Dual Currency Deposit
ABN AMRO Bank N.V. has voluntarily signed on to the moratorium on distributing particularly complex structured products to retail investors that has been proposed by the FSMA. This does not constitute a judgement as to the risks inherent in the product. This structured product qualifies as particularly complex for retail investors under the terms of the moratorium by the FSMA on the distribution of particularly complex structured products. This document is addressed solely to clients who hold moveable assets with ABN AMRO BANK N.V. that exceed EUR 500,000 and that allow an investment in structured products with the portion of the moveable assets held with ABN AMRO BANK N.V. that exceeds EUR 500,000 More information on the moratorium is available on the website www.fsma.be. A Dual Currency Deposit or DCD is a short-term investment that offers investors the possibility of receiving a substantially higher yield for moderate movements in exchange rates. It is highly suited to investors with assets in more than one currency, with investment plans in a foreign currency, or with a clear currency vision. A DCD will be of interest to you if you do not mind if the capital and interest are converted into an alternative currency. The more risk you are prepared to accept, the higher the potential yield. The yield depends on a number of variables including: currency pair, term (tailored), market interest rates and volatility of currencies. Product description There is a DCD variant for either currency vision: up or down. With an up-variant, the capital is repaid in the base currency if the spot rate at is equal to or below the conversion rate. If the spot rate at expiration is above the conversion rate, the capital plus interest is repaid in the alternative currency. The reverse applies for a down-variant. The capital is repaid in the base currency if the spot rate at expiration is greater than or equal to the conversion rate. If the spot rate at is below the conversion rate, the capital plus interest is repaid in the alternative currency. A DCD is a structured tailored product combining a traditional deposit with the sale of a currency option. The investor agrees to a conversion rate fixed by mutual agreement for an agreed alternative currency. By selling an option, at the exchange rate agreed in advance, investors can substantially increase their return. The deposit is placed with ABN AMRO Bank N.V.
Basic parameters Minimum capital deposit: EUR 100,000 or the equivalent in another agreed currency ( the base currency ); Accepted currencies: all major currencies including but not restricted to EUR, USD, GBP, CHF, NOK, AUD, CAD, ZAR, NZD, JPY, SEK, SGD, HKD; The interest rate, conversion rate and variant (up or down) are determined at the outset; interest is taxed at source; The minimum term is 1 week; The maximum term is 1 year; Conversion into the alternative currency determined at the outset if the actual spot rate of the currency pair is higher (in the case of an up-variant) or lower (in the case of a down-variant) than the conversion rate on the (two business days before maturity); Interest is paid in the same currency as the capital. Consequently, in the case of the conversion of the capital, the interest is also converted into the alternative currency and paid together with the deposit at maturity ; DCD s cannot be transferred to another account, whether or not at another bank; DCD s cannot be terminated by the client during the term or traded; Detailed information is also to be found in the Dual Currency Deposit Agreement. Cost No separate charges apply for buying and selling. The cost of structuring the DCD by the Bank depends on the amount, complexity, currency pair and term of the transaction and is included in the interest. The interest is subject to withholding taxes. Target group This product is only suitable for you if you have extensive experience in the currency markets. This product is highly suitable if you have assets in more than one currency or if you have investment plans in a foreign currency. Consult your Private Banker or Investment Advisor concerning your investor profile. Risks Credit risk: all positions are held in the books of ABN AMRO Bank N.V. The ratings for ABN AMRO Bank N.V. as at 1 January 2013 are: A for S&P; A2 for Moody s; and A+ for Fitch. Market risk: a DCD is not a capital guaranteed product. The investor runs the risk that the expected market developments concerning exchange rates fail to materialise, making the conversion rate less favourable than the spot rate. This means that the yield on the invested assets can be nil or even negative. ABN AMRO Bank reserves the right to terminate DCD s during the term in the event of circumstances distorting the market. Liquidity risk: a DCD is not negotiable or transferable and cannot be terminated by you during the term. Note: the principal is withdrawn from your account as soon as the contract for the DCD is signed and is not included in the calculation of your spending limit.
Notes on operation of the DCD up-variant: Example: investment in EUR and the alternative currency is USD. Suppose the current EUR/USD spot rate is 1.387 and you do not expect this to rise substantially. Then you choose a conversion rate above the current EUR/USD spot rate, for example 1.395. If the EUR/USD spot rate at 10 a.m. New York time on the is above the predetermined conversion rate, the capital and interest are converted into the alternative currency (in this case USD) at the previously agreed conversion rate. If the EUR/USD spot rate on the is lower than or equal to the conversion rate, the capital and interest are paid in the currency of the investment (in this case EUR). Up-variant Interest Rate DCD Market base currency Return alternative currency 0 Spot rate < Conversion rate Spot rate on expiration < Spot rate Up-variant scenarios DCD term: 1 year DCD capital: EUR 100,000 Alternative currency: USD Expiration (Fixing Date): 2 business days before the maturity of the deposit, at 10 a.m. New York time. DCD interest % p.a.: 5% Conversion rate: 1.395 Spot rate on start : 1.387 Scenario 1 EUR/USD spot rate is above the conversion rate on the expiration Scenario 2 EUR/USD spot rate is equal to the conversion rate on the Scenario 3 EUR/USD spot rate is below the conversion rate on the expiration EUR/USD spot rate on 1.48 1.395 1.31 Capital + interest* 146,475 USD 105,000 EUR 105,000 EUR Annual yield versus spot rate on expiration - 1,030.40 EUR - 1.03 % 5,000 EUR 5,000 EUR Calculation ((105,000 * 1.395)/1.48) - 100,000 (100,000 + 5,000) (100,000 + 5,000) * Gross yield subject to tax at source (25%) 1 1 Subject to changes in the tax regime. For more information, please don t hesitate to contact your Private Banker.
Notes on operation of the DCD down-variant: Example: investment in USD and the alternative currency is EUR. Suppose the current EUR/USD spot rate is 1.387 and you do not expect this to fall substantially. Then you choose a conversion rate below the current EUR/USD spot rate, for example 1.37. If the EUR/USD spot rate at 10 a.m. New York time on the is below the predetermined conversion rate, the capital and interest are converted into the alternative currency (in this case USD) at the previously agreed conversion rate. If the EUR/USD spot rate on the is equal to or above the conversion rate, the capital and interest are paid in the currency of the investment (in this case USD). Down-variant DCD Return Interest Rate Market alternative currency base currency 0 Spot rate < Conversion rate Spot rate at expiration < Spot rate Down-variant scenarios DCD term: 1 year DCD capital: USD 100,000 Alternative currency: EUR Expiration (Fixing Date): 2 business days before the maturity of the deposit, at 10 a.m. New York time DCD interest % p.a.: 5% Conversion rate: 1.37 Spot rate on start : 1.387 Scenario 1 EUR/USD spot rate is above the conversion rate on the Scenario 2 EUR/USD spot rate is equal to the conversion rate on the Scenario 3 EUR/USD spot rate is below the conversion rate on the EUR/USD spot rate on 1.45 1.37 1.29 Capital + interest* 105,000 USD 105,000 USD 76,642.34 EUR Annual yield versus spot rate on expiration 5,000 USD 5,000 USD - 1,131.39 USD - 1.13 % Calculation (100,000 + 5,000) (100,000 + 5,000) ((105,000/ 1.37)*1.29) - 100,000 * Gross yield subject to tax at source (25%) 1 1 Subject to changes in the tax regime. For more information, please don t hesitate to contact your Private Banker.
DISCLAIMER Prospective investors must understand that the risks associated with this product and should reach an investment decision in relation to this product after careful consideration, if necessary in consultation with their advisers, including as to whether this product is in keeping with their own investment policy. The information contained in this document has been drawn up by ABN AMRO and is intended as general information and is not tailored to your personal situation. The information is therefore definitely not to be considered as advice or as a proposal or offer for 1) buying or trading in financial instruments and/or 2) purchasing investment services or as investment advice. Any decisions you make on the basis of the information contained in this document are for your own account and risk. The information and terms and conditions applying to financial instruments offered by ABN AMRO and investment services provided by ABN AMRO are to be found in the ABN AMRO Securities Services Terms which form part of ABN AMRO general banking terms and are available from www.abnamro.be. This product is also subject to the provisions of the Dual Currency Deposit Agreement. Although ABN AMRO endeavours to provide complete, up-to- information from reliable sources, ABN AMRO makes no warranties, express or implied, as to whether this document is correct, complete or up to. ABN AMRO accepts no responsibility for printing and typesetting errors. The information contained in this document is subject to change without prior notice. ABN AMRO is not obliged to up or amend the information contained herein. ABN AMRO and/or its agents or subcontractors accept no liability whatsoever for any loss (including loss of profits), arising in any way from the information offered to you in this document or its use. ABN AMRO or the rightholder reserves all rights (including copyright, trademarks, patents and other intellectual property rights) in relation to all information provided in this document (including all text, graphics and logos). The information contained in this document may not be copied or published in any form, distributed or reproduced without the prior written permission of ABN AMRO or the consent of the rightholder. However you may print out the information contained in this document for your own personal use. ABN AMRO is not a registered broker-dealer and investment adviser under the U.S. Securities Exchange Act of 1934 and the U.S. Investment Advisers Act of 1940, as amended from time to time and under other applicable laws and regulations of the individual states of the United States of America. Unless an exception applies under the aforementioned laws, the provision of securities services by ABN AMRO including (but not limited to) the products and services described herein, and the advice in this respect, is not intended for US Persons as defined by the aforementioned laws and regulations. This document or copies thereof must not be sent or taken to the United States of America or supplied to US Persons. Nevertheless, it is not the intention to sell or distribute or offer the services and/or products described in this document to persons in countries in which ABN AMRO is barred on the basis of any legal provision. Any party in possession of this document or copies thereof must check for itself whether any legal restrictions apply to the publication and distribution of this document and/or the purchase of the services and/or products described in this document and bear such restrictions in mind. ABN AMRO is not liable for loss resulting from services and/or products purchased contrary to the aforementioned restrictions. This brochure was produced on 1 March 2012. ABN AMRO Bank N.V., registered office Gustav Mahlerlaan 10, 1082 PP Amsterdam, the Netherlands, Amsterdam Chamber of Commerce 34334259. Belgian office, Roderveldlaan 5 bus 4, 2600 Berchem, Belgium, Registry of Antwerp Commercial Court (Companies Register) 0819.210.332 VAT BE 0819.210.332. ( ABN AMRO ) is the issuing institution. AAPB - April 2013