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A bank guarantee can minimise the risk to your business when, for example, dealing with customers, suppliers or landlords. Here you can read more about when a bank guarantee is relevant and you can find out more about the different guarantee types you can choose from.
A bank guarantee can be a good tool for your company if you need to minimise risks when making arrangements. When your company closes a deal with a customer, supplier or landlord, a bank guarantee can be part of the agreement. The purpose of the guarantee is to protect one or both of the parties against loss.
Sometimes a party requires a bank guarantee if it is to conclude such an agreement at all. This often occurs in connection with commercial leases, where the landlord usually demands a bank guarantee amounting to 3-6 months’ rent.
A bank guarantee means that the bank assumes a risk on behalf of your company by standing surety for the payment. For this reason we conduct a credit assessment before providing a bank guarantee, just like we do when we are granting loans and credit.
Read more about the different types of guarantee or contact us for advice.
Interest rate hedging
Interest rate hedgingWe can help you map the total portfolio risk of your debt and make specific borrowing, refinancing and risk management proposals.
If your company has debts or other credit, fluctuations in interest rates could affect your finances. We can help you create an overview of the risk and give you recommendations and solutions that will enable you to manage the risk.
We map the total portfolio risk of your company's debt and make specific borrowing, refinancing and risk management proposals. In doing so, we take into account any interest rate fluctuations and the consequences these can have on your company's cash flow and equity.
If you have variable interest-bearing debt, we can refinance it with fixed interest loan or offer interest rate ceiling or interest rate swap. That way you can gain a risk profile suited to your company.
Currency hedgingDoing business with foreign countries often involves a currency risk. We can help you manage this.
Currency fluctuations constitute a risk if your company engages in importing or exporting from/to country which has different currency than your local currency. There are several matters you need to take a stand on in this case: What currency is the transaction to be settled in and how could exchange rate movements affect your company's earnings, balance sheet and cash flow?
We can help you assess and manage the risk associated with payments to and from abroad.
You can get advice at the strategic level, where we can be your sparring partner regarding your company's overall currency management. Our experts can analyse the consequences of currency fluctuations and what a certain hedging strategy would mean for your company's key figures.
To support your tactical decisions and actions we can share with you the views and forecasts of our economists and analysts.
If you have open currency risk which you want to hedge, we can provide currency forwards and options for that purpose.
Cross-border trading involves a number of risks. We have specialised solutions that can help you manage them. Read more about how we can assist you in the field of international trade. (link to life event ‘Trading internationally’)
Trading with countries in the West is relatively safe. However, exports and imports can involve higher economic risk. You are far away from clients and suppliers – physically, legally and culturally. And if you deal with politically and economically unstable countries, it is wise in any case to obtain extra assurance.
International trade forms
If you have to use forms for export and import letters of credit, guarantees etc. in connection with international trade, you can find them here.
Danske Bank offers several ways of minimising country, supplier and customer risks. Feel free to ask our trade finance consultants for advice and guidance. In 2015, for the fifth year in a row, we were ranked Best in Trade Finance in the Nordic region by the research institute TNS SIFO Prospera.
Danske Bank offers a variety of payment methods and hedging instruments:
The documentary credit is one of the most secure payment methods in international trade, offering the exporter a conditional payment guarantee from the importer’s bank. Documentary credits usually require the presentation of certain documents, which must be complied with before payment can take place. You must be aware that banks examine the documents only with respect to the documentary credit and do not look at contracts, agreements or the condition of the goods.
A guarantee is a written undertaking by a guarantor, usually a bank, to ensure that a supplier or contractor receives compensation in the event of a breach of contract. There are several different types of guarantee, and more than one type can be included in a contract.
Documentary collections can provide exporter and importer with a compromise between open account trading and documentary credits.