Enhance your investment potential with Treasury Plus via a line of credit from the eligible collaterals* in your Currency Manager Account.
Eligible pledged collaterals* in Currency Manager Account
HKD, USD, AUD, CAD, EUR, GBP, JPY, NZD, CHF
Invest the additional capital from the credit line in Premium Account and/ or foreign exchange investment for higher potential returns
Illustrative Example | Ordinary Premium Account Investment | Leveraged Premium Account Investment |
Leveraged Foreign Currency Trading |
---|---|---|---|
Principal | USD 100,000 | USD 100,000 | USD 100,000 |
Additional Capital from Treasury Plus |
Not applicable | USD 200,000 | USD 200,000 |
Total Fund | USD 100,000 | USD 300,000 | AUD 375,000 (USD 300,000) |
Investment | USD / AUD Premium Account | AUD Time Deposit | |
Strike Price (USD/AUD) | 0.8 USD : 1 AUD | ||
Tenor | 30 Days | ||
Investment Interest Rate | 6% p.a. | 0.25% p.a. | |
Loan Rate | Not applicable | 0.67% p.a. | |
Example 1 (0.805 USD : 1 AUD) | |||
Interest Earned | USD 500 ( USD 100,000 * 6% * 30 / 360) |
USD 1,500 (USD 300,000 * 6% * 30 / 360) |
AUD 78 (AUD 375,000 * 0.25% * 30 / 360) |
Principal & Interest Earned | USD 100,500 | USD 301,500 | AUD 375,078 |
Interest Cost from Treasury Plus |
Not applicable | USD 112 (USD 200,000 * 0.67% * 30 / 360) |
USD 112 (USD 200,000 * 0.67% * 30 / 360) |
Net Return | USD 500 | USD 1,388 | USD 1,826 (AUD 375,078 * 0.805 - USD 300,000 - USD 112) |
Annualized Return Ratio | 6% | 16.7% | 21.9% |
Example 2 (0.795 USD : 1 AUD) | |||
Interest Earned | USD 500 (USD 100,000 * 6% * 30 / 360) |
USD 1,500 (USD 300,000 * 6% * 30 / 360) |
AUD 78 (AUD 375,000 * 0.25% * 30 / 360) |
Principal & Interest Earned | AUD 125,625 (USD 100,500 / 0.8) |
AUD 376,875 (USD 301,500 / 0.8) |
AUD 375,078 |
Interest Cost from Treasury Plus |
Not applicable | USD 112 (USD 200,000 * 0.67% * 30 / 360) |
USD 112 (USD 200,000 * 0.67% * 30 / 360) |
Net Loss | - USD 128 AUD 125,625 * 0.795 - USD 100,000) |
- USD 496 (AUD 376,875 * 0.795 - USD 300,000 - USD 112) |
- USD 1,925 (AUD 375,078 * 0.795 - USD 300,000 - USD 112) |
Annualized Return Ratio | -1.6% | -6.0% | -23.4% |
Note:
Important Disclaimer:Important Disclaimer:
Risk Disclosure:Risk Disclosure:
Leverage Risk
The use of leverage means that relatively small price movements will have a multiplying effect on customers' corresponding gains or losses and the degree of investment risk customers face is greatly increased. Thus, the risk of loss in leveraged investments via Treasury Plus can be substantial. Customers may sustain losses in excess of their margin funds. Placing contingent orders, such as "stop loss" or "stop limit" orders, will not necessarily limit losses to the intended amounts. Market conditions may make it impossible to execute such orders.
Customers may be called upon at short notice to deposit additional margin funds. If the required funds are not provided within the prescribed time, their positions may be liquidated. In the event that the market deteriorates rapidly beyond the margin call level and reaches the forced sell level, the bank reserves the right to close out all or part of the outstanding positions without notice and without any margin calls. Customers will remain liable for any resulting deficit in their accounts. Customers may be engaged in leveraged investments in Premium Account and/or other foreign exchange currencies through pledging of deposits (including local and foreign currencies) and/or Premium Account. Minor market fluctuations (including but not limited to fluctuations in currency exchange rate) may multiply customers' losses and lead to substantial deficit. Customers may sustain losses in excess of their collaterals and have resulting deficits in their accounts.
Price Risk
Treasury Plus is highly speculative and risky and is subject to the risk of market fluctuation. The value of customers' holdings may be reduced as a result. Customers should have sufficient net worth to be able to assume the risks and bear the potential losses of leveraged investments.
Interest Rate Risk
Our Bank only offers overnight tenor for Treasury Plus. As the interest rates for Treasury Plus loan may vary during the period of investment, the interest costs may therefore also vary. This may affect the net investment return.
Liquidity Risk
Premium Account cannot be terminated before maturity. For customers who pledged Premium Account as collateral, any loan repayment or top up requirement before maturity will have to be covered by other pledged deposit and/or additional funds. If customers do not have sufficient pledged deposit and/or fail to bring in additional funds, the Bank has the discretion to terminate the Premium Account before its maturity date to repay the Treasury Plus loan outstanding. Such early termination may be made at a loss to customers and they will remain liable for any resulting deficit in their accounts.
Credit Risk
The approved line amount granted is dependent on the quantum of finance allowed for each margin deposits and/or Premium Accounts. The quantum of finance is subject to change by the Bank without notice.
Currency Risk
If the currency of the loan is different from the currency of the underlying investments and/or deposits, foreign exchange rate risk implications may affect the value of the loan, underlying investments, and/or deposits. Relatively small movements in the exchange rate will have a multiplying effect on customers' corresponding gain or loss and resulting in the possibility of margin call and forced sell.
Over-the-counter Risk – For Treasury Plus / Foreign Currency Leveraged Investment / FX Margin Trading, the Relationship Manager and/or Treasury Specialist / Treasury Portfolio Specialist / Investment Specialist / any other licensed sales persons from Citibank explained that such products are being sold over-the-counter (“OTC”) and the implications of which are:
Marked-to-market Losses
Customers' leveraged position is marked-to-market daily and they may be called upon at short notice to deposit additional funds to avoid a forced sell of their leveraged positions.
Margin Call
The margin call level is set at present margin level equal to or exceeds 100%, computed as the ratio of (a) the aggregate of the outstanding amount(including accrued interest) at any time under the revolving credit facilities or otherwise under this account to (b) the aggregate of (i) the value of the eligible deposits (including for this purpose, accrued interest and the value of the investments under Premium Accounts) maintained with the Bank under this account and (ii) the value of the deposits (including accrued interest) to be established or Placements to be made with the Bank from the proceeds of any part of such advances, multiplied by such percentage as may be prescribed by the Bank from time to time (presently, 83.33%) (the “loan-to-security” ratio). If margin call is triggered, customers need to top up the shortfall margin to below 100% within 2 business days. Positions may be liquidated at the discretion of the Bank if a margin call is not complied within the stipulated time period. The margin call level is also subject to change by the Bank without prior notice and the Bank has no obligation to notify customer of the aforesaid event, therefore it is customer's duty to monitor the same.
Force-sell
The forced sell level is set at present margin level equal to or exceeds 103.44%, computed the ratio of (a) the aggregate of the outstanding amount(including accrued interest) at any time under the revolving credit facilities or otherwise under this account to (b) the aggregate of (i) the value of the eligible deposits (including for this purpose, accrued interest and the value of the investments under Premium Accounts) maintained with the Bank under this account and (ii) the value of the deposits (including accrued interest) to be established or Placements to be made with the Bank from the proceeds of any part of such advances, multiplied by such percentage as may be prescribed by the Bank from time to time (presently, 83.33%) (the “loan-to-security” ratio). All or any part of customers' margin deposits and/or securities may be realized for settling all or any part of their outstanding without notice. In the event that the market deteriorates rapidly beyond the margin call level and reaches the forced sell level, the bank reserves the right to close out all outstanding positions without notice and without any margin calls. The forced sell level is also subject to change by the Bank without prior notice.
Loan Currency Switching Risk – The Relationship Manager and/or Treasury Specialist / Treasury Portfolio Specialist / Investment Specialist / any other licensed sales persons from Citibank explained that customers may be exposed to risks associated with loan currency switching:
Loan Interests
Treasury Plus is a revolving loan where interest is accrued daily. All the interest charged and other sum payable will be due and payable at any time forthwith on demand by the Bank.
Customers should seek independent advice before making a commitment to apply for Treasury Plus. In the event that customers choose not to seek independent advice, they should carefully consider whether such leveraged investment account is suitable in the light of their own investment objectives, financial position and risk profile.
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