Treasury Private Banking

With a spot transaction you buy or sell foreign currency through your accounts at the exchange rate that you now agree with the bank. The settlements through your accounts take place with two currency days.

Do you have a loan with Euribor interest? And do you want more certainty about your interest rate? Then you can hedge the risk of rising interest rates with an interest rate cap.

With an interest rate cap (or 'interest ceiling'), you agree with us on a 'cap interest rate' for the term and amount of your loan: the maximum percentage up to which your variable interest rate (Euribor) on your loan can increase. If the Euribor rises above the agreed interest rate, then you pay the agreed cap interest rate. If the Euribor falls below the agreed percentage, then you simply pay the lower Euribor interest rate. To take out an interest rate cap, you pay a one-off premium to ABN AMRO in advance. You can only take out this product with us if the underlying loan is with ABN AMRO.

An interest rate cap is an interest rate derivative. Interest rate derivatives can help you manage your interest rate risks, but they also entail risks.

With a Tower Deposit you have the chance of a higher interest rate for your surplus cash. Whether you receive that higher interest rate depends on the price development of a specific currency pair over a certain period. But: if the price develops differently than you expected, you will receive a lower interest rate than with a normal deposit.

With a Forward contract, you agree upon a rate at which you will buy or sell a currency on a certain later date ('the forward rate'). This gives you certainty in advance about what your foreign exchange transaction will cost.

Purchasing a foreign exchange option (call or put) gives you the right, but not the obligation, to sell or buy a certain amount of foreign currency at an agreed upon date and time. With a foreign exchange option, you can protect yourself against unfavourable rate movements. But what if the rate moves in your favour? Then you are totally free to buy or sell the currency at the more favourable market rate. You pay a one-off premium in advance for a foreign exchange option.

A swap is a combination of a spot and a forward transaction. With a foreign exchange swap, you are exchanging different currencies with the bank for an agreed upon period of time. You agree to buy or sell a certain amount of a currency from or to the bank, and at a later date to sell or buy back the same amount to or from the bank at predefined exchange rates. This allows you, for example, to change the date of a previously agreed upon forward.

You can temporarily put your surplus cash in a specific currency on a Dual Currency Deposit (DCD) at a higher interest rate. In return for this higher interest rate, ABN AMRO may pay you back in a different currency at an agreed rate.

A limit order offers the option to buy or sell an agreed amount of currency at a rate determined by you. When the specified rate is reached in the market, the order is automatically executed. The advantage for you is that you do not have to follow the rate yourself; the order is monitored 24 hours a day from Monday to Friday. A disadvantage is that a limit order does not offer protection against a rate movement that is unfavourable to you. A limit order can be adjusted or cancelled at any time during office hours.