TREASURY PLUS

Increase your investing power by up to 83.33%.

Increase your investing power by up to 83.33%.

Enhance your investment potential with Treasury Plus via a line of credit from the eligible collaterals* in your Currency Manager Account.

Features
  • Credit line up to 83.33% of the total eligible pledged collaterals* value in your Currency Manager Account
  • Leverage up to 5 times of your initial funds
  • Invest the additional capital from the credit line in Premium Account and/or foreign exchange investment for higher potential returns, but the risk of leveraged investment can be substantial
  • A revolving loan facility that allows you to withdraw and repay the loan anytime within office hours through our staffs
  • Flexible choice of 9 major loan currencies
How Does It Work?

Collateral for pledging

Eligible pledged collaterals* in Currency Manager Account

9 loan currencies available

HKD, USD, AUD, CAD, EUR, GBP, JPY, NZD, CHF

Invest the additional capital from the credit line in Premium Account and/ or foreign exchange investment for higher potential returns

*
Eligible pledged collaterals include the total available deposit and investment in designated currencies (Time Deposit, Call Deposit and/ or Premium Account) in Currency Manager Account excluding "In-trust-for" Account Deposit, Hold-deposit, Pledged-deposit, Gold Manager, Gold Premium Investment, RMB Deposit, Market Linked Account and MaxiSavings.
Illustrative Examples

Illustrative Example - Investing in Premium Account

  • Ms. Chan has a HKD500,000 investment in Premium Account.
  • With "Treasury Plus," she obtains additional capital of HKD400,000 to invest in Premium Account by pledging her existing funds from the Premium Account.

Return Comparison Before After
Principal HKD500,000 HKD500,000
Additional capital loaned from "Treasury Plus" Not applicable HKD400,000
Set up a Premium Account with the following conditions:
Total Premium Account principal HKD500,000 HKD900,000
Based currency HKD
Alternative currency NZD
Strike price HKD6.04 = NZD1
Tenor 30 days
Premium Account interest rate 6% p.a.
HKD loan interest rate (on September 4, 2013) 2.39% p.a.
Payout and return upon maturity:
Interest earned HKD2,466 (HKD500,000 x 6% x 30 / 365) HKD4,438 (HKD900,000 x 6% x 30 / 365)
Exchange rate on notification date (by assumption) HKD6.1 = NZD1 HKD6 = NZD1 HKD6.1 = NZD1 HKD6 = NZD1
Premium Account principal & interest earned HKD502,466 NZD83,190 (HKD502,466 / 6.04) HKD 904,438 NZD149,742 (HKD904,438 / 6.04)
Interest cost from "Treasury Plus" Not applicable HKD786 (HKD400,000 x 2.39% x 30 / 365)
Net return / loss HKD2,466 - HKD860* (NZD83,190 x 6 - HKD500,000) HKD3,653 (HKD904,439 - HKD900,000 - HKD786) - HKD2,334* (NZD149,742
x 6 - HKD900,000 - HKD 786)
Annualized P&L (against initial principal) 6.00% -2.10% 8.89% -5.68%
*
Customers can choose to keep NZD or convert to other currencies after receiving the payout in NZD.
#
If the Bank becomes insolvent during the tenor of Premium Account or defaults on its obligations under Premium Account, you may get nothing back and suffer a total loss of your original investment amount. You will remain liable for any resulting deficit in Treasury Plus.

Illustrative Example - Investing in Foreign Exchange Investment

  • Ms. Chan has a US$1,000,000 deposit and has a bearish view on JPY.
  • With Treasury Plus, she obtains additional capital of JPY80,000,000 (assuming USD/JPY spot rate at 100, margin ratio: 80%) for foreign exchange investment by pledging her existing funds.
  • She then converts the JPY to USD.
Today With Treasury Plus
Self-funded Principal (USD) 1,000,000
Margin Ratio (up to 83.33%) 80%
USD/JPY Spot Price 100
Treasury Plus in JPY loan amount 80,000,000
JPY loan interest rate (on September 4, 2013) 2.29% p.a.
Amount after converting JPY to USD 800,000
1 Week Later (by assumption) Gain scenario Loss Scenario
USD/JPY Spot Price 105 95
Loan interest amount (JPY) 35,622 35,622
Loan interest amount (USD) 339 375
Loan amount at USD/JPY spot price (USD) 761,905 842,105
Repayment amount (loan amount + interest) (USD) 762,244 842,480
Gain/Loss (USD) 37,756 -42,480
Return Ratio 3.78% -4.25%

Remark:

  • Figures shown in the examples are referenced as of September 4, 2013.
  • The above illustrative examples are hypothetical and provided for illustrative purposes only. The scenarios are not based on the past performance of the foreign currency. The Bank is not making any prediction of future movements in the foreign currency by virtue of providing the illustrative example. It does not represent all possible outcomes or describe all possible factors that may affect the return of an investment. The return ratio and loan interest rate are for illustration only, and do not constitute actual and/or future performance and loan cost.
Latest Interest Rates
  • Comprehensive Market Insight Stay up-to-date with market information.
  • Time Deposit Offer Deposit funds to enjoy preferential interest rates.

Important Disclaimer:Important Disclaimer:

  • The tenor of the Treasury Plus and the Premium Account are different. The Bank only offers overnight tenor for Treasury Plus. The interest rates for loan may vary daily without notice, customers’ interest costs may therefore also vary. This may affect the net return on investments. Customers can inquire latest interest rate by calling the Bank’s hotline or website.
  • The loan interest of Treasury Plus will be debited to respective loan accounts on the last calendar day of each month. If the last calendar day is not a bank business day, interest will be debited on the first succeeding business day (includes interest incurred in-between).
  • Customers’ loan currencies in Treasury Plus can be different from investment currencies in Premium Account. In such a case for Treasury Plus, customer will be subject to more significant currency risk.
  • Foreign exchange rate fluctuation of the collateral currencies may reduce collateral value and may induce margin call and/or forced sell.
  • Unless after liquidation the outstanding position will not reach any margin call and forced sell level, customer-initiated liquidation of the pledged product will not be permitted if the liquidation proceeds are not for loan repayment.
  • Investment products are not eligible for U.S. persons and might only be applicable to limited jurisdictions.

Risk Disclosure:Risk Disclosure:

Leverage Risk

The use of leverage means that relatively small price movements will have a multiplying effect on customers' corresponding gains or losses and the degree of investment risk customers face is greatly increased. Thus, the risk of loss in leveraged investments via Treasury Plus 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. Customers may be engaged in leveraged investments in Premium Account and/or other foreign exchange currencies through pledging of deposits (including local and foreign currencies) and/or Premium Account. Minor market fluctuations (including but not limited to fluctuations in currency exchange rate) may multiply customers' losses and lead to substantial deficit. Customers may sustain losses in excess of their collaterals and have resulting deficits in their accounts.

Price Risk

Treasury Plus 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. Customers should have sufficient net worth to be able to assume the risks and bear the potential losses of leveraged investments.

Interest Rate Risk

Our Bank only offers overnight tenor for Treasury Plus. As the interest rates for Treasury Plus loan may vary during the period of investment, the interest costs may therefore also vary. This may affect the net investment return.

Liquidity Risk

Premium Account cannot be terminated before maturity. For customers who pledged Premium Account as collateral, any loan repayment or top up requirement before maturity will have to be covered by other pledged deposit and/or additional funds. If customers do not have sufficient pledged deposit and/or fail to bring in additional funds, the Bank has the discretion to terminate the Premium Account before its maturity date to repay the Treasury Plus loan outstanding. Such early termination may be made at a loss to customers and they will remain liable for any resulting deficit in their accounts.

Credit Risk

The approved line amount granted is dependent on the quantum of finance allowed for each margin deposits and/or Premium Accounts. The quantum of finance is subject to change by the Bank without notice.

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 forced sell.

Marked-to-market Losses

Customers' leveraged position is marked-to-market daily and they may be called upon at short notice to deposit additional funds to avoid a forced sell of their leveraged positions.

Margin Call

The margin call level is set at present margin level equal to or exceeds 100%, computed as the ratio of (a) the aggregate of the outstanding amount(including accrued interest) at any time under the revolving credit facilities or otherwise under this account to (b) the aggregate of (i) the value of the eligible deposits (including for this purpose, accrued interest and the value of the investments under Premium Accounts) maintained with the Bank under this account and (ii) the value of the deposits (including accrued interest) to be established or Placements to be made with the Bank from the proceeds of any part of such advances, multiplied by such percentage as may be prescribed by the Bank from time to time (presently, 83.33%) (the “loan-to-security” ratio). If margin call is triggered, customers need to top up the shortfall margin to below 100% within 2 business days. 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 level is 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.

Force-sell

The forced sell level is set at present margin level equal to or exceeds 103.44%, computed the ratio of (a) the aggregate of the outstanding amount(including accrued interest) at any time under the revolving credit facilities or otherwise under this account to (b) the aggregate of (i) the value of the eligible deposits (including for this purpose, accrued interest and the value of the investments under Premium Accounts) maintained with the Bank under this account and (ii) the value of the deposits (including accrued interest) to be established or Placements to be made with the Bank from the proceeds of any part of such advances, multiplied by such percentage as may be prescribed by the Bank from time to time (presently, 83.33%) (the “loan-to-security” ratio). 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 outstanding positions without notice and without any margin calls. The forced sell level is also subject to change by the Bank without prior notice.

Loan Interests

Treasury Plus is a revolving loan where interest is accrued daily. All the interest charged and other sum payable will be due and payable at any time forthwith on demand by the Bank.

Customers should seek independent advice before making a commitment to apply for Treasury Plus. In the event that customers choose not to seek independent advice, they should carefully consider whether such leveraged investment account is suitable in the light of their own investment objectives, financial position and risk profile.

Important Information:Important Information:

  • The investment decision is yours but you should not invest in the Treasury Plus unless the intermediary who sells it to you has explained that the product is suitable for you having regard to your financial situation, investment experience and investment objectives.
  • Treasury Plus involves leveraged investment and is subject to a number of risks.
  • Leveraged investments carry a high degree of risk in which a relatively small market movement will have a proportionately larger impact on the funds you have invested or will have to invest. An investor may sustain a total loss of initial margin funds and any additional funds deposited to maintain his/her position. If the market moves against his/her position or margin requirements are increased, an investor may be called upon to pay substantial additional funds at short notice to maintain his/her position.
  • Premium Account is not a bank deposit and involves risks including the possible loss of the principal amount invested. Please refer to relevant brochures for the details and risks involved for Premium Account.
  • Investors should not rely on this document/content of this leaflet alone to make investment decisions. They should also read other relevant documents for details including the risk factors. If you have any enquiries, please seek independent professional advice prior to subscription.
  • Past performance is not indicative of future performance.
  • Investor's 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 foreign currency market, the terms of the Premium Account and Treasury Plus.
  • This material is issued by Citibank (Hong Kong) Limited, a licensed bank regulated by the Hong Kong Monetary Authority.