Guarantee provisions in the Agreement State-FMO of July 1, 2023
Article 4: The Maintenance Obligation of the State
4.1.1 In accordance with this Agreement, the State shall maintain FMO as a financial undertaking as referred to in Article 1:1 of the Dutch Financial Supervision Act. Maintenance will be understood to mean that, at FMO's written request, the State undertakes to make the financial resources described in Article 4.1.2 available to FMO if it is reasonably foreseeable that FMO will be assessed Failing or Likely to Fail by the Supervisor (the Maintenance Obligation).
4.1.2 The financial resources provided by the State under Article 4.1.1 to FMO upon written request will be at least sufficient for FMO to meet the Prudential Requirements.
4.1.3 If FMO makes a request under the Maintenance Obligation, the State shall consult with FMO on the manner in which the support will be provided and the reasonable conditions applicable to the support before the support is made available. The support to be provided by the State to FMO will under no circumstances be for no consideration. The State and FMO shall not let these consultations in any way prevent the support from being provided in a timely manner. Timely, as referred to in this Article 4, will be understood to mean that in all cases the financial resources will be made available to FMO before FMO is assessed Failing or Likely to Fail by the Supervisor.
4.1.4 If (i) the State has not suspended its obligations under this Article 4 pursuant to Article 9.1, (ii) FMO has submitted a request pursuant to Article 4.1.1 and (iii) the State has discussed with FMO the manner of support and any reasonable conditions applicable thereto pursuant to Article 4.1.3, the resulting payment obligation of the State to FMO will be a direct, unconditional and irrevocable obligation.
4.1.5 In the event that FMO ceases to be supervised as a financial undertaking as referred to in Article 1:1 of the Dutch Financial Supervision Act, Article 4.1.1 will lapse and Article 4.1.5 et seq. will apply. Losses on FMO's operations will first be charged to the RAR Fund. To the extent that such losses have not been covered by compensation and/or insurance benefits received, the State will be obliged to supplement the losses insofar as:
a. The amount of these losses exceeds the amount of the RAR Fund at the end of the month in which these losses were incurred; and
b. The inadequacy of the cover for general value adjustments under the RAR Fund is due to abnormal operating risks, such as unforeseen political difficulties or transfer problems with particular countries or the collapse of the world economy or a regional economy.
4.1.6 The Parties shall consult with each other on the determination of the amount of the losses referred to in Article 4.1.5. This Article 4.1.6 will in no way interfere with the timely provision of the support to be granted, as referred to in Article 4.1.5.
4.1.7 If the circumstances described in Article 4.1.5 occur and FMO requests the State to fulfil its obligation referred to in Article 4.1.5, such request will give rise to a claim of FMO towards the State recognised by the State on the first business day of the first month following the day on which the request is made. The request must be made in writing.
Article 5: The Financial Security Obligation of the State
5.1.1 If FMO so requests in accordance with Article 5.1.2, the State shall prevent FMO from failing to meet the following exhaustively listed obligations of FMO in a timely manner (the Obligations):
a. debt, loans and funds raised on the capital market;
b. short-term money-market borrowings with a maturity of up to two years;
c. swap agreements with exchange of principal sum and interest payments;
d. swap agreements without exchange of principal sum with interest payments;
e. foreign exchange forward contracts and Forward Rate Agreements (FRAs);
f. option and future contracts;
g. securities financing transactions;
h. other financial instruments that FMO includes in its range of instruments to conduct adequate balance sheet management;
i. combinations of the products referred to above under 5.1.1a to 5.1.1h inclusive;
j. guarantees and other committed funds provided by FMO to third parties in the fulfilment of its mandate; and
k. maintaining an adequate organization comprising operational costs, including employee costs, expenditure on buildings, administrative costs and similar expenditure.
5.1.2 If FMO anticipates that it cannot meet any payment obligation due under the Obligations described in Article 5.1.1 from its own financial resources, FMO may submit a properly substantiated written request to the State to make available to FMO an amount equal to (the portion of) such payment obligation due under the Obligations for the purpose of enabling FMO to meet such payment obligation due under the Obligations (the Financial Security Obligation).
5.1.3 The State shall transfer the amount to be provided to FMO under the Financial Security Obligation and as included in the written request in accordance with Article 5.1.2 to a bank account to be specified by FMO on a date to be agreed that will enable FMO to meet the Obligations in a timely manner.
5.1.4 FMO undertakes towards the State to use the amount that the State provides to FMO in accordance with this Article 5 solely to meet the Obligations that FMO cannot meet from its own financial resources.
5.1.5 If FMO makes a request under the Financial Security Obligation, the State shall, before the support is made available, consult with FMO on the manner in which the support will be provided and the reasonable conditions applicable to the support. In accordance with Article 5.1.3, the State and FMO shall not let these consultations in any way hinder the timely provision of the support.
5.1.6 If FMO has submitted a request pursuant to Articles 5.1.1 and 5.1.2 and the State has consulted with FMO on the manner of support and any reasonable conditions attached thereto pursuant to Article 5.1.5, the resulting payment obligation of the State to FMO will be a direct, unconditional and irrevocable obligation.
Notes to the guarantee provision
The GRR fund referred to in Article 3 of the Agreement State-FMO of July 1, 2023 consists of share premium reserve of €21,211k and the contractual reserve. On December 31, 2024, the fund amounted to €3,029,676k (2023: €2,743,034k).