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Forward purchase and sale of foreign exchange is a product that protects legal entities from changes in exchange rate movements. The client agrees on the exchange rate at which he will buy / sell foreign currency on a specific day in the future.

Advantages of contracting forward purchase and sale of foreign currency:

• Exchange rate hedging
• Ability to control income and expenses
• The course is precisely defined and guaranteed on an agreed date in the future

OTP banka offers the following types of forwards:

• Real forward – buying / selling foreign currency for RSD with an agreed currency date in the future. The client “today” contracts the purchase / sale of foreign currency with the date of execution of the transaction in the future.
• Covered forward (quasi) – purchase / sale of foreign currency for RSD where the client fulfills the obligation on the day of contracting the transaction and the bank on the agreed date in the future.
• Step up forward enables the client to adjust the purchase / sale of foreign currency with its inflows of funds and settle obligations in installments during the duration of the contracted work.

Forward purchase and sale of foreign currency is intended for importers and exporters It provides protection against changes in exchange rate movements and price fixation in the future. Contracting an exchange rate on a value date in the future allows the client to know in advance what his / her expenses / income will be and thus to plan his / her business more easily.

The bank offers the following types of forwards:

1. Real forward buying and selling of foreign currency for RSD with a value date in the future both parties settle their obligation on currency.
2. Quasi forward purchase and sale of foreign currency for RSD where the client settles his obligation on the day of contracting the deal, and the bank on the day of the currency contracted transactions.
3. Step up forward purchase and sale of foreign currency for RSD where the client settles his obligation in several installments, depending on the client’s liquidity. The first installment of at least 15% of the contracted amount must be paid on the day of the contracting and the last at the latest on the day of the currency of the contracted work. The interval between two installments cannot be longer than 35 days. The bank settles its obligation on the value date.

• Maximum value date: 1 year
• Securing the bank from non-execution of the transaction by the client (counterparty risk): RSD deposit as collateral
• The amount of the deposit depends on the amount of the transaction, the currency and the maturity of the transaction. If the paid collateral is not enough during the transaction, the client will be contacted to pay the additional amount of collateral (margin call). The deposit is kept in a dedicated account and is pledged to the APR in order for the funds to be exempted from the blockade.
• Treasury limit
  Compensation for non-performance of work
  The client is assigned a limit, ie the total amount of transactions that can be concluded with the client for the period is determined of one year.
• The fee is charged if the client does not settle his obligations from the concluded Framework Agreement and the specific Conclusion.

Example when a client sells foreign currency to a bank on a term (forward):

• The client provides EUR on the due date, and the collateral on the day of the contract if it is collateral (if the client is not approved)
• The client will sell EUR for RSD at a fixed exchange rate of 120.58 regardless of where the market rate is on the due date
• In this example, this means that the client will receive 1.38 RSD per 1 EUR more than what he would receive today for the sold foreign exchange.

Presentation

A currency swap is a simultaneous purchase and sale of two currencies at pre-agreed exchange rates, maturing on two different dates in the future. In the first transaction, the client buys / sells one currency, while in the second transaction the reverse purchase / sale of currencies is performed in relation to the first transaction between the client and the bank.

This type of transaction is intended for clients who want to hedge their currency positions (hedging against exchange rate fluctuations), as well as for the purpose of managing the inflow / outflow of foreign currency and dinar funds.

Swap advantage:

• Foreign exchange risk protection (fixed exchange rates)
• Possibility to exchange one currency for another for a certain period of time
• At a given moment, the client has the currency he needs for current operations
• Management of inflows / outflows of foreign currency and dinar funds

A currency swap is a transaction of simultaneous purchase and sale of two currencies in two different time periods
The swap is intended for clients who want to hedge their currency positions (hedging against exchange rate fluctuations), as well as for the purpose of managing the inflow / outflow of foreign currency and dinar funds.

• Maximum value date of the second transaction: 1 year
• Securing the bank from non-execution of the transaction by the client (counterparty risk):
•  RSD deposit as collateral
•  Treasury limit
•  Compensation for non-performance of work

Currency swap transactions

Example:

The client has EUR 1 million in his account and wants to protect himself from the change in the exchange rate in the next three months, and at the same time he needs dinar funds for current operations.

The client sells EUR 1 million to the bank and at the same time undertakes to buy EUR 1 million with the currency for 3 months.

The exchange rate at which a client sells EUR and then buys it depends on the current market rate and the current interest rates of the currencies that are the subject of the currency swap.

The client provides RSD on the day of the currency and can use them for his regular business.

The collateral must be secured on the day of contracting the transaction, unless the client has been granted a treasury limit.

The client will sell EUR for RSD at a fixed exchange rate of 119.80, and buy at 120.80 regardless of where the market exchange rate is on the value date of both transactions.

Presentation

An interest rate swap is a product that represents the exchange of one interest stream for another without the simultaneous exchange of principal. The interest rate swap is an instrument for protection against changes in interest rates in the future and is intended for clients who have long-term credit arrangements.

Interest rate swap transactions (IRS):

• An interest rate swap is an exchange of one interest stream for another without a simultaneous exchange of principal
• Interest rate swap is an instrument for hedging against interest rate risk, where the client cancels the effect of a variable interest rate

The bank offers:

• A coupon swap is a contract where payments at a fixed interest rate are exchanged for payment at a variable interest rate.
• Base interest rate swap is a contract where interest rate flows are based on variable interest rates that differ (Euribor, Libor).

 Maximum maturity and conclusion currency

• Maximum maturity of the transaction: 10 years
• Transaction closing currency: EUR, USD and CHF

Securing the bank from non-execution of the transaction by the client (counterparty risk):

• RSD deposit as collateral
• Treasury limit
• Compensation for non-performance of work

Example (coupon swap):

The company has a loan for 3 years at 3m Euribor + 3% and expects that the variable interest rate will increase during the loan period and wants to fix that cost, ie to replace the variable interest rate with a fixed one. For that reason, it is necessary to conclude an interest rate swap with the bank for a period of 3 years.
The bank makes an offer for a fixed interest rate swap price for 3 years of 0.15%
The price of the interest rate swap agreed at the beginning of the arrangement is not subject to change during the duration of the swap
The variable interest rate is the reference interest rate (Euribor, Libor) and since it is a variable category, it is determined before each settlement.
Calculation when interest rate swap settlement
If a 3m interest rate swap is agreed, the first settlement is 3m after the beginning of the interest rate swap. For example. An interest rate swap was agreed on 24/09, and the date of the first settlement is 24/12. 22/12 3m Euribor was determined which will be valid on 24/12, in the amount of 0.05.
The company received from the IRS:
1m EUR x 0.05% x 91 days / 360 = 126.39 EUR
The company pays to the IRS:
1m EUR x 0.15% x 91 days / 360 = 379.17 EUR
Net settlement:
252.78 EUR
If 3m Euribor rises above the agreed fixed rate, the company will become the recipient in net settlement.
Note: The cost of the loan remains, ie the client is still obliged to pay 3% of the agreed margin on the approved loan.

Interest rate swap transactions (IRS)
Result (agreed loan + interest rate swap):
The company pays to the bank on the basis of a loan: 3m Euribor +
The company received an interest rate swap: 3m Euribor
The company pays in the interest rate swap: 0.15%
Net cost for the company: 3.15% (3% + 0.15%)

Presentation

The interest rate option is a contract that allows the client to hedge against the growth of the interest rate by fixing the maximum rate to which the client is exposed during the duration of the contracted transaction. It is intended for clients who have long-term credit arrangements.

A type of option contract that allows the client to hedge against interest rate growth by fixing the highest rate to which the client is exposed (CAP strike rate)

• The CAP interest rate option is an instrument to hedge against rising interest rates
• This type of interest option is intended for clients who have loans with a variable interest rate and sufficient maturity to be interested in determining the highest level of interest rate (in practice at least 3 years)
• This type of option contract gives the option buyer (to receive a positive difference between the reference
• Euribor Libor interest rates and contract fixed rates (CAP rate)
• The price that the option buyer pays is a premium, which depends on the nominal amount of the contracted work and the maturity of the contract
• For the time being, the bank offers only the sale of the option, ie the client can only be the buyer of the option
• The condition for concluding this transaction is signing a Framework Agreement with the client and setting a treasury limit
• If the transaction is terminated prematurely, ie if the client withdraws from the job, the bank retains the paid premium and charges the client a Fee for non-performance of the job

Maximum maturity and conclusion currency

• Maximum transaction maturity 10 years
• Transaction closing currency EUR, USD and CHF

Example:

The company has a loan in the amount of 1 million eur for 3 years of 3 m Euribor 3 Considers that the variable interest rate will increase during the loan period and wants to fix this cost, or to protect itself if it exceeds the level of 0 75
The client buys an interest rate option by contracting a CAP contact rate of 0 75 for a period of 3 years
The premium in this example is EUR 5,000 and is paid on the day of the contract
The settlement is agreed in accordance with the annuity plan of the existing hedged loan, but the contracting parties can agree on the nominal amount they want.

Settlement per transaction:

• If Euribor 3 M is below the strike at 0 at the beginning of each quarter, there is no payment by the bank to
  to the client
• If Euribor 3 M is above the strike at the beginning of each quarter, 0 75 the bank pays the client the amount calculated on the next
  the way
• The client continues to pay Euribor 3 m 3 based on the basic job

Advantages product

• The client is fully protected from the growth of Euribor 3 M above 0 75 The client has unlimited potential for profit if interest
  rate be above strike a
• The maximum amount that a client can lose is limited and is equal to the amount of premium he pays on the day of contracting the transaction

Brokerage services include the provision of services in the name and on behalf of the client

• Financial instruments listed on the domestic and international market
• Financial instruments issued by the Republic of Serbia, on the primary and secondary market
• Financial instruments outside the regulated market (OTC)
• Shares in the procedure of offers for takeover of joint stock companies
• Shares in the procedure of offers for acquisition / alienation of own shares of joint stock companies
•  Other financial instruments

Financial advisory services, corporate agencies and additional services

• Registration and administration of financial instruments in the Central Registry
• Listing and delisting of financial instruments on the domestic market
• Financial advice in increasing and decreasing the capital of joint stock companies
• Sponsorship and show agent services with and without purchase obligation
• Services for organizing takeover bids for joint stock companies
• Services for organizing offers for acquisition / alienation of own shares of joint stock companies
• Services of organizing the procedure of dividend payment of joint stock companies
• Other corporate activities and reporting on joint stock companies

Securities and cash depository: ADDITIONAL SERVICES WITH FINANCIAL INSTRUMENTS

Services intended for all types of clients who trade securities through intermediaries
a) Broker of Vojvodjanska banka or b) Other brokerage houses / banks

• Opening of dedicated cash accounts and accounts of financial instruments Ownership, Collective
  Safeguarding domestic and foreign financial instruments and money
• Calculation and settlement of transactions with domestic and foreign financial instruments (RVP / and collection of income from dividends, coupons, etc.
• Transfer of financial instruments without payment (RF /
• Foreign currency conversion service (EUR and USD) from dedicated accounts in order to provide coverage of dinar transactions on the Belgrade Stock Exchange Our “Custody rate” is the official middle exchange rate of the NBS on the day of conversion reduced by 1 25

Custody Bank: CUSTODY SERVICES

• A set of services intended for Pension and Investment Fund Management Companies in Serbia
• Opening dedicated cash accounts and custodian financial instruments accounts
• Safeguarding domestic and foreign financial instruments and money
• Calculation and settlement of transactions with domestic and foreign financial instruments (RVP / and collection of income from dividends, coupons, etc.
• Transfer of financial instruments without payment (DF)
• Control and confirmation of NAV calculation, yield units
• Services with payment / current accounts of fund

You can get more detailed information and useful tips from our expert team:

Višnja Petrović: + 381 11 20 53 382

Carna Kulic: +381 11 20 53 384

Nikola Babic: +381 11 20 53 385

Sales desk: +381 20 53 398

e-mail:

treasury@voban.rs

salestreasury@voban.rs