Types of Risk
Leverage Risk
Depending on market conditions, the value of your collateral may fall. You may then be called upon to “top up” your account or to repay your outstanding credit facilities at short notice. It is a requirement that the value of the collateral is maintained at the required level. The Bank may have to liquidate your collateral at a loss to repay any amount outstanding and you would be liable for any amounts still owing subsequently.
Interest Rate Risks
The interest rate of your credit facility may increase, resulting in a higher interest payment amount for the facility.
Foreign Exchange Risks
Your credit facilities may be subject to additional foreign exchange risks if they are taken in a different currency other than that of your collateral. If the exchange rate moves against you, the repayment amount of the facilities may be affected.
Change in credit Loan to Value (LTV) ratio
LTV ratios are subject to periodic review and may change within a short period of time. When the LTV of your collateral is reduced, you will need to have sufficient liquidity to repay your outstanding credit loan or pledge additional collateral as security for the credit facility.
Leverage Risk
Depending on market conditions, the value of your collateral may fall. You may then be called upon to “top up” your account or to repay your outstanding credit facilities at short notice. It is a requirement that the value of the collateral is maintained at the required level. The Bank may have to liquidate your collateral at a loss to repay any amount outstanding and you would be liable for any amounts still owing subsequently.
Interest Rate Risks
The interest rate of your credit facility may increase, resulting in a higher interest payment amount for the facility.
Foreign Exchange Risks
Your credit facilities may be subject to additional foreign exchange risks if they are taken in a different currency other than that of your collateral. If the exchange rate moves against you, the repayment amount of the facilities may be affected.
Change in credit Loan to Value (LTV) ratio
LTV ratios are subject to periodic review and may change within a short period of time. When the LTV of your collateral is reduced, you will need to have sufficient liquidity to repay your outstanding credit loan or pledge additional collateral as security for the credit facility.
