Swap Transaction

1.Foreign Exchange Swap:

Cross Currency Swap (CCS) is a transaction where customers sell and buy 2 kinds of currency at the same time in a certain period, the amount of swap money at valid date (spot delivery transaction) and maturity date (forward transaction) is completely the same. The rate of 2 transactions is defined at the time of signature of contract.

• Interest rate is defined since the beginning
• Principal swap at maturity date
• Up to 5 year term

a. Eligible customers:

• Credit organizations, economic organizations who demand for selling, buying foreign currency

b. Benefits;

• Assure risk prevention of principal and interest;
• Gain margin between 2 currencies or rate if the rate vary follow customers’ expectation.

2. Interest Rate Swap Interest Rate Swap (IRS) is a derivative contract where two parties negotiate to swap their interest flow to each other based on a certain amount of nominal principal and followed a fixed payment schedule. The nominal principal is the base to pay the swap interest flow between two parties but no real swap payments.

• Change floating rates to fixed rates (without changing the terms of the ecixting loans) to avoid risks of rising (in case that customers borrow with floating rates).
• Change from fixed rates to floating rates with a view those interest rates will rise (in case that customers deposit with fixed rates).
• No principal swap at maturity date.
• Settlement payments calculated by netting fixed rates and floating rates on the settlement date (multiplied by the notional principal).

a. Eligible customers:

• Credit organizations, economic organizations

b. Benefits:

• Protect against adverse movements in interest rates;
• No changes of original contract’s terms;
• Possible to determine principal cost or investment profit (change from floating rates to fixed rates);
• No original principal swap.

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