Interest Rate Option

Advantages for You

  • Draw-down is not tied to taking a loan from Sberbank CZ; loan security from another bank can be used
  • A stable interest rate throughout the repayment term

Detailed Information

No fees are charged for obtaining the product

An IRS - interest rate swap - is a transaction in which cash flows derived from fixed and floating interest rates are swapped. It is the undertaking of the counterparties to pay the agreed interest rate (fixed/floating) from an agreed amount throughout the agreed period on a regular basis as at firmly set dates in the future.

No principal is exchanged between the transaction counterparties. In practice, the counterparties only exchange the difference between the agreed fixed interest rate and the referential interest rate. It allows for a change in interest-rate liabilities or receivables with a fixed interest rate for ones with a floating rate and vice-versa.

Minimum repayment term 1 year, maximum repayment term 20 years.

A version of an IRS is an amortised IRS on which the nominal value of the principal drops during its course in a pre-agreed manner.

Example

The bank and the client agree that they will exchange their cash-flows for a period of 2 years based on the following algorithm:

  • The client will pay the bank a 2% interest rate on the principal of EUR 1 mil., on a semi-annual basis. On the other hand, the bank will pay the client a floating rate, the 6M EURIBOR, as at the same dates, on the same principal.
  • The 6M EURIBOR rate is fixed two business days before the start of each interest-rate period. Subsequently, at the end of each interest-rate period, the difference between those interest rates will be settled, in the form of a single cash flow.

Advantages

  • Thanks to a progressive interest rate, the interest burden on the loan is lower at the beginning
  • Case-by-case agreements on early repayment

The heightened client-protection provisions based on the European Parliament and the Council Directive 2014/65/EU "The Market in Financial Instruments Directive II" - MiFID II apply to this product.

Contact information

Head of the Global Markets

Branko Sušić    +420 234 706 881   susic.branko@sberbankcz.cz         

Global Market Sales

Trading in FX and Interest-Rate Instruments

Martin Chum +420 234 706 890 chum.martin@sberbankcz.cz 
Filip Jelínek  +420 234 706 986 jelinek.filip@sberbankcz.cz 
Martina Lukesová +420 543 525 710 lukesova.martina@sberbankcz.cz 
Marek Bohumský +420 234 706 846 bohumsky.marek@sberbankcz.cz