regional and local branches. Generally speaking, buyers show a preference for payment by cash against documents (CAD), as this is the simplest and least costly method. However, they understand U.S. and transcontinental buyer requirements for letters of credit (L/C). This is often the form of payment for U.S. companies beginning to sell to Belgium. In cases, where Belgian importers and their U.S. suppliers have built up mutual confidence, letters of credit are superseded by time drafts and eventually by CAD terms. In rare instances, open account terms; i.e. where the importer pays after receipt of the goods, are used.

How to Finance Exports/Methods of Payment

Belgian importers are relatively small, with inadequate sources of inexpensive capital. Real rates of interest for working capital loans now run more than seven percent, and Belgian importers will ask for the most lenient credit terms possible. In addition, they are accustomed to being offered flexible payment terms, mainly from their neighboring trading partners, including France, Germany, the Netherlands, U.K., Switzerland, and (sometimes) Italy. Extended payment terms of 30, 60, 90 and even 120 days are not unusual, though the most common payments terms are net 30 days. However, Belgian businesses, like many in Europe, routinely delay payment beyond the agreed upon payment terms. In Belgium, some 43 percent of all payments are not made on time, although 80 percent of the delayed payments are made within another 30 days. In short, 91 percent of all payments by Belgian businesses are made net 60 days. Yet, this is a better record than in Italy or the U.K., and equal to that of France and the Netherlands.

Since the use of credit is consequently widespread, flexible credit terms can be important to winning sales contracts in Belgium. A U.S. firm should consider offering such terms, provided he/she is able and willing to provide such finance and provided the U.S. company has done a full credit check into the credit background of the Belgian company. Even then, it would probably be wise to try several shipments on a secured credit basis before moving to easier terms. There are several local credit agencies available, including Dun and Bradstreet.

Import duties and value added tax (VAT) are applied to the CIF (Cost Insurance Freight) value of goods. The rate of import duties is the same as that applied by all EU countries. Since products coming from other EU members enter Belgium duty free, U.S. products often start off with an average 5-6 percent price disadvantage. By offering favorable credit terms, U.S. suppliers can help their importers offset a portion of that higher price.

Counter or barter trade, mainly with Eastern European and other countries short of foreign exchange, continues to be a recognized business practice in Belgium. Considering Belgium's sophistication in international trading practices, it is well placed to develop this type of business.

Types of Available Export Financing and Insurance

The Belgian financial marketplace is private-sector oriented. There is one government-sponsored institutions for financing imports. The address is:

Office National du Ducroire
Contact: Mr. Yves Windebinckx, Director
40 Square de Meeus
B-1000 Brussels
Tel: 32/ 2/ 509-42-11
Fax: 32/ 2/ 513-50-59
Email: ducroire@ondd.be

Project Financing Available

There are no special programs for financing major projects in Belgium. Major projects are financed by commercial and investment banks.

List of Banks in Belgium with Correspondent U.S. Banking Arrangements

FORTIS BANK (formerly Generale Banque)
Montagne du Parc, 3
1000 Brussels
Tel: 32/2/565-1111
Fax: 32/2/565-4222

Board of Directors Chairman- Maurice Lippens; Vice-Chairman- Herman Verwilst

Fortis came into existence in 1990, as a result of a merger between the Dutch combination AMEV/VSB and Belgium's largest insurer AG. It is an international group that handles operations in the insurance, banking, and investment fields. Based in the Benelux market, it is one of the largest financial service providers in the area, offering many different services.

In early 1998 Fortis announced its intentions to buy all outstanding shares in the Generale Banque, which was one of the largest banks in Belgium. It was thought that the combination of the two would create the leading Benelux and European integrated financial services group. The intention was for Generale Banque to become the backbone of the extension of the Fortis Banking group, based in Belgium. As of June 29 1998 Fortis owned approximately 94 percent of the shares of Generale Banque. Along with this merger, in December of 1998, the Fortis group made another substantial financial move. The group made arrangements to buy out the remaining shares of ASLK-CGER Bank and ASLK-CGER insurance, thus making the companies 100 percent Fortis companies.

On Feb 2, 1999 the name of the group was officially changed to Fortis Bank. It has a workforce of more than 40,000, with 3,000 branches, and 7 million customers in the Benelux countries, making it one of the leading banks in the Benelux. It is also the market leader in bancassurance.

BANK BRUSSELS LAMBERT
Avenue Marnix, 24
1000 Brussels
Tel: 32/2/547-2324
Fax: 32/2/547-8305

President and CEO: Michel Tilmant

In early 1998 the ING group took over Bank Brussels Lambert, and the resulting combination is a market leader in the Benelux and ranked 12th in Europe. The main business focuses are retail banking, corporate and institutional banking, financial markets and investment banking, asset management, and private banking. BBL also has services for insurance, leasing, factoring, and travel, through certain specialized companies. BBL has over 900 traditional bank branches and over 500 Self'Banks.

The joined forces of ING and BBL intend to further develop their activities in Europe by building on the already existing strong position in the Benelux. Then they plan to extend retail and banking services across borders to neighboring markets. After that is established, they will work to help create synergies in the main financial centers, and develop their presence in several emerging markets.

KBC
Avenue du Port, 2
1080 Brussels
Tel: 32/2/422-7111
Fax: 32/2/422-8181

Chairman of the Board of Directors of the KBC Bank: Mr. Willy Breesch, also Chairman of the Boards of Directors of the KBC Bank and Insurance Holding Company.

In January of 1998, the ABB Group, the Almanij-Kredietbank Group and the CERA Group announced their intentions to merge and form and single bank and insurance group. Legally the merger was completed on June 4, 1998. The KBC Bank and Insurance Group is and independent and pioneering enterprise, and has set for itself the objective of becoming one of the most profitable bancassurance institutions in Europe. KBC is already among the more profitable financial service groups in Europe and has been awarded 'AA' credit ratings.

The KBC workforce includes over 1500 bank agents, 500 insurance brokers, and over 8000 FIDEA brokers. It has a presence in over 30 different countries.

CREDIT COMMUNAL DE BELGIQUE S.A.

Boulevard Pacheco, 44
1000 Brussels
Tel: 32/2/222-1111
Fax: 32/2/222-4032

Gilbert Mottard, Chairman of the Board of Directors; François Narmon, Chairman of the Management Committee.

Established in 1912, this municipal credit institution created a totally new method of financing its short-tern loans, the savings bond. Today, it still continues to develop and constantly improve savings bond techniques. Apart from being the number one credit institution in the savings bond area, it is a fully-fledged major bank and has developed a full activity on the money, capital and foreign exchange markets in Belgium and abroad. It has over 500 counterpart institutions throughout the world. In 1996, Credit Communal of Belgium created a joint venture company, with Credit Communal of France called Dexia. The objective of Dexia is to develop the international activities of the Belgian and French partners in the area of municipal credit financing. Dexia is now a fast growing entity, which has already bought control of Credito Communale Italiano, Italy's largest entity for financing municipal corporations. Employs 3,834; consolidated balance sheet total: BF 2,507 billion BF ($70 billion).

Credit Communal's consolidated balance sheet is approximately $70 billion USD, and it has a work force of almost 4000.

MORGAN GUARANTY TRUST COMPANY OF NEW YORK
Avenue des Arts, 35
1040 Brussels
Tel: 32/ 2/508-8211
Fax: 32/ 2/508-8334

Contacts: Herve Huas, Managing Director and Chairman of the Management Committee and Christian Jacobs, Managing Director.

Ranking as the 5th largest bank in Belgium, this is a branch of the J.P. Morgan & Co., with headquarters in New York City. The bank offers commercial and investment banking services to corporate and institutional clients. In addition to the traditional commercial banking services, it offers a variety of specialized services to international customers. Another company of the J.P. Morgan group in Belgium is Euroclear, located at Blvd. Emile Jacqmain, which is a clearinghouse for Eurobonds and internationally traded securities.

Morgan has a workforce of approximately 1200.

CITIBANK BELGIUM S.A.
Boulevard General Jacques, 263g
1050 Brussels
Tel: 32/ 2/626-5111
Fax: 32/ 2/626-0584
Contact: Vidor Toledo, Managing Director.

This is the Belgian subsidiary of Citibank NA, which has its headquarters in New York City. Citibank opened its Belgian branch in 1919 at the Grand Place. During the Second World War, this branch was closed but re-opened in 1962. As a result of local acquisitions, it now has 60 branches in Belgium. Today it is a leading international and domestic bank, which has relations with most of Belgium's largest industrial and trading companies. This bank also offers specialized services to financial institutions, insurance companies and to public sector entities.

BANK OF AMERICA
Uitbreidingstraat 180, Box 6
2600 Antwerp
Tel: 32/ 3/280-4211
Fax: 32/ 3/239-6109
Contact: Willem Nijboer, Vice President/Regional Manager.

This is the Belgian branch of Bank of America N.T. & S.A., with headquarters in San Francisco. This Belgian branch was established in 1965. It provides a full range of commercial banking services and has a branch office in Brussels located at Van Nieuwenhuislaan, 6, 1160 Brussels, Tel: 02/663-2100, Fax: 02/663-2150, Richard Challinor is the Director.

CHASE MANHATTAN BANK
Avenue Louise 326, Box 51
1050 Brussels, Belgium
Tel: 32/2/629-5811
Fax: 32/2/629-5850
Contact: Mrs. Regnarm Tel: 629.58.23
Mr. Benoit Struye de Swienlande, General Manager.

EUROCLEAR OPERATIONS CENTER
(A unit of Morgan Guaranty Trust)
Blvd Emile Jacqmain 151
1210 Brussels, Belgium
Tel: 32/2/224-1211
Fax: 32/2/224-7449
Contact: Mr. Luc Bosmans, Managing Director and General Manager