2010 Annual report - Nedbank Group Limited

complex products and services. This resultsin Treasury being able to provide customisedsolutions to its clients.the ultimate cost of funding or investmentyield, by providing the option of floating orfixed interest rates.The Treasury team has strong highly specialisedskills and is driven by passion to enhance client’sknowledge of foreign exchange and interestrate markets and solutions, as well as drivingprofitability for the Bank.Products & SolutionsSome of the products and solutions Treasury offersto its clients include but are not limited to:• Spot Enhancer Products - Enabling clientsto trade in foreign currencies at a rate that issignificantly better than the current spot rate.This is achieved by setting a cap/floor on afuture exposure of a different cash flow that isnot yet hedged.• Cross Currency Interest Rate Swaps - thesehave been used by some clients to swap thecapital and interest payments of one foreigncurrency for another currency’s capital andinterest. This is done to remove all currency riskand give participants the chance to manage• Forward Rate Agreements (FRAs) – Thisproduct fixes an interest rate on a notionalloan or deposit and its due to be introducedsometime in the future. Typically, borrowersbuy FRAs to hedge against rising interest rates,while investors sell FRAs to hedge againstfalling interest rates.• Yield Enhancement Products – This isan investment product that clients use inanticipation of an interest rate hike to achievea return on excess cash. The rate earned onthis type of investment is better than a fixedinvestment rate because the interest rateis reset every quarter. As a result the clientis able to improve the return on a longterminvestment if there is an upward trendin the interest rate yield curve. Returns onthis product are achieved only if funds areinvested for a minimum of 12 months. In 2010this product was not marketed due to theanticipated rate cuts.TREASURY WAS SUCCESSFUL IN CLIENT RETENTION DUE TORELATIONSHIP MANAGEMENT AND KNOWLEDGE OF CLIENTBUSINESS AND NEEDS. LIQUIDITY AND MARGIN MANAGEMENTREMAINED A KEY FOCUS IN 2010.39Nedbank (Swaziland) Limited Annual Report 2010