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Forward FX Transactions
These are binding contracts to buy or sell a given amount of currency for delivery at a specific future date to facilitate customer/bank to hedge against adverse foreign exchange fluctuations. The bank has a well structured correspondent relationship with the major international currency centers namely- US Dollars, Sterling Pound, Euro, and SA Rand. However indicative prices are available for other currencies on request and settlement can be advised accordingly.
Forwards-Imports/Exports
Export Forwards: Exporters enter into contracts to sell expected export proceeds at a specified future date.
Import Forwards: Importers enter into contracts to buy invoiced payments at a specified future date.
Benefits
No extra charge and tenures available up to one year
Competitive priced swap points
Enables customer/bank to hedge against adverse foreign exchange fluctuations
Requirements
Available to both customers and non-customers.
Customer is required to have limits marked for specific contracts.
A direct Dealing mandate to be completed for all eligible customers.
Government Securities (Treasury Bills/Bonds)
These are fixed income instruments. The bank invests funds into these instruments on customer’s behalf at a commission. Equity Bank provides an avenue for customers to investment in government securities.
How does one invest in T/Bonds?
The government invites applications through the local media and a bond prospectus to apply for the current bond issue.
Applicants must have opened CDS account with CBK. They will then fill in the bond application forms and drop them at the T/Bonds application box at the CBK before or on the last application date at 2.00 pm (Equity Bank treasury can aid the full process for the customer).
Unlike treasury bills, which are sold at a discount, treasury bonds are sold at face value. Withholding Tax of 15% is charged on the interest.
T/Bonds can be two types:
Floating Rate T/Bonds: The interest rate is not fixed and is dependent on the Treasury Bill rate. Usually a small premium is given above the prevailing T/Bill rate and adjusted every coupon period, which could be every 3 or 6 months.
Fixed Rate T/Bonds: The interest rate is fixed at issue and is payable every 3 or 6 months. Treasury Bonds are listed and traded i.e. can be sold and bought in the Nairobi Stock Exchange (NSE), which is also referred to as the secondary market. Minimum Requirement- Kes. 50,000
Benefits
High interest rates and easily convertible into cash as they are traded at the NSE
Can be used as collateral to obtain financing
Considered fairly secure as they are guaranteed by the Government
Requirements
Investment amount
Swift
A medium of communication between banks. Facility
is used when customers are sending or receiving
money locally or internationaly.
Benefits
fast/speedy
Secure
Efficient
All the messages are standadised internationaly.
Requirements
Available to both customers and non-customers.
Foreign Currency Swaps
This is a transaction where two parties agree to exchange two currencies (USD/KES) for an agreed period of time, where the said currencies are re-exchanged at a future date. To facilitate customers who have surplus funds in one currency to use this surplus to fund a shortfall in another. Example: A customer holding Kenya shillings can give the bank these shillings in exchange for US dollars for a specified period of time.
Benefits
No extra charge and tenures available up to 1 Year
Competitive priced swap points.
Requirements
Customer is required to have limits marked for specific contracts
A direct dealing mandate to be completed for all eligible customers
Spot FX Transactions
This is a foreign currency deal whose settlement date is two working days from the deal/transaction date. It facilitates easy transaction of cross-border settlements. The bank has a well structured correspondent relationship with the major international currency centers namely- US Dollars, Sterling Pound, Euro, and SA Rand. However indicative prices are available for other currencies on request and settlement can be advised accordingly.
Benefits
No charge levied for spot transactions
Same day processing can be arranged
Requirements
Available to both customers and non-customers
Foreign Currency – Fixed Deposits
To provide an opportunity for individuals and institutions to invest cash in foreign currency. The bank offers very attractive rates for fixed deposits in the major currencies, namely US Dollars, Sterling Pound, Euro, SA Rand. However, indicative rates are available for other major currencies.
Benefits
Affordable minimum deposits
Competitive and negotiable interest rates
Flexible premature withdrawal conditions
Loans of up to 80% of fixed amount
No cheque handling fees
Requirements
National ID
Deposit amount
If not existing account holder:
Should be introduced by an existing account holder who has operated an account for more than three months
Should provide statements of a current account held in another bank
Completed account opening application
For institutions:
Registration certificate
VAT and PIN certificate
Search fees
Foreign Currency Current Account
Foreign currency current accounts are available for the major traded currencies, namely – US dollars, Sterling Pound, Euro and SA Rand. Provides an opportunity to save, transact business and collect receipts in foreign currency. Can also be used as a facility (lien) to access credit.
Benefits
Low operating balance convenient to retail customers
Competitive rates on fixed amounts
Requirements
Documentary evidence of foreign currency receipts
National ID, VAT & PIN certificates
If not an existing account holder:
Should be introduced by at least a three months old customer
Should provide statements of a current account held in another bank
