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Country Commercial Guides FY 2000: Denmark Report prepared by U.S. Embassy Copenhagen, released July 1999 Note*

VIII. TRADE AND PROJECT FINANCING

Brief Description of the Banking System: The core of the Danish banking system is the Danish National Bank, an autonomous central bank. It establishes monetary policy including the interest rate structure and monitors money supply. There are 114 (1995) commercial and savings banks in Denmark, all of which operate under the same basic conditions. The two largest, Den Danske Bank and Unibank have nationwide networks of branch banks and, in addition to their commercial banking activities have subsidiaries engaged in mortgage financing, stockbroking, leasing, factoring, investment, property and insurance. Together, they account for close to two-thirds of total banking sector assets. The largest, Den Danske Bank, had total assets of $79 billion at the end of 1996 and employed 11,110 people. Unibank, the second largest, had total assets of $58.5 billion and a staff of 9,851. Several banks operate branches abroad, including in the United States. There are 19 foreign banks, mostly European, with branches or offices in Denmark, including two American banks. These are Citicorp (through is U.K. subsidiary) and Republic National Bank of New York. In addition to the commercial banking system, other major credit institutions include mortgage credit companies, leasing and factoring companies, government and private venture capital organizations and pension funds.

Foreign Exchange Controls Affecting Trading: There are no foreign exchange controls in Denmark.

General Financing Availability: The vast majority of small-to medium-sized Danish firms are financed by commercial bank credit lines. The credit line is typically extended on a continuous, revolving basis and is not subject to an annual settlement. Such credit lines are usually established to finance day-to-day operations, including inventory financing. Larger corporations may obtain capital through stock offerings on the Copenhagen Stock Exchange (in some cases even on U.S. stock exchanges), or through direct negotiation with institutional investors such as pension funds. Financing is often a problem for small-to medium-sized companies with high growth, or growth potential. Frequently, such companies chose or are forced to solve their financing problems by selling out to foreign, including U.S., corporations.

How to Finance Exports/Methods of Payment: U.S. exports to Denmark are usually financed by the importer or the importer's bank. Eximbank financing is available but rarely used. The most common method of payment for an importer in the early phases of a business relationship is by Irrevocable Letter of Credit opened through a commercial bank. This is a recognized procedure, well-known and acceptable to Danish banks and importers. When a business relationship has reached a stage of mutual trust, payment credits are often extended by the exporter for periods varying from 30 - 90 days. There are no local credit facilities available specifically to finance imports from the United States, or any other country.

Types of Available Export Financing:

Most exports to Denmark are financed by Danish commercial banks. Eximbank financing is available but rarely used.

Project Financing Available: The Danish Government arranges its own financing for infrastructure projects. Private projects are financed through a well-established local capital market. Multilateral institutions which make project finance available include the European Investment Bank and the Nordic Investment Bank.

List of Banks with Corresponding U.S. Banking Arrangements:

All major Danish banks have correspondent bank relationships in the United States. Most of them have such relationships with more than one American bank. The two largest have branches in New York as follows:

Den Danske Bank
280 Park Avenue
New York, NY 10017-1216

Unibank A/S
13-15 West 54th Street
New York, NY 10019