July 2017

NOWS THE TIME TO REVIEW YOUR FOREIGN CURRENCY LOAN

Foreign Currency Loans became very popular a few years ago. Depending on the currency they potentially offered consumers and companies low interest rates, at attractive exchange rates. But recent experience has shown they can become a problem where they have been sold to consumers and small firms that may not be familiar with the potential pitfalls of such sudden changes in exchange rates. Many legacy loans are still active and still causing problems.

Loans in Swiss Francs are a good example. They were popular in countries like Croatia, Poland, Hungary and Romania. But when the Swiss National Bank stopped pegging Swiss francs to the euro in January 2016, the cost of servicing them shot up.

 

This left many debtors struggling to keep up with loan repayments, which in turn put pressure on governments to take action to help those in difficulty. Some countries have already passed laws to protect consumers and small business owners, others  are considering doing so.
There are professional ways to hand foreign currency loans through Managed Currency Mortgages. A successful currency manager will move the borrower's debt into a currency which subsequently falls in value against the base currency.


The manager can then switch the loan back into the base currency (or another weakening currency) at a better exchange rate, thereby reducing the value of the loan. A further benefit of this approach is that the currency manager will try to select currencies with a lower interest rate than the base currency, and the borrower therefore can make substantial interest savings.

Its possible to calculate the estimated damage or downside of a typical loan and to make comparisons between a foreign currency loan and a conventional one using the Euribor Index. AGN member firms can assist with this analysis.


REFERENCES

For more information check the following links:
Statement at the European Parliament on Foreign Currency Loans
Systemic risk in Europe due to foreign currency loans1



CONTACT DETAILS

For more information about how you or your client might take advantage of this opportunity see the contact details of the AGN Firm below:


Firm: Munt Audit&Forensic
Contact Person: David Muntané
Phone: (34) 931 24 03 18
EMail: dmuntane@muntaudit.es
Website: www.muntaudit.es

AGN International Ltd is a company limited by guarantee registered in England & Wales, number 3132548, registered office at 24 Greville Street, London EC1N 8SS, United Kingdom.

AGN International Ltd (and its regional affiliates; together "AGN") is a not-for-profit worldwide membership association of separate and independent accounting and advisory businesses. AGN does not provide services to the clients of its members, which are provided by Members alone. AGN and its Members are not in partnership together, they are neither agents of nor obligate one another, and they are not responsible or liable for each other's services, actions or inactions.

This communication is generic in nature, for general information only and does not constitute professional advice. It should not be relied upon in arriving at any decision, and no responsibility is accepted. Salient facts should be verified and professional advice should be taken before taking or refraining from any course of action.

Copyright © 2017 AGN International Ltd, All rights reserved. You are receiving this because you are a member of AGN International Ltd


 

NOTE TO AGN MEMBERS:

Firms with a legal capability may have clients who need a forensic analysis to support a future claim. Alternatively law firms themselves could use AGN audit firms with forensic accounting expertise to produce client reports that detail the financial damage and losses from one of these investments. 

 
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AGN International Ltd is a company limited by guarantee registered in England & Wales, number 3132548, registered office at 24 Greville Street, London EC1N 8SS, United Kingdom.

AGN International Ltd (and its regional affiliates; together "AGN") is a not-for-profit worldwide membership association of separate and independent accounting and advisory businesses. AGN does not provide services to the clients of its members, which are provided by Members alone. AGN and its Members are not in partnership together, they are neither agents of nor obligate one another, and they are not responsible or liable for each other's services, actions or inactions.

This communication is generic in nature, for general information only and does not constitute professional advice. It should not be relied upon in arriving at any decision, and no responsibility is accepted. Salient facts should be verified and professional advice should be taken before taking or refraining from any course of action.

Copyright © 2015 AGN International Ltd, All rights reserved. You are receiving this because you are a member of AGN International Ltd

 


This publication has been prepared for the purpose of quick information dissemination. Its contents should not be used as a basis for advice or formulating decisions under any circumstances.

AGN International Ltd is a company limited by guarantee registered in England & Wales, number 3132548, registered office 6 Hays Lane, London Bridge, London SE1 2HB, United Kingdom.
AGN International Ltd (and its regional affiliates; together "AGN") is a not-for-profit worldwide membership association of separate and independent accounting and advisory businesses. AGN does not provide services to the clients of its members, which are provided by Members alone. AGN and its Members are not in partnership together, they are neither agents of nor obligate one another, and they are not responsible or liable for each other's services, actions or inactions.

Copyright © 2020 AGN International Ltd, All rights reserved. You are receiving this because you are a member of AGN International Ltd




6 Hays Lane, London Bridge, London SE1 2HB, United Kingdom

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