Source: Royal Bank of Scotland
The Royal Bank of Scotland Financial Markets ('RBS Financial Markets') has today announced that it now offers its corporate customers, across its global markets, a web-based tool to perform hedge effectiveness tests for a range of interest rate and currency derivatives.
RBS Financial Markets has developed and launched the IAS 39 Toolkit, designed to help customers carry out hedge effectiveness assessments, which tend to be the most technical and computationally intensive of the IAS39 hedge accounting requirements.
Commenting on the announcement, John McCormick, Global Head of Sales & Marketing, RBS Financial Markets said: "We recognise that IAS 39 will have a significant impact on our customers. This complex piece of regulation is forcing many of our customers to rethink and review their funding and hedging strategies. The addition of the IAS 39 Toolkit to our range of customer services is in direct response to customer requests for solutions in this field. It demonstrates our growing ability to 'make it happen' in corporate risk solutions."
The IAS39 Toolkit is a user-friendly tool that performs certain calculations, the results of which can assist users with the determination of whether hedge relationships qualify for hedge accounting. Customers simply enter the details of the hedged item (i.e. a loan or a bond), the hedging item (i.e. an interest rate swap), and choose between different methods of assessing effectiveness. The outputs include changes in the fair values or cash flows of the hedged and hedging items due to the hedged risk, as well as offset ratios and other statistical results such as regression.