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Interest Equalisation

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Interest Equalisation

Finnish Export Credit Ltd (FEC) administers the State of Finland’s interest equalisation system.

Banks play a key role in the interest equalisation system. The bank negotiates a credit agreement that meets the terms set by OECD, funds and and manages the credit. The bank often covers the credit risk with export credit guarantee but the credit risk can also be covered by the bank itself or the bank can use other arrangement of it’s choice.

How does the interest equalisation system work?

Under the interest equalisation system the bank arranges for its client purchasing Finnish capital goods and services a fixed CIRR-based export credit. A case-specific interest equalisation agreement with FEC provides the bank a hedge, which converts the fixed CIRR-based receivable into a floating rate receivable.

Under the interest equalisation agreement the bank will pay a fixed CIRR rate plus an optional margin to FEC and receive a floating rate (normally Euribor or Libor) plus a spread from FEC 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 OECD term 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 euro, United States dollar or the buyer's country's currency.

FEC charges the client a case-specific margin above the base rate, a commitment fee and a handling fee for renewing the offer.

Further information:

OECD Commercial Interest Reference Rates (CIRRs)

For the period from the 15th of August 2019 through to the 14th of September 2019

FEC will apply these rates to financing of export credits and to new interest equalisation indications, bids and agreements.

CIRR Rates (PDF)

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.

REPAYMENT PERIODS

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

Links:

Co-operational banks

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

ABN AMRO Bank N.V.

AKA Ausfuhrkredit-Gesellschaft m.b.H

Banco Bilbao Vizcaya Argentaria S.A.

Banco Santander S.A.

Barclays Bank Plc

Bayerische Landesbank

Citibank International Limited

Citibank N.A.

Commerzbank Aktiengesellschaft

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.

Jyske Bank A/S

KfW IPEX-Bank GmbH

Mizuho Bank Ltd.

Natixis

Nordea Bank Finland Plc

Raiffeisen Bank International AG

Skandinaviska Enskilda Banken AB (publ)

Societe Generale

Sparebanken Vest

Standard Chartered Bank

Sumitomo Mitsui Banking Corporation

Sumitomo Mitsui Banking Corporation Europe Ltd

Svenska Handelsbanken AB (publ.)

The Bank of Tokyo-Mitsubishi UFJ, Ltd

The Hongkong and Shanghai Banking Corporation Limited

The Royal Bank of Scotland Plc

The Standard Bank of South Africa Limited

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.)


Other matters

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


Helsinki Headquarters

Porkkalankatu 1

PL 1010, 00101 Helsinki


Kuopio Headquarters

Kallanranta 11

PL 1127, 70111 Kuopio


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