KARACHI (September 18 2003): Habib Bank Limited (HBL) on Wednesday introduced interest rates and foreign exchange derivatives for corporate customers.
In a presentation held here, the bank introduced its corporate customers to a variety of derivative instruments and products to assist them in safeguarding themselves from the interest rate and foreign exchange risks.
A spokesman of the HBL said in an environment of uncertainty the bank's derivative products were a means to better manage an organisation's financial risk, hence, enabling it to focus on their core businesses.
The products introduced included forward rates agreements (FRA), interest rate swaps (IRS) and currency options.
The presentation was made in collaboration with the corporate and treasury divisions of the bank, which helped in merging the technical expertise of the treasury division along with existing corporate products, he added.
He said that FRA's were simple interest rate derivatives that enable a corporate to hedge itself against future fluctuation of interest rates.
IRS were agreements between two parties to exchange streams of interest payments, one of which was fixed and the other one was floating, he said.
He also elaborated that options were a right, but not an obligation, to buy or sell an underlying asset such as currencies and equity at a predetermined price at a future date.