Financial Derivatives

 The majority of companies are exposed to financial risk to a smaller or larger extent. The main financial risks that companies encounter in their everyday work are currency, interest rate and liquidity risks.

A currency risk is the risk that currency rates may move in an unfavorable direction and cause the business to suffer financial losses. The best-known sub-category of financial risk is transaction risk. A company is exposed to currency risk, when:

At the same time, changes in currency rates may also affect business directed at local markets, if their goods or services are susceptible to changes in currency rates.

Currency risk can be reduced with spot, forward, swap and option transactions.

An interest rate risk is the risk that interest rates may move in an unfavorable direction and generate an increase in interest rates on loans or a decrease in interest income from assets. Therefore, interest rate risks affect all businesses that loan or invest money for their business activities. Interest rate risks are associated primarily with floating (EURIBOR, LIBOR) or fixed interest rates. The important aspect is the term of the loan or investment.

 

The management of interest rate risks is a part of the financial management of a business, including estimating, managing cash flow, financing decisions, etc. In addition, we offer you the opportunity to reduce your interest rate risks through different financial instruments, such as forward rate agreements (FRA), interest rate swaps (IRS) and interest rate options.

The respective specialists at our bank are always ready to offer both know-how and long-term experience in order to find the appropriate transactions and transaction structures.