Exchange Rate Risk Management

Exchange rate risk management products are aimed at customers who wish to hedge their exposure to exchange rate risk. In some cases, other customers who wish to enter the exchange rate market aiming to benefit from the rise or drop in exchange rates may also use these products. Apart from the products listed below, there is also a large number of products available which can be tailored to suit the individual needs of each customer.

FX Forward

FX Forwards are bilateral agreements that contractually bind two parties to exchange an amount from one currency to another at a predetermined exchange rate and at a future date. This way the product offers customers the option of locking in a specific exchange rate. FX Forwards are a common practice used to hedge and fully protect against exchange rate risk due to the convenience in carrying out the transaction, the future principal swap and the flexibility in choosing the delivery date.



Features

  • Minimum transaction amount: €30,000 or the equivalent in foreign currency.

  • Currencies: All main currencies.

  • Signing of ISDA Master Agreement

  • Signing of MiFID agreement

  • Conditional existence of relevant Credit Limits extended by the Bank

  • Conditional margin requirement

  • Taxation: Varies per customer type

  • Key Information Document (KID) – FX Forward

Flexible Forward

Flexible Forward transactions allow partial settlement of an agreed amount whenever a customer wishes up to the settlement date, at a predetermined exchange rate. They offer all the benefits of an FX Forward (i.e. protection against exchange rate risk, flexibility in choosing the amount, exchange rate and settlement date, convenient execution). They also give customers the option of covering potential liabilities/inflows in foreign currency within a specified period at the same predetermined exchange rate. The predetermined amount must be fully settled by the settlement date.



Features

  • Minimum transaction amount: €150,000 or the equivalent in foreign currency.

  • Maximum number of settlements: 10 – depending on the transaction amount

  • Currencies: All main currencies.

  • Signing of ISDA Master Agreement

  • Signing of MiFID agreement

  • Conditional existence of relevant Credit Limits extended by the Bank

  • Conditional margin requirement

  • Taxation: Varies per customer type

Forward Plus

It is an exchange rate risk hedging product. Forward Plus transactions offer the option of improving the terms under certain conditions. They offer all the benefits of an FX Forward (i.e. protection against exchange rate risk, flexibility in choosing the amount, exchange rate and settlement date, convenient execution). They also give customers the option of participating in a potentially more favourable exchange rate shift under certain conditions. Specifically, an exchange rate is agreed upon from the beginning. This rate is the worst rate at which an exchange rate may be converted in the future. At the same time, the customer may benefit from a potentially favourable exchange rate shift, provided this shift will not go over/under a specific level throughout the predetermined period.



Features

  • Minimum transaction amount: €200,000 or the equivalent in foreign currency.

  • Currencies: All main currencies.

  • Signing of ISDA Master Agreement

  • Signing of MiFID agreement

  • Existence of relevant Limit extended by the Bank

  • Conditional margin requirement

  • Taxation: Varies per customer type

FX Swap

FX Swaps are agreements between two parties who swap one currency for another at a value date of 2 working days, but also agree to reverse the swap at a future date.
The currency swap is carried out at the spot exchange rate, while the reverse swap at the forward rate, since this encompasses the interest rate difference between the two currencies. Liquidity in one currency is converted into another for a period of time, without any exchange rate risk. FX Swaps are a common financing practice when customers have funds in a currency other than the one they need, but don't want to take on the exchange rate risk.



Features

  • Minimum transaction amount: €200,000 or the equivalent in foreign currency.

  • Currencies: All main currencies.

  • Signing of ISDA Master Agreement

  • Signing of MiFID agreement

  • Conditional existence of relevant Limit extended by the Bank

  • Conditional margin requirement

  • Taxation: Varies per customer type

FX Call/Put Option

FX Options are agreements which give owners the right, but not the obligation, to buy (call option) or sell (put option) a currency for another at a future date and at a specific exchange rate (strike price). The call option gives buyers the option to buy a specific amount of a currency at a specific exchange rate (strike price). On the other hand, call option sellers must sell the currency at the same price, provided the seller requests it.



Features

  • Minimum transaction amount: €300,000 or the equivalent in foreign currency.

  • Currencies: EUR, USD, GBP, JPY, CHF, RON, AUD, CAD.

  • Signing of Derivative Products Contract

  • Signing of MiFID agreement

  • Conditional existence of relevant Limit extended by the Bank

  • Taxation: Varies per customer type