INVESTMENT PLUS

Power up your capital.

Power up your capital.

"Investment Plus" is a powerful tool to enhance your investing power by providing you with additional capital to seize investment opportunities as they happen.

Features
  • Wide selection of investment products used as collaterals including bond, mutual funds, structured products and equities
  • Offer leverage of up to 5.61 times of your initial funds with us
  • Provide additional capital of up to 85%2 of your initial investment holdings with us
  • Additional capital can be used for the reinvestment of bond, mutual funds and structured products
  • Enable you to enjoy interest differentials by profiting from high-interest investments3 using money obtained from low-interest loans4 (as low as 1.38% p.a.5)
  • Offer hassle free repayment that you will only need to repay the monthly calculated interest every 3 months
  • Let you enjoy same-day loan disbursal. Upon successful account opening, your loan application will normally be processed and disbursed within the same business day6
Benefits

Your Investment Potential

Illustration 1: If you are holding CASH

If you are holding CASH

Illustration 2: If you are having Investment Holdings

If you are having Investment Holdings

Illustration Example 1

If customer is holding CASH

  • Ms. Wong has available cash of US$100,000.
  • She wants to invest US$330,000 in a 10-year US Corporation Bond.
  • With "Investment Plus", she enjoys the leveraged investment and receives an additional capital of US$230,000 for the corporate bond investment.

If customer is holding CASH

Return Comparison

Before After
Initial Investment Capital US$100,000 US$100,000
Additional Investment Capital obtained from "Investment Plus" Not applicable US$230,000
Annual Interest Return from the
10-year US Corporate Bond
(Assume the coupon rate is 3.0% p.a.)
US$ 3,000
(US$ 100,000 x 3.0%)
US$ 9,900
(US$ 330,000 x 3.0%)
Interest Cost from "Investment Plus"
(Assume the interest rate is 1.38 % p.a. for a 12-month tenure)
Not applicable US$ 3,174
(US$ 230,000 x 1.38%)
Net Return US$ 3,000 US$ 6,726
Return on Investment (p.a.)
(Based on Initial Investment Capital)
3.0% 6.73%

Notes:

  1. The tenure of "Investment Plus" and the investment period of individual investment products may be different.
  2. Assume the loan interest rates of "Investment Plus" (i.e. 1.38% p.a.) and the bond prices remain the same throughout the entire investment period illustrated above. Actual loan interest rates are subject to prevailing market interest rates.
  3. Figures shown in the examples are referenced to April 29, 2015. The Hypothetical rates of return and loan interest rates stated are for illustrative purposes only and are not indicative of actual and / or future performance and borrowing costs.
  4. Investments should be subject to investor's own investment objectives and risk profiles.
Illustration Example 2

If customer is holding Investment Holdings

  • Mr. Lee has US$200,000 investment holdings at Citibank.
  • He plans to invest in an Enhanced Growth Mutual Fund Portfolio.
  • With "Investment Plus", Mr. Lee obtains an additional capital of US$105,000 by pledging his existing initial investment holdings for the extra Enhanced Growth Mutual investment Portfolio investment.

If customer is holding Investment Holdings

Return Comparison

Before After
Initial Investment Holdings

1. Bond
2. Mutual Funds
3. Equities
US$200,000

US$100,000
US$50,000
US$50,000
US$200,000

US$100,000
US$50,000
US$50,000
Annual Return / Loss
1. Bond
(Assume the coupon rate is 3.0% p.a.)
US$ 3,000
(US$ 100,000 x 3.0%)
US$ 3,000
(US$ 100,000 x 3.0%)
2. Mutual Funds US$5,000
(US$ 50,000 x 10.0%)
US$5,000
(US$ 50,000 x 10.0%)
3. Equities
(Assume 10% gain in mutual funds and equities)
US$5,000
(US$ 50,000 x 10.0%)
US$5,000
(US$ 50,000 x 10.0%)
Additional Investment Capital obtained from "Investment Plus" Not applicable Additional Investment Capital :
US$ 105,000
1. Bond : US$ 60,000
(US$ 100,000 X 60%)
2. Mutual Funds : US$ 25,000
(US$ 50,000 X 50%)
3. Equities : US$ 20,000
(US$ 50,000 X 40%)
Annual Return / Loss from Additional Investment Not applicable Investment Capital US$ 100,000 is used for the purchase of Enhanced Growth Fund Portfolio
(Assume the expected rate of return is 8.47% p.a.) US$8,470 (US$100,000 x 8.47%) (Assume the expected rate of return is -20% p.a.) -US$20,000 (US$100,000 x -20%)
Interest Cost from "Investment Plus" 
(Assume the interest rate is 1.38% p.a. for a 12-month tenure)
Not applicable US$1,380 (US$100,000 x 1.38%) US$1,380 (US$100,000 x 1.38%)
Net Return / Loss US$ 13,000 US$ 20,090 - US$8,380
Return / Loss on Investment (p.a.) 
(Based on Initial Investment Capital)
6.50% 10.05% -4.19%

Notes:

  1. The tenure of "Investment Plus" and the investment period of individual investment products may be different.
  2. Assume the loan interest rates of "Investment Plus" (i.e. 1.38% p.a.) and the bond prices remain the same throughout the entire investment period illustrated above. Actual loan interest rates are subject to prevailing market interest rates.
  3. Figures shown in the examples are referenced to April 29, 2015. The Hypothetical rates of return and loan interest rates stated are for illustrative purposes only and are not indicative of actual and / or future performance and borrowing costs.
  4. Investments should be subject to investor's own investment objectives and risk profiles.
Additional Information

Your leveraged position is evaluated by using the formula of Margin Erosion (“ME”) by mark-to-market basis, and you are required to restore ME to below “0” or such lowest possible percentages whenever there is a Pre Margin Call, Margin Call or Force Sell status.

*
Initial equity position is calculated as loan outstanding divided by weighted loan-to-value ratio, then minus the loan outstanding.
ME Actions
Pre Margin Call
0%< ME <25%
Any settlement proceeds will be used as repayment of any outstanding loan
Margin Call *
25% =/< ME <50%
Top up the margin, within 7 calendar days by
  • Deposit of additional eligible investments and/ or eligible deposits ^, and/ or
  • Repay by any settlement proceeds
Force liquidation may apply if a margin call is not complied within the period
Force Sell #
ME >/=50%
Force liquidation all or part of the investments and/ or deposits without prior notice
*
The margin call levels are 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.
^
The list of the eligible investments and eligible deposits designated by the Bank and their respective loan-to-value ratio may be amended by the Bank from time to time without prior 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 or part of the outstanding positions without notice and without any margin calls. The forced sell levels are also subject to change by the Bank without prior notice.

If you have any questions, please feel free to contact your Relationship Managers or call our 24-hour CitiPhone Banking Hotline at (852) 2860 0333.

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Remarks:Remarks:

  • Depending on individual investment products (e.g. mutual fund , bonds, structured products and eligible deposits) being purchased. 5.6 times is an example of pledging US Corporate Bond.
  • Depending on individual collateral used.
  • Additional investment(s) will be subject to investors' own investment objectives and risk profile.
  • Loan interest rates will be subject to prevailing market interest rates and may be subject to change from time to time.
  • 1.38% p.a. interest rate is referenced to "Investment Plus" USD term loan as of April 29, 2015. Interest rate(s) is/are for reference only and is/are not guaranteed. The actual interest rate(s) will be dependent on loan currency and loan drawdown date and may be subject to change from time to time.
  • Customers are requested to submit their loan application before 3:00p.m. Same-day loan disbursal will normally be subject to the cut off time of the respective investment product(s).

Important Notice:Important Notice:

"Investment Plus" is a leveraged product and is subject to a number of risks, including:

• Leverage risk

The use of leverage means that relatively small price movements will have a multiplying effect on customers’ corresponding gains or losses or the overdraft credit limit and the degree of investment risk customers face is greatly increased. Thus, the risk of loss in foreign exchange margin trading, leveraged investments or derivatives 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. This brief statement cannot, of course, disclose all the risks and other significant aspects of trading in currencies/derivatives or any other leveraged investment products. Customers should therefore carefully study the market before they trade.

• Price Risk

Leveraging on customer’s existing margin deposits and/or securities such as stocks, mutual funds, bonds, notes, Premium Accounts 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.

-
The use of leverage means that relatively small price movements will have a multiplying effect on customers’ corresponding gains or losses. Customers should have sufficient net worth to be able to assume the risks and bear the potential losses of leveraged investments.

• Interest Rate Risk

The interest rates for loan may vary during the period for investment or utilization of the overdraft credit line, the interest costs for customers may therefore also vary. This may affect the net return on investments or overdraft credit limit.

• Liquidity Risk

During adverse market conditions, the customers may not be able to liquidate all or any part of their holdings.

• Credit Risk

The approved line amount granted is dependent on the loan-to-value ratio allowed for each margin deposit and/or security.

-
The loan-to-value ratio is subject to change by the Bank without notice.
-
The loan-to-value ratio for securities like bonds and notes is impacted by negative/downgrade ratings. Any security that falls below the Bank’s designated minimum rating by Moody and S&P may result in the security not being marginable and a margin call or force sell could be triggered as a consequence.

• 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 force-sell.

• Marked-to-market Losses

The customers’ leveraged position is marked-to-market intraday, daily, weekly or monthly, whichever is applicable, and they may be called upon at short notice to deposit additional funds to avoid a forced sell of their leveraged positions.

-
Losses may exceed the amount of initial deposits and/or securities that are pledged by customers as collateral.
-
Customers shall remain liable for any resulting deficit in their account(s).

• Pre-margin Call

For Investment Plus, in the event that the erosion of the Initial Equity Position (that is, loan outstanding divided by weighted loan-to-value ratio, then minus the loan outstanding at the relevant time) falls within the region of 0%<x<25%, Citibank shall have the absolute discretion to exercise the right:

  • to decline the execution of any type of transaction of the customer in respect of any eligible investments and/or eligible deposits; or,
  • to apply any settlement proceeds to restore the Initial Equity Position to below 0% or such lowest possible percentages.

• Margin Call

The implications of margin call levels for the leveraged facility and 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 levels are 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. For Investment Plus, margin call trigger is set at the level where the Initial Equity Position erodes for 25% or above. If a margin call is triggered, customers need to top up the shortfall margin within 7 calendar days.

• Force-Sell

The implications of forced sell levels for the leveraged facility, including 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 or part of the outstanding positions without notice and without any margin calls. The forced sell levels are also subject to change by the Bank without prior notice. For Investment Plus, forced sell trigger is set at the level where the Initial Equity Position (that is, loan outstanding divided by weighted loan-to-value ratio, then minus the loan outstanding at the relevant time) of the customer portfolio erodes for 50% or above.

Terms and Conditions:Terms and Conditions:

  • This material is for information purpose only and does not intend to constitute any offer or solicitation or advice to buy or sell any investment products. The investment decision is yours but you should not invest in "Investment Plus" unless the intermediary who sells it to you has explained to you that the product is suitable for you having regard to your financial situation, investment experience and investment objectives.
  • Investments are not bank deposits and are not protected under any deposit protection scheme or authority.
  • Investors should have sufficient net worth to be able to assume the risks and bear the potential losses of investing in "Investment Plus".
  • Leveraged transactions carry high degree of risks. Investors may therefore wish to seek independent advice before making a commitment to enter into a position of "Investment Plus". In the event that investors choose not to seek independent advice, you should carefully consider whether "Investment Plus" is suitable in the light of your own investment objectives, financial position and risk profile. For more information on the collateralized investment products, investors should also carefully read the relevant terms and conditions.
  • Investors should not rely on the content of this material / website alone to make investment decisions. You should also read other relevant documents for details including the risk factors. If you have any inquiries, please seek independent professional advice prior to subscription.
  • Past performance is not indicative of future performance.
  • Investors' investments are subject to the insolvency and credit risk of Citibank (Hong Kong) Limited (the "Bank"). There is no assurance of protection against a default by the Bank in respect of payment obligation. In case of insolvency of the Bank, you may lose your entire investment irrespective of the performance of the market or segment invested and the terms of the investment.
  • .Investment products are not available for US persons and might only be applicable to limited jurisdiction.
  • The facility is subject to our annual review whereupon we will re-assess based on our annual review criteria (as determined by us from time to time) which may include, but are not limited to: your (a) credit history, (b) bankruptcy check, (c) net worth and (d) customer segment (Citigold or Citigold Private Client). You may be required to provide additional information or documentary proof upon request. We may renew the Facility (with the same of different Facility Limit and on the same or different terms) or terminate the Facility.
  • The bank reserves the rights to liquidate any or all of the eligible deposit or collateral held with the bank and/or set off any credit balance in any of your accounts (or your joint accounts with other person(s)) against any outstanding balances and terminate Investment Plus services.