Business clients Managing risks Currency risk Swap deal

Currency risk

Swap deal is the best option, if You need to make a future payment in dollars, but wish to use the dollars as euro in the meantime, without risking a possible change in the exchange rate.

Conditions

Swap deal is a combination of spot and forward deals. This means, two deals are made at the same time:

  • The client buys one currency and sells the other (spot deal)
  • At the same time the client agrees that at a set time in the future she will make a contrary deal, at a fixed exchange rate (forward deal).
  • The price of the swap deal depends on the difference between the interest rates of currencies and is calculated through this difference.
  • The minimum amount for a swap deal is 20 000 EUR (or its equivalent) and minimum yearly trades´amount 100 000 EUR.

The client and the bank will confirm the conditions of the deal and the collateral amount, which the client then submits to the bank to ensure that the deal is made.

The bank may demand the provision of additional collateral from the customer for the duration of a transaction after each transaction has been entered into. If the bank demands the provision of collateral or additional collateral from a customer, the bank shall separate the funds that are the object of financial collateral from all other funds held in the customer’s account. The bank shall transfer the funds agreed between the parties from the customer’s current account in the relevant currency of the deposit to the opened sub-account named the collateral deposit.

To start a swap deal

  • You need a deposit on Your current account, or some other liquid collateral accepted by the bank (or a credit limit), in the amount required by the bank.
  • You need a sufficient amount on Your current account to start the swap deal.
  • You need to have signed the Customer Agreement on Financial Instruments.
  • You need to have a limit.