WASHINGTON - Last year nearly all of the 55 transactions that Baltimore's Allfirst Bank financed for overseas buyers were guaranteed in one way or another by the Export-Import Bank.

But it probably would not fund that many international deals under the Bush administration's proposal to cut the Export-Import Bank's budget 25% in fiscal 2002, to $698 million, Allfirst senior vice president David Cook says. Simply put, the cuts would leave less money for loan guarantees and insurance. And without the backing of the federal government, Mr. Cook said, $18 billion-asset Allfirst would be reluctant to extend credit to businesses in Africa, Central America, and other emerging markets.

"The risk in many of these countries is sufficient enough that we would not be able to take it without support from the Ex-Im Bank," said Mr. Cook, whose bank's international loans range in value from $300,000 to $9 million. "Regulators do not want to see a huge surge of activity in risky countries."

Mr. Cook is one of many in the banking industry urging the Bush administration to reconsider its plan to trim the Export-Import Bank's budget. The Bankers Association for Finance and Trade, a group of international lenders, was among 10 business groups that recently sent a letter to the Office of Management and Budget expressing "deep concern" about the effect the cut would have on U.S. exports.

Jack Bierman, a spokesman for the association, said there is more at issue than banks' ability to lend. In insuring international loans or guaranteeing working-capital loans to U.S. firms, the Export-Import Bank helps create a market for goods and services produced in the United States. A budget cut would lead to fewer exports by U.S. companies including manufacturers, distributors, and software developers, which could ultimately lead to job cuts, he said.

Mr. Bierman also questioned the Bush administration's timing. With global competition heating up, he said, governments in other developed countries are boosting trade agencies' funding, not curtailing it.

"This is not the time to cut back on a program that supports trade," said Mr. Bierman, a former senior vice president at the Export-Import Bank.

Officials at the Office of Management and Budget would not respond to bankers' charges that the proposal is "anti-business." An OMB spokesperson, who asked not to be identified, would say only that "part of the President's agenda is reducing corporate subsidies, and these are viewed as corporate subsidies." A spokesperson at the Export-Import Bank declined to comment.

The bank makes a handful of direct loans but primarily backs loans by private-sector lenders. It keeps funds in reserve in the event a borrower defaults (the riskier the country, the higher the reserve).

In fiscal 2000 the Export-Import Bank insured or guaranteed more than 2,500 loans that supported $15.5 billion of exports. Its guarantees covered $12.6 billion of those exports, a figure that is expected to fall by a third if the budget cuts stick.

Bankers say they are most worried about the impact a smaller Export-Import Bank might have on small-business customers.

David Zuercher, executive vice president and group head at Wells Fargo International in San Francisco, a division of $272 billion-asset Wells Fargo & Co., said his group mainly provides working-capital loans to businesses with revenues of less than $50 million. Though the customer must have a qualified overseas buyer in place before Wells will make a working-capital loan, Mr. Zuercher said the bank still requires that extra protection.

"These are receivables from foreign countries, so it's hard for banks to get comfortable with that risk," he said. "My biggest concern is that these cutbacks might have an effect on the ability of our small-business customers to get the funding they need."

Laura McWilliams, manager of the international division at $4 billion-asset Southwest Bank of Texas in Houston, echoed those sentiments. She said that the Export-Import Bank - which is perhaps best known for insuring transactions for such large manufacturers as Boeing Corp. - has stepped up its small-business financing in the past few years, and she wondered if it could maintain that commitment if the Bush proposal goes through.

Of the 2,500 loans the Export-Import Bank insured or guaranteed last year, nearly 2,200 were used to assist small businesses. The guarantees supported $2.3 billion worth of loans, up 10% from fiscal 1999.

"I think there's a misperception that Ex-Im is only for large, $200 million deals," Ms. McWilliams said. "That is not our market."

Finally, lenders are worried about the agency's staffing. Budget cuts will almost surely "reduce manpower" at the Export-Import Bank, said Allfirst's Mr. Cook.

"That's going to have an immediate and dramatic impact on a bank's ability" to process overseas transactions, he added.

One banker is looking on the bright side.

Even with the budget cut, the Export-Import Bank would be backing a lot of loans, said Terry Snellings, managing director of trade finance at $75 billion-asset Wachovia Corp. "It's not like they are doing away with the Ex-Im Bank," he said.

Besides, the cut might create more opportunities for private insurers, such as American International Group or Zurich Financial, which currently handle just 5% of international deals. That is important, Mr. Snellings said, because it could make lenders less reliant on taxpayer dollars for insuring private transactions.

In some cases, private insurers offer even more policy flexibility than the Export-Import Bank. The bank requires that at least 51% of the contents of an export be produced in the United States, for example, whereas private insurers do not. And the bank will guarantee only export deals; private firms insures imports. (Wachovia finances about $2 billion of imports a year for its U.S. customers.)

Nevertheless, the Export-Import Bank remains the lender's choice. For one thing, private insurers have to answer to shareholders and can be tough negotiators in policy-writing, Mr. Snellings said. But the main reason is that lenders just feel more secure knowing that their loans are backed by the world's richest nation.

"For a banker," said Mr. Snellings, whose bank uses both private and government insurance, "the full faith and credit of the U.S. government is the most risk-free exposure you can have."

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