Repurchase Agreements (REPO)

Repurchase agreement (REPO) is the transaction under which one party, for money, transfers to other party financial assets, committing to repurchase it within the specified time limit.

This transaction is a quick and convenient way to borrow money for a certain period of time securing with the financial instruments available. For example, if you have bonds and want to keep them to maturity, but you need the money, you can enter into a repurchase transaction, i.e. borrow money from the bank, mortgaging the bonds.

Repo transactions may be entered into by natural and legal persons that meet the criteria for the Professional Client category as set out in the publicly available Client Category Rules.

• After having entered into the main REPO, later you can enter into other transactions in the most convenient way: in the bank outlets, by phone or by e-mail.
• The funds are transferred to you on the transaction date.
• When borrowing money in this way, there is no need to submit a certificate of income.
• After having pledged your securities, you still retain the rights associated with them, that is to receive dividends, coupons and so on.

The loan amount depends on the pledged securities, for example, having pledged:

• Shares and funds, you can receive up to 70 percent of the pledged shares' market value;
• Bonds - up to 90 percent of pledged bonds' market value.

The maturity is up to 1 year.

On the one hand, the repurchase transaction is a pretty easy way to get credit, on the other hand, it can be a complex financial instrument linked to a higher than normal credit risk. REPO transaction risk depends on the purpose for which you are borrowing and on the kind of financial instruments pledged: government securities, bond market value generally fluctuates less than the stock market or the market of the shares the investment funds are investing in.

The risk occurs when the market value of mortgaged financial instruments goes down:

• In the case the collateral value has declined more than the limit set in the contract, the bank may require to transfer the guarantee contribution, which must be transferred immediately;
• In the case of borrowing money to invest it again in the same financial instruments, if their market value falls, the risk to lose more than without borrowing exists. In addition, the interest paid for borrowing further reduces the overall investment value.

By entering into transaction using borrowed funds, you risk to lose both your own and borrowed moneys, which are still to be repaid.

Before entering into a repurchase transaction, with the help of investment adviser, you should familiarize thoroughly with transaction conditions and assess your ability to take on the risks described herein.

1. First of all, in any Šiaulių bankas unit you have to sign a contract for the provision of investment services and the main REPO agreement.
2. You can make REPO transactions in the bank branches, by telephone or e-mail, specified in the Main Agreement.

The most convenient way is to fill this request form, and required specialist will contact you.

For more information on these transactions, conditions and rates you can call 8700 55 055 (+370 37301337 when calling from abroad).

The information contained herein is only a presentational marketing message. It cannot be regarded as an offer to buy any financial instrument, to sell it and (or) to conclude the transaction (s).

Please note that investing involves certain risks, so before making an investment decision, you have to assess that, under certain circumstances, which are independent of Šiaulių bankas AB will and action, your investment value can drop. Šiaulių bankas AB is not responsible for your decisions taken on the basis of the information contained herein.