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2021

Canada Financial Guarantee Market

Canada Financial Guarantee Market Size, Share, Competitive Landscape and Trend Analysis Report by Product Type, Enterprise Size and End User : Country Opportunity Analysis and Industry Forecast, 2021-2028

BI : Financial Services

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Author's: Aarti Goswami| Pramod Borasi | Onkar Sumant
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Canada Financial Guarantee Market Outlook - 2028

The Canada financial guarantee market was valued at $1.32 billion in 2020, and is projected to reach $2.19 billion by 2028, growing at a CAGR of 7.3% from 2021 to 2028. 

Financial guarantee is a tangible obligation by banks that there will be sufficient resources and secured finances to safely terminate trade activities.  It is offered in the form of bonds sanctioned by banks to guarantee the lenders in the market. Moreover, a financial guarantee does not release sellers for termination of trade activities but ensures availability of funds when sellers are unable to carry out safe termination. 

Canada-Financial-Guarantee-Market-2021-2028

With promoting international business and dealing with number of traders for different types of goods & services by executing cross-border transactions, the demand for financial bank guarantee in Canada continues to rise, which acts as key driving force of the Canada financial guarantee market. 

In addition, lowering the financial risks and technological advancements in the field of financing are some of the important factors contributing toward the growth of the market. However, increase in trade wars between countries and lack of credit facilities for small & medium-sized enterprises are some of the factors that limit the Canada financial guarantee market growth. On the contrary, rapid increase in trade activities and increase in share of trade in the country economy are expected to offer remunerative opportunities for the market in the coming years.

The report focuses on growth prospects, restraints, and trends of the Canada financial guarantee market analysis. The study provides Porter’s five forces analysis to understand the impact of various factors such as bargaining power of suppliers, competitive intensity of competitors, threat of new entrants, threat of substitutes, and bargaining power of buyers on the Canada financial guarantee market outlook.

Segment Review

The Canada financial guarantee market is segmented into product type, enterprise size, and end user. By type, the market is segregated into bank guarantees, documentary letter of credit, standby letter of credit (SBLC), receivables financing, and others. Depending on enterprise size, it is fragmented into small enterprises, medium-sized enterprises, and large enterprises. On the basis of end user, it is bifurcated into exporters and importers. 

Canada Financial Guarantee Market
By Product Type
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Documentary Letter of Credit accounted for the highest market share in 2020

Competitive Analysis

The report analyses the profiles of key players operating in the Canada financial guarantee market such as Scotia Bank, Toronto Dominion, Banque Nationale du Canada (National Bank of Canada), Banque de Montreal (Bank of Montreal), BNP Paribas, HSBC, Citibank, CIBC, Royal Bank of Canada, and Export Development Canada. These players have adopted various strategies to increase their market penetration and strengthen their position in the Canada financial guarantee industry. 

COVID-19 Impact Analysis

The COVID-19 pandemic negatively impacted the Canada financial guarantee market, owing to increased uncertainty & protectionism in global trade, shift in supply chain demands, and business closures across several industry verticals, which are set to decline the demand for financial guarantee in the country. Moreover, to curb the spread of virus, several provincial governments in Canada has imposed stringent trade measures, which have resulted into geopolitical tensions & accelerating massive change in trade patterns. Therefore, demand for financial guarantee products in Canada has declined significantly during the global health crisis. 

Canada Financial Guarantee Market
By Enterprise Size
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Small-sized Enterprises segment will grow at a highest CAGR of 8.7% during 2021 - 2028

Top Impacting Factors

Financial Guarantee Facilitates International Business among Importers and Exporters

Financial guarantee facilitates cross-border transactions between importers and exporters. Importers can import goods to and from Canada by availing financial guarantors from banks and pay back later. Exporter can be rest assured that there will be no default in payment, as banks provide guarantee for the payment. Therefore, importers and exporters can increase international business and deal with number of traders for different types of goods & services for cross-border transactions. Thus, increase in cross-border business between Canada and other countries significantly contributes toward the growth of the market.  
Trade Wars between Countries 

Trade wars cause countries to reduce or stop doing business with the rival country. Leading commodities in the trade between Canada and China include chemicals, metals, industrial, agricultural machinery & equipment, wood, and fish products. Although these products are heavily traded between these two countries, the trade war between them reduced the business and has negatively impacted the Canada financial guarantee industry.

Rise in Import and Export Activities

Canada majorly imports consumer goods, motor vehicles & parts, electronic & electrical equipment, industrial machinery, industrial chemical, and plastic & rubber products. Its key exports include crude oil, cars, and gold. These products are in huge demand, and the demand is anticipated to grow in the future. Thus, rise in import and export activities of Canada is anticipated to provide remunerative opportunities for the expansion of the financial guarantee market, as more number of buyers and sellers take financial guarantee from Canadian banks. Furthermore, new trade agreements in cross-border trading between Canada and other countries are likely to open new avenues for the growth of market. 

Canada Financial Guarantee Market
By End User
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Importers Segment holds a dominant position throughout the forecast period

Key Benefits for Stakeholders 

  • The study provides in-depth analysis of the Canada financial guarantee market share along with current & future trends to illustrate the imminent investment pockets.
  • Information about key drivers, restrains, & opportunities and their impact analysis on the Canada financial guarantee market size are provided in the report.
  • Porter’s five forces analysis illustrates the potency of buyers and suppliers operating in the market.
  • An extensive analysis of the key segments of the industry helps to understand the Canada financial guarantee market trends.
  • The quantitative analysis of the Canada financial guarantee market forecast from 2021 to 2028 is provided to determine the market potential. 

Key Market Segments

By Product Type

  • Bank Guarantees
  • Documentary Letter of Credit
  • Standby Letter of Credit (SBLC)
  • Receivables Financing
  • Others

By Enterprise Size

  • Small Enterprises
  • Medium-sized Enterprises
  • Large Enterprises  

By End User

  • Exporters
  • Importers  

 Key Market Players

  • Scotiabank
  • Toronto Dominion 
  • Banque Nationale du Canada (National Bank of Canada)
  • Banque de Montreal (Bank of Montreal)
  • BNP Paribas
  • HSBC
  • Citigroup, Inc. 
  • CIBC
  • Royal Bank of Canada
  • Export Development Canada   

Canada Financial Guarantee Market Report Highlights

Aspects Details
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By Product Type
  • Bank Guarantees
  • Documentary Letter of Credit
  • Standby Letter of Credit (SBLC)
  • Receivables Financing
  • Others
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By Enterprise Size
  • Small Enterprises
  • Medium-sized Enterprises
  • Large Enterprises
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By End User
  • Exporters
  • Importers
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Key Market Players

SCOTIABANK, BNP PARIBAS, ROYAL BANK OF CANADA, BANQUE DE MONTREAL, .BANQUE NATIONALE DU CANADA (NATIONAL BANK OF CANADA), HSBC, CIBC, CITIGROUP INC., EXPORT DEVELOPMENT CANADA (EDC), TORONTO DOMINION

Analyst Review

Facilitating transactions in situations having massive risk for the beneficiary to engage, adoption of digital technologies by traders, and the role of government in the country economy are some of the major trends in the market. Furthermore, during the COVID-19 pandemic, the Canadian Government expanded guarantees to be available for exporters, international investors, and businesses that sell their products or services within Canada.

For instance, the Business Credit Availability Program and Export Development Corporation (EDC) Mid-Market Guarantee will bring liquidity to companies having revenues between $50 million and $300 million to sustain during the global health crisis. However, a considerable number of companies perceive that they have minimum Canada financial guarantee exposure. This scenario is changing, and 2020 has witnessed a decrease in sale of financial guarantee in the country, owing to geopolitical risk and shutdowns of several industry verticals in the country.

The Canada financial guarantee market is consolidated with the presence of key vendors such as Scotiabank, Toronto Dominion, Banque Nationale du Canada (National Bank of Canada), Banque de Montreal (Bank of Montreal), BNP Paribas, HSBC, Citigroup, Inc., CIBC, Royal Bank of Canada, and Export Development Canada. These players have adopted various strategies to increase their market penetration and strengthen their position in the industry.

Author Name(s) : Aarti Goswami| Pramod Borasi | Onkar Sumant
Frequently Asked Questions?

The Canada Financial Guarantee Market is estimated to grow at a CAGR of 7.3% from 2021 to 2028.

The Canada Financial Guarantee Market is projected to reach $2.19 billion by 2028.

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Factors such as lowering the financial risks and technological advancements in the field of financing drives the growth of the Canada Financial Guarantee market

The key players profiled in the report include Scotia Bank, Toronto Dominion, Banque Nationale du Canada (National Bank of Canada), Banque de Montreal (Bank of Montreal), BNP Paribas, HSBC, Citibank, CIBC, Royal Bank of Canada, and Export Development Canada, and many more.

On the basis of top growing big corporations, we select top 10 players.

The Canada Financial Guarantee Market is segmented on the basis of product type, enterprise size, and region.

The key growth strategies of Canada Financial Guarantee market players include product portfolio expansion, mergers & acquisitions, agreements, geographical expansion, and collaborations.

Importers Segment holds a dominant position throughout the forecast period.

Small-sized Enterprises segment will grow at a highest CAGR of 8.7% during 2021 - 2028.

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Canada Financial Guarantee Market