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Interest Equalisation

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Interest Equalisation

Finnish Export Credit Ltd (FEC) administers the Finnish interest equalisation system.

The Government of Finland is responsible for the interest support to be paid to financial institutions on the basis of the interest equalisation agreements. Therefore the interest equalisation agreements carry a BIS 0% weight for capital adequacy calculation purposes.

FEC and the financial institution arranging the export credit will enter into a co-operation agreement prior to the first transaction. The procedure of interest equalisation is based on ISDA terms. The financial institution shall have an investment grade rating for its long term funding and sufficient knowledge and experience in arranging and financing of officially supported export credits. FEC has signed co-operation agreements with a number of financial institutions.

Transactions benefitting from interest equalisation shall meet the criteria of the OECD Arrangement.

The credit is generally covered by an export credit guarantee, but the risk may also be carried by the financial institution.

For further information, please contact Finnvera’s personnel in Export Financing.

Contact

Links:

How does the interest equalisation system work?

Under the interest equalisation system a financial institution arranges for its client a fixed CIRR-based export credit. The responsibility of funding the transaction lies on the financial institution arranging the credit. An interest equalisation agreement with FEC provides the financial institution a hedge, which converts the fixed CIRR-based receivable into a floating rate receivable.

Under the interest equalisation agreement the financial institution will pay a fixed CIRR rate to FEC and receive a floating rate (normally Euribor or Libor) plus a spread from FEC. According to the decision of the Ministry of Employment and the Economy the interest equalisation maximum spreads to be added to the reference rate are as follows:

Repayment period in years

Credit amount

 

under 5M€

5-25 M€

25-50 M€

over 50M€

5 or under

50 bp

40 bp

35 bp

30 bp

over 5 - 10

50 bp

45 bp

40 bp

40 bp

over 10

50 bp

50 bp

45 bp

40 bp

Main terms of interest equalisation

The export credit is arranged and funded by a financial institution. The financial institution is responsible for documentation, and shall administer the credit and its securities throughout the entire life of the credit. The credit currency is mainly euro or the United States dollar.

FEC charges a handling fee and a commitment fee according to its policies.

OECD Commercial Interest Reference Rates (CIRRs)

For the period from the 15th of April 2016 through to the 14th of May 2016

FEC will apply these rates to new interest equalisation indications, bids and agreements. FEC will add a premium of 0.2 per cent to the CIRRs when fixing at bid. Interest rates may not be fixed for longer than 120 days.In project finance for repayment terms of up to and including 12 years, the normal CIRR shall apply. For repayment terms in excess of 12 years and up to 14 years, a surcharge of 20 basis point on the CIRR shall apply for all currencies. CIRR´s for Renewable Energies and Water Projects with repayment period over 11 years are available on OECD’s web site.

CURRENCY

INTEREST RATE / REPAYMENT PERIOD

 

2-5 years

>5-8.5 years

>8.5-10 years

 

 

 

 

AUD

3.08

3.08

3.08

CAD

1.54

1.71

2.06

CHF

0.16

0.26

0.40

CZK

0.93

0.99

1.18

DKK

0.69

0.85

1.07

EUR

0.53

0.71

0.96

GBP

1.54

1.82

2.13

HUF

2.96

2.96

2.96

JPY

0.79

0.80

0.80

KRW

2.61

2.61

2.61

NOK

1.65

1.65

1.65

NZD

3.33

3.33

3.33

PLN

3.15

3.15

3.15

SEK

0.38

0.91

1.18

USD

2.04

2.38

2.68

REPAYMENT PERIODS

  • CATEGORY I 2 - 5 years (8.5 years)
  • CATEGORY II 2 - 10 years

Links:

How to apply for interest equalisation?

Interest equalisation can be applied for by the exporter or the mandated financial institution for and on behalf of the exporter or the buyer. The application for interest equalisation must be submitted before the supply contract is signed.

Interest equalisation is applied for by an application which is sent to applications.eca@finnvera.fi.

Co-operational banks

FEC has signed a co-operation agreement with following financial institutions:

ABN AMRO Bank N.V.

Banco Bilbao Vizcaya Argentaria S.A.

Banco Santander S.A.

Barclays Bank Plc

Citibank International Limited

Citibank N.A.

Credit Agricole Corporate and
Investment Bank Helsinki Branch

Credit Suisse AG

Danske Bank A/S

Deutsche Bank AG London Branch

DNB Bank ASA

Fortis (BNP Paribas) SA/NV

HSBC Bank Plc

HSBC Bank USA, N.A.

ING Bank N.V

JPMorgan Chase Bank, N.A.

KfW IPEX-Bank GmbH

Nordea Bank Finland Plc

Raiffeisen Bank International AG

Societe Generale

Sparebanken Vest

Standard Chartered Bank

Svenska Handelsbanken AB (publ.)

The Bank of Tokyo-Mitsubishi UFJ, Ltd

The Hongkong and Shanghai
Banking Corporation Limited

The Royal Bank of Scotland Plc

UniCredit Bank AG

UniCredit Bank Austria AG

Switchboard

029 460 11 (weekdays 9:00 a.m. and 4:15 p.m.)

Financial advice

029 460 2582 (weekdays 9:00 a.m. and 4:15 p.m.)

Changes to payment programmes

029 460 2790 (weekdays 9:00 a.m. and 4:15 p.m.)

Other services

029 460 2791 (weekdays 9:00 a.m. and 4:15 p.m.)

Helsinki Headquarters

Eteläesplanadi 8

PL 1010, 00101 Helsinki

Kuopio Headquarters

Kallanranta 11

PL 1127, 70111 Kuopio

All contact information