Use a bank guarantee to mitigate risk when trading internationally
A bank guarantee is a contractual agreement mitigating risk and reducing the loss if things do not go as planned, allowing you and your international trading partner do business more safely.
Backed by a guarantor, usually a bank, the guarantee ensures that you receive compensation in the event of a breach of contract. Guarantees can also support your cash flow management by enabling release of cash from your buyers at an earlier stage in the contact.
Various risk scenarios covered
Danske Bank arranges different types of guarantees covering different risk scenarios, helping you trade with others, thereby facilitating growth. Local conditions and regulations decide whether we issue the guarantee, or if the guarantee should be issued by a local bank in the beneficiary's country against our counter guarantee.
Several different types of guarantees might be included in the same contract - below is an overview of some of the most frequently used. To find out which is most suitable for your business, please read on or reach out to us.
You can apply for a guarantee through District.
Guarantees from abroad
If you have agreed to receive a guarantee from abroad and want us to underwrite it, we issue guarantees on behalf of most banks worldwide.
Please contact your Relationship Manager for assistance.
Green guarantees
Green guarantees function similarly to conventional guarantees in that they are designed to ensure that specific obligations are met between a seller and a buyer through collateral, typically upon the completion of a project or the fulfilment of a contract.
International rules
Demand guarantees are subject to a set of international rules: Uniform Rules for Demand Guarantees (URDG), ICC Publication No. 758, issued by the International Chamber of Commerce (ICC) in Paris.
The rules set forth the requirements of the parties under a guarantee. It is Danske Bank's experience, however, that these rules are not followed widely enough.
You can obtain a copy of the rules from the Bank or the ICC.
Download Fact Sheets
Read more about our trade finance products and services in these booklets (PDF):
Related Content
Solutions
Letter of credit
Documentary credits – or letters of credit - are a payment method to ensure that an exporter receives payment against presentation of credit conform documents.
Green guarantees
Green guarantees function similarly to conventional guarantees in that they are designed to ensure that specific obligations are met between a seller and a buyer through collateral, typically upon the completion of a project or the fulfilment of a contract. However, Green Guarantees stand out because they must support activities that are drivers to foster the desired development in society to earn the "green" designation.
Solutions
Export Finance
For suppliers, the up-front cost of the manufacture, shipping and delivery of such goods is substantial, and whereas a seller typically wants early payment, the buyer generally wants to delay payment as long as possible to maintain strong cash flows.
