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GLOBAL MACRO & CURRENCY MANAGEMENT

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MULTI-CURRENCY LIABILITY MANAGEMENT PROGRAMME

Introduction

In any economic environment, to concentrate solely on one side of the balance sheet while ignoring debt is somewhat illogical, akin to locking the front door and leaving the back door open.

Throughout history all major currencies have endured significant cycles—both up and down—generating opportunities for the capital reduction of debt.

ECU's principal objective has been to reduce the size of its clients' debt by taking advantage of medium-term currency trends and, where applicable, adding a cash flow advantage through interest rate differentials. By 2007 the programme would have paid off—in full—any multi-currency loan facility taken out by clients in 1988 and also generated a significant cash surplus.

Neither the notion nor the reality of turning a liability into an asset over time escaped the attention of a number of major UK private banking groups who set about introducing systems and procedures so that their more financially sophisticated HNW private banking clients could utilise this innovative debt management product—not just in respect of their property financing requirements but also as a means of bespoke leverage within their investment strategies, allowing their clients to gain additional exposure to undervalued assets within a cyclical downturn.

The three main potential benefits of a managed multi-currency loan facility are:

Debt Reduction - Seeking to place debt in currencies which fall in value against sterling.

Interest Savings - Achieved by borrowing currencies with lower interest rates than sterling
 
Tax Efficiency - Capital and interest benefits are currently tax fee to individuals who are UK residents for tax purposes.
 

Foreign exchange movements can be sudden and substantial. Changes in the exchange rate may increase the sterling equivalent of a client's debt. The increase could be sizeable.

Please note that the management of multi-currency loans is not a "regulated activity" as defined in the Financial Services and Markets Act 2000 and you will therefore not benefit from the protection of the Financial Conduct Authority (FCA), the Financial Ombudsman Service in the event of a complaint, or the Financial Services Compensation Scheme in the event of ECU’s default.

 

More Information 

For more information on ECU's active currency hedging solutions, please contact Matthew Lindfield, Head of Private Clients


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