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+372 6 752 000
E-mail:
ariklient at sampopank dot ee

Business clients › Managing risks › Interest risk › Interest rate cap

Interest risk

Interest rate cap is a financial instrument that allows You to fix the maximum interest payment for the future in case of an obligation with a variable interest rate. On the other hand, selling the interest rate cap allows You to set a limit to the future interest income and receive a compensation for the sale.

Conditions

  • You have an obligation with a variable interest rate and You wish to insure Yourself against future increase in the interest rate.
  • You have assets earning interest at a variable rate that You wish to profit from today, and You are ready to forego the potentially higher profits in the future.
  • You wish to speculate on the future change in interest rates.
  • You wish to change a variable interest rate for a fixed interest rate.
  • Your minimum loan or deposit amount is 200 000 EUR (including amortization of underlying assets or growth estimation).
  • Your obligation or asset with interest payments does not have to be tied to Sampo Pank.

By signing a cap-deal the buyer and the seller agree on the value of the underlying assets, the duration of the contract and the cap premium (and other terms if required). By signing the contract the cap seller will take upon him an obligation to periodically pay the cap buyer amounts, agreed on according to the prevailing market interest less the maximum interest set by the contract. In the future only those periods will be compensated in which the fixed money market interest rate exceeds the agreed interest maximum.

Cap-deals are flexible and the client can set the following terms:

  • he level of interest rate, from which interest payments are to be insured
  • the period for which the maximum level of interest rates is frozen (it does not have to comply with the duration of the loan; the start date may lie further in the future)
  • the share of the interest risk that is frozen (even managing a part of the risk gives more security than no managing of risk at all)

Requirements

Before concluding a financial services agreement presented on the website of Danske Bank A/S Estonia branch www.sampopank.ee, we recommend you to familiarize yourself with the terms and conditions of the agreement. For further information, please call Sampo Pank's Customer Info Line on 6 800 800.