Managing liquidity in a group can be complicated and time-consuming. Moving funds manually from account to account in order to earn interest and avoid paying interest is not cost-effective.
If you want to keep individual accounts separate for liquidity purposes, the Bank can offer interest netting for all the accounts in a country held in the same currency. Danske Bank's Group Interest Netting programme gives your group several advantages in liquidity management:
- Simpler, easier financial control
- A better overview of your interest terms
- Higher overall interest income on your accounts with Danske Bank
In addition, with our business systems, your accounting staff always has real-time information about the group's net liquidity and can make real-time transactions.
Easy to administer
You can avoid manual routines to monitor account balances and to transfer funds between your group's parent and subsidiaries. In Danske Bank's Group Interest Netting programme, the notional interest earned on your pooled balance is calculated automatically every day.
Overview of your group's overall cash position
Group Interest Netting not only gives your group a convenient view of your total interest income, terms and limits. Since you do not have to move funds between group companies, it also gives you a reliable picture of each company's finances.
Optimal interest income
How does it work? We set off interest on debit balances against interest on credit balances to determine the net interest amount.
If your group’s credit balances are larger than its debit balances, the surplus credit balance earns interest at the rate agreed upon for deposits. If your group’s total liquidity is negative, we eliminate the interest differential by paying interest on the group's credit balances at the rate agreed upon for debit balances.
Multicurrency Interest Netting
Account sweeping between foreign currency accounts to optimise interest positions is even more difficult and inefficient than domestic interest management.
Danske Bank also offers interest netting across national borders and currencies – a valuable supplement to the Group Interest Netting or Cross-Border Cash Pool.
With our Multicurrency Interest Netting programme, you can optimise the interest positions on the credit and debit balances of all operating accounts with Danske Bank branches in Denmark, Sweden, Norway, Finland, Germany, Poland and the UK, and soon in Ireland as well.
How it works
For the purpose of interest calculation, all of your group's accounts are treated as a single account in a synthetic currency that you designate, and notional interest is calculated on the netting amount. No physical transaction takes place. This is a simple, efficient way of reducing the margin paid to the Bank.
No tax complications
Our model ensures that the addition of notional interest complies with national tax rules. No interest is booked across borders, even though the calculation is based on account balances in more than one country.
Danske Bank has extensive experience in designing individual cash management solutions for international groups. For further information, please contact us.