Loan Currency Switch
Diversify your loan portfolio currency and utilize global market opportunities.
A loan currency switch offers leverage clients the possibility to book cross currency loans and to convert their loan currency.
Benefits of Loan Currency Switch
- Diversify your loan currency holdings and utilize market opportunities.
- Hedge the foreign exchange risk in the underlying investment by changing the currency of the accompanying loan.
- Benefit from lower interest rate if target loan currency carries a lower interest rate.
- Line reduction if the target loan currency depreciates against the initial loan currency.
Our dedicated Treasury Sales Officers are members of your Relationship Services Team, who will support you with updates on foreign exchange markets and Citi foreign exchange forecasts.
Because currency markets fluctuate, there is always a risk with any FX product that you could lose some of your capital if you make a trade and then decide to immediately switch back to your original currency. For this reason, our FX solutions, including Loan Currency Switch, are best suited to experienced investors, those who already operate in more than one currency, or those who are prepared to accept the risk that currencies can fluctuate.
How to Apply for Loan Currency Switch?
Please contact your Relationship Manager.
- Please take note that foreign currency investments are subject to rate ﬂuctuations which may provide you both opportunities and risks. You may experience a loss when you convert foreign currencies. Exchange controls may be applicable from time to time to certain foreign currencies. You should therefore determine whether any foreign currency investment is suitable for you in the light of your investment objectives, your ﬁnancial means and your risk proﬁle.
- Loan currency switch is available to IR5 and IR6 Citigold and Citigold Private clients only.
- The Facility denominated in the Converted CCY shall be governed by same Terms & Conditions and other related security documentation executed in favour of the Bank for the Original CCY Facility.
- Please note that for x-currency lending, a 10% haircut applies to the prevailing Loan To Value (LTV) ratios when the loan and collateral currencies are not the same.
- The loan will continue to be subject to margin call and you may be required to top up your Collateral if there is insufﬁcient Collateral assigned to your loan at all times.
- You will pay Citibank interest on any utilization of the Leverage Facility and/or the Overdraft Facility at the rate for the respective facility currency, which is the sum of the Margin and the monthly base rate for the respective facility currency as determined and announced from to time by Citibank with reference to the relevant interbank market rate ("Reference Rate") and if that rate is less than zero, the Reference Rate shall be deemed to be zero. In the event the Reference Rate is unable to be determined by Citibank for whatever reasons (whether or not due to market disruption) or the Reference Rate does not represent Citibank’s cost of funds, Citibank shall be entitled to adopt a substitute basis for determining the rate of interest and notify the same to you.
- The FX rate and initial and target loan values will be conﬁrmed to you on a recorded call back before the loan currency swap processing. Please note that if you decide to cancel your instructions after conﬁrming the foreign exchange rate, you may incur a loss should the rate move adversely when bank cancels the FX position on your behalf.
- The call back to clients for loan swap is restricted to working days, Monday – Friday. Settlement of the loan may take up to next working day. During this time, the client may be liable for accrued interest in the source currency.
- In the event of market volatility, Citibank N.A., UAE has the right to unilaterally cancel any swap transaction requested by the Client without notice, notwithstanding the Client instructions to book the swap transaction.
- Client acknowledges the above risks and conﬁrms his understanding of FX Loan Swap. Client also acknowledges that Citibank will not be in a position to advise on the loan swap transaction or verify its suitability for the client. Client understands and accepts the above risks and based on such understanding chooses to proceed.
- Client hereby acknowledges that the loan currency conversion facility is not to serve speculative purposes.
- Citibank N.A. UAE is licensed with UAE Securities and Commodities Authority (“SCA”) to undertake the financial activity as a Promoter under license number 602003.
- This product/service may be affected by changes in foreign currency exchange rates
- When a client initiates a transaction of converting his holdings from his Currency into another currency, he runs the risk of the other Currency depreciating, thus leading to a reduction in assets in the home currency. Similarly, when a client converts a liability from one currency to another, he runs the risk of the resultant Loan CCY appreciating leading to a higher liability when converted back to the original currency.
- We would like to remind you that if the new loan currency appreciates against your original loan currency, you may suffer a loss, even if the interest rate on the new loan currency may be lower.