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.
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
5 or under
over 5 - 10
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.
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.
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.
- CATEGORY I 2 - 5 years (8.5 years)
- CATEGORY II 2 - 10 years
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
Citibank International Limited
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.
Nordea Bank Finland Plc
Raiffeisen Bank International AG
Skandinaviska Enskilda Banken AB (publ)
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