How it works

If things go wrong

When EKF assumes the risks it allows Danish companies to cultivate uncertain and unknown markets. If things go wrong, EKF will pay.

Sanctions put a stop to payments
In autumn 2009 the Danish company DESMI received an order worth almost DKK 35 million for supply of equipment to seven harbours in Iran. It was a huge order for DESMI and as Iran was an uncertain market, the company decided to secure a guarantee from EKF to cover the transaction.

DESMI supplied the equipment which was to be used to confine damages and recover oil in case of oil spill disasters in water,  and DESMI trained the Iranian buyers in the use of the equipment.
 
During the first couple of years, the Iranian customer settled payments as agreed but the payments gradually became more and more irregular. It was, however, a contributory cause that during the same period, the UN gradually tightened the economic sanctions against Iran. This, among others, excluded the country from the international banking system.

The payments came to a halt in 2012. At the time the Iranian customer still owed DESMI approximately DKK 3.5 million.

Fortunately, DESMI had, as mentioned, secured a guarantee from EKF covering 50 per cent of the loss. Thus, in autumn 2013 EKF paid DESMI approximately DKK 1.7 million in compensation.

At the same time EKF assumed the claims towards the Iranian customer. We are still working on finding a solution with the Iranians which would allow them to settle the payments within the frameworks of the international sanctions.
International cooperation on agreement with crisis-stricken bank
In 2005, a Danish export company supplied a carbon dioxide plant to a buyer in the Republic of Kazakhstan. The export was financed by a confirmed letter of credit worth USD 1.1 million, meaning that the payment was guaranteed by the buyer's bank. The Danish company received its money from the Danish bank that assumed the risk for the bank in Kazakhstan.

The Danish company's bank applied to EKF for a financing guarantee to cover 95% of the loss if the bank in Kazakhstan defaulted on its obligations under the L/C agreement. The L/C was fulfilled up until 2009, but in the wake of the global financial crisis, the Kazakhstani bank was obliged to notify the Danish bank that it would be suspending payments under the L/C. By that stage, three instalments totalling approx. DKK 2 million were outstanding, and EKF paid compensation to the Danish bank for the unpaid instalments.
The Kazakhstani bank embarked on a restructuring process, and EKF, in association with export credit agencies in other countries which also had money at stake, commenced the process of negotiating an agreement to limit the losses.

The export credit agencies were not happy with the terms of the initial draft agreement because it entailed substantial write-offs on the loans along with seven years of zero repayments followed by an 11-year repayment plan. Following numerous talks, in the summer of 2010, the bank and its creditors concluded a final agreement on more favourable terms.

The Kazakhstani bank has so far honoured the agreement as part of the restructuring process.
 



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