The financing is provided in euros and US dollars.
“Margin credits for the purchase of securities are traditionally popular among our customers, professional investors - both individuals and legal entities who trade on financial markets. In this way, active customers proportionally increase volumes of transactions and potential profit. More conservative investors can earn on the rate difference between the attracted financing and returns on the debt market,” said Pavel Golubev, Head of the Department of Securities and Financial Markets of Rietumu Bank.
Standard financing conditions are limited by the BBB- rating for government bonds, by the BB- rating for corporate bonds and by issuer capitalization of of 5 billion USD or euros for stocks. “However, we are not adherents of standard solutions and approach the analysis of risks in a flexible way, by taking into account the entire combination of factors, which determine the attitude towards the specific instrument in each case,” emphasised Pavel Golubev.
Owing to such an individual approach, customers of Rietumu Bank can receive marginal credit for a number of bonds with the rating starting from B- and also under stocks of companies with capitalization from 1 billion euros. Depending on the type of security, a customer may be provided financing in the amount of 50 to 95% of its market value.
According to Pavel Golubev, the interest in operation with financial instruments is quite high now, among other factors, due to a long period of historically low base interest rates. “For those customers who are ready to a higher risk and are not afraid of market fluctuations, investments in bonds and stocks are a good alternative to deposits. But one should come to this market with a cool head and count on a long-term perspective,” said Pavel Golubev.
The bank’s customers who are not professional investors and do not have sufficient knowledge can receive help in the formation of their portfolio of securities from specialists of Rietumu Asset Management – the bank’s subsidiary.
Bonds with different levels of risk, maturity and return, as well as stocks, can be selected for the portfolio. It is important that holders of such securities not only earn on a favourable change of the price, but also receive regular coupon payments and dividends.
When there are new investment ideas and a wish to receive a higher return, one can undertake a higher risk, forming a portfolio of financial instruments with the attraction of margin credit.
“From time to time, stress occurs on the markets and then experienced investors get a chance to buy good quality assets on attractive terms. With margin credit, one can earn even more. During the last five years, our customers were able to earn quite well, for example, on events such as the corruption scandal in Brazil, the imposed sanctions on Russian companies, the news about Brexit, etc. “Passive” investors were able to earn too - during the last five years, the S&P index has grown by 55%, German DAX by 28% and Russian MICEX by 32%,” said Pavel Golubev.
Eleonora Gailisha Mass Media and Public Relations
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