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MANAGED CURRENCY MORTGAGES

Debt Reduction

Bank Lending Criteria

average interest rates - bar charts

Calculation Methodology

Since 1988 ECU has managed hundreds of multi-currency loan facilities at over 20 banks, with terms of business that vary and that have evolved over time to meet our clients' and their lending banks' requirements.

The 'Average Interest Rates' bar charts have been created from certains actual foreign exchange transaction data which, subject to the notes below, is consistent with all foreign exchange transactions executed by ECU on all ECU-managed sterling-based loans throughout the period.

The 'Average Interest Rates' charts demonstrate the interest paid on a multi-currency loan facility managed by ECU with interest being charged at 1.75% above the weekly closing 7-day inter-bank cost of funds applicable to the currencies borrowed compared with the cost of borrowing at a Sterling 7-day LIBOR rate plus 1.75% for the periods of time specified in the individual bar charts.

Interest Saving

The 'Interest Saving' is calculated as the difference between the interest which would have been paid on the starting balance of the loan in sterling at a rate of 1.75% above the weekly 7-day inter-bank sterling LIBOR rate, and the interest payable in the currency(ies) in which the loan has been denominated at a rats of 1.75% above the weekly closing 7-day inter-bank LIBOR rate applicable to those currencies. An Interest Saving is shown as positive performance. An Interest Loss is shown as negative performance.

Daily interest is calculated at a rate of 1.75% above the weekly closing 7-day inter-bank interest rates for borrowed money in the relevant currencies divided by 360 for all currencies excpet sterling, which is divided by 365.

Underlying Transaction Data

Some of the historical ECU-managed, multi-currency loan facilities were provided by banks that no longer exist or have been sold or merged. As a result, independent verification of historical data is not always possible. ECU's trading instructions to all banks are identical save only three main respects: (a) the amounts vary from bank to bank; (b) although they are given at the same time, it may not have been possible to instruct or execute with all banks simultaneously; and (c) two of the lending banks that historically provided multi-currency loan facilities to ECU's clients were unable to place debt in more than one currency at a time.

The performance data is based on actual foreign exchange transactions executed for clients at Royal Trust Bank of Canada, who were then taken over by Kleinwort Benson Private Bank and subsequently by Kleinwort Benson (Channel Islands) Ltd. ECU believes this to be representative of the capital and interest rate savings of a £1m multi-currency loan managed by The ECU Group plc over these periods. The trading and performance data of ECU's multi-currency debt management programme is periodically reviewed by independent accountants.

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ECU IN THE MEDIA

"How to take advantage of overseas interest rates."

The Sunday Telegraph
November 2006

READ ARTICLE

I have read and understand Risk Warnings.

Foreign exchange movements can be sudden and substantial. At no stage should you expose yourself to the high risks of foreign currency exposures if you are not able to afford the potential losses that could result from sizeable adverse currency movements and the higher interest rate servicing costs that would be required of you in the event of your having a larger debt.

Denominating debt in foreign currencies may not be suitable for you. Changes in the exchange rate may increase the sterling equivalent of your debt. Your lender will not tolerate too great an increase in the sterling equivalent of your debt as a result of currency losses and may opt to convert your debt back into sterling at a predetermined level. This may result in a permanent increase in the sterling equivalent of your debt which is not fully compensated for by any other benefits derived during the course of The ECU Group plc's discretionary currency debt management services. In this event, you could be left paying UK interest rates on a larger amount of sterling debt than that you originally borrowed. Your home may be repossessed if you do not keep up repayments on your mortgage.

Your lending bank sets a 'Conversion Limit' at which level they have the right to convert your managed multi-currency mortgage back into sterling to prevent further currency losses. It is important to understand that this is a right of your lending bank and not an obligation and that if they do not act promptly to convert your loan back into sterling when your Conversion Limit is reached, your loan could increase by more than that specified by your Conversion Limit.

ECU may from time to time transfer your loan into foreign currencies with higher interest rates than sterling with the objective of achieving a debt reduction in that currency.

Sterling interest rates are subject to change and the differential between sterling interest rates and the interest rates of other foreign currencies will fluctuate.

Suitability
The markets or financial instruments discussed herein may not be suitable for all investors and investors must make their own investment or participation decisions using their own independent advisors as they believe necessary and based upon their specific financial situation and investment objectives. Past performance is not a reliable indicator of future performance, and should not therefore form the basis of a decision whether or not to buy or sell any investments or financial instruments or to participate in any particular trading strategy mentioned herein.

The UK Regulatory System
The ECU Group plc ("ECU") is authorised and regulated by the Financial Services Authority.

In respect of managing physical liabilities in foreign currencies, ECU trades the foreign exchange markets on a spot basis and issues switch instructions to lending banks on a spot basis. Neither of these activities is currently regulated by the Financial Services & Markets Act 2000 as they meet the "Commercial Purposes" test. Therefore you will not benefit from the protection of the Financial Services and Markets Act 2000.

However, if ECU instructs the Lender, or any prime broker or counterparty with whom ECU effects foreign exchange transactions, to conduct a switch by way of effecting an “option” or “futures” transaction for the Client’s account, such transactions may be considered to be an “investment of a specified kind” under the Financial Services and Markets Act 2000. Consequently, both the execution process provided by the Lender, or any prime broker or counterparty with whom ECU effects foreign exchange transactions, and the currency management services provided by ECU, as envisaged under this Agreement, may be considered to be regulated activities. In such instances, the Client may be required to sign additional risk warnings and the rules for the protection of investors under the Financial Services and Markets Act 2000 will apply.

Other Important information
This website is maintained by ECU and is being issued inside and outside the United Kingdom by ECU for informational purposes only. It is not to be construed as an offer to buy or sell or a solicitation of an offer to buy or sell any investments or financial instruments or to participate in any particular trading strategy in any jurisdiction in which such an offer or solicitation would violate applicable laws or regulations. ECU may not respond to requests for information or further assistance if, in the opinion of ECU, such action might be illegal or contravene any rule or regulation of any jurisdiction.

The views and foreign exchange and interest rate information in this website are based upon information from sources which we believe to be reliable but they are not guaranteed as to their accuracy or completeness. Expressions of opinion herein are subject to change without notice. Any contractual obligation between ECU and its clients will only be on the basis of undertakings contained in an ECU client agreement executed by both ECU and the client, as may be amended from time to time by ECU, and which may vary from any information contained herein. Products and services may be subject to material changes at any time from the information herein. ECU aims to ensure that all information herein is accurate at time of printing, but does not accept any responsibility for its accuracy.

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