Bank of Cyprus has just launched its new eFX Convert service. What changes does it bring for currency conversions?

Many changes are afoot as Bank of Cyprus has become the first bank in Cyprus to offer customers the ability to convert currencies with real-time prices - or 'live pricing' - while simultaneously doing away with the complex processes that until recently were needed for such conversions. It is important to highlight that eFX Convert covers more than 45 currency pairs, so customers can transact easily, quickly, and from the comfort of their home or office using their computer or even their mobile phone, and without being charged any fees or commissions.

Currently customers can execute transfers and conversions in their own connected accounts or to the accounts of other Bank of Cyprus customers. For overseas payments, they can contact their accounts officer at the Bank and open an account in the currency in which they transact. Next, they can make the conversion and immediately transfer to a foreign currency account the amount in the currency of the payment, and then perform the transfer by debiting that account. For instance, for a payment in Japanese Yen, you can convert from euro and instantly credit your account in Japanese Yen using the eFX Convert service. Then you perform the payment directly from this account in Japanese Yen. So, the entire process is done online, and it's fast and easy. 

Does that apply to any amount?

Yes, the service applies to any amount which customers have available in their account. It's also important to note that there's no minimum or maximum on the amount you can convert for transfers between your connected accounts. When it comes to transfers to the accounts of another entity at the Bank of Cyprus, the relevant restrictions/settings for transfers using 1bank apply.

 How important are real-time currency conversions?

Very important and extremely useful. Just imagine that eFX Convert allows customers to view prices in real time, so if they agree with the foreign exchange conversion rate, they can go ahead and do it. We should also stress that once a customer completes the transaction, he or she will see that his/her accounts are credited/debited instantaneously. So, for example, if someone sells euro to buy dollars, once the transaction is completed, they will see the dollars credited to their dollar account, and at the same time their euro account debited by the corresponding amount. Obviously a perfectly transparent process, that is available from 7.30am to 5.30pm.

For transactions involving currency conversions which are placed in 1Bank outside operating hours, the client will not receive any live rates and will have the option to place the transaction as “Pending for future execution”. In this case, the order will be executed the following workday, at the then-available currency exchange rate.

Give us an example of a transaction performed in the recent past, and an example of a transaction using eFX Convert.

Previously customers had to call the Bank, send a fax, or file instructions via 1bank. The instructions were passed on to the bank staff and then to another department in the Bank, in order for the transaction to be completed. This took time and money, and the customer bore the cost.

Now, customers can instantly convert using 1bank, with just the push of a button. So, our customers have access to a new currency conversion service that's effective, efficient and easy to use. Also, it's important to note that with this new process, customers incur no fees or commissions.

Your department also offers hedging services. Can you elaborate?

Yes, we offer hedging solutions to companies in Cyprus. The two main risks which a Cypriot company might face are related to:

• Currency exchange fluctuations and
• Interest rate fluctuations

For foreign exchange related risks, we offer our customers products allowing them to lock into the forward exchange rate which is based on the current spot rate for conversions performed in the future. Let’s say an importer needs to make a payment three months from now. He doesn't want to be exposed to adverse exchange rate fluctuations. To guard against this, the importer may lock in an exchange rate today with an FX forward contract. For example, if he needs to pay in dollars, he can lock in an exchange rate today to pay in US dollars in three months. In this way importers and exporters can mitigate their exchange rate risks and accordingly adjust their pricing and budgeting. 

When it comes to managing interest rate fluctuations, this mainly concerns large customers who hold loans referenced to a variable interest rate - like Euribor - and are exposed to possible interest rate hikes. In such cases customers can use hedging products to either convert the variable interest rate into a fixed rate (interest rate swaps) or to limit their exposure by purchasing an interest rate cap. So, in essence, they can reduce or eliminate any interest rate risk. 

These are the main products used by our customers for hedging. But beyond that, we also deal with customers’ wealth management needs. Specifically, we transmit/execute all capital market transactions in shares, mutual funds, and bonds in the international markets.

Finally, we also offer structured products. We can create or sell structured products tailored to a customer's preferences and risk appetite. 

More broadly, I'd say that our department operates as a treasurer for Bank of Cyprus customers, assisting them in performing their transactional needs and providing solutions for hedging their market risk.