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Risk Management

With a specialized team dedicated to innovative product design, ABC provides customers with diversified services of risk management to help them properly manage various risks in operation and effectively control risks arising from the operational process and volatility of foreign exchange rates and interest rates while seeking returns.

Operational Risk Management
1. Payment Limit Control
The customer can control the amount of a single payment or payment over a certain period from a settlement account and restrict the over-limit transactions.
Procedures: The customer submits an application to an ABC outlet for account opening, and signs the relevant agreement.
2. Payee Management
The customer can control the beneficiary account in electronic payments by defining the scope of beneficiary accounts and preventing payments to non-designated accounts.
Procedures: The customer submits an application to an ABC outlet for account opening, and signs the relevant agreement. 
3. Authorized Payment
In order to enhance centralized financial management, the customer may make a payment and transfer from the accounts of the members electronically once authorized by the members.
Procedures: The customer applies to ABC for access to the Bank-Enterprise Express, and gets authorization from the members.
4. Balance Pre-warning Notice
When the balance of the settlement account is lower or higher than the preset limit, ABC will inform the customer by short message or via the Bank-Enterprise Express.
Procedures: The customer submits an application to an ABC outlet for account opening, and signs the relevant agreement.

Exchange Risk Management
1. Forward Foreign Exchange Purchase and Sale
ABC and the customer sign the contract on forward foreign exchange purchase and sale, where the currency, amount, exchange rate and term for future foreign exchange purchase and/or sale transactions are determined by the customer. Upon the receiving and/or payment of the foreign exchange on the designated date, ABC will purchase or sell (as the case may be) foreign exchanges according to the contract.
It assists the customer to mitigate foreign exchange rate risks and preserve the value of currencies.
Procedures: The customer submits to ABC the commercial documents and relevant vouchers, and signs with ABC the Master Agreement on Forward Foreign Exchange Purchase/Sale. For subsequent transactions under the master agreement, the customer only needs to submit the Forward Foreign Exchange Purchase/Sale Application. Then the customer completes the settlement with ABC as scheduled.
2. Forward Foreign Exchange Trading
ABC and the customer agree to settle foreign exchange sale or purchase at an agreed foreign exchange rate and in an agreed amount on a specified future date.This service is designed for customers that will be exposed to foreign exchange rate risks during a future period.
It satisfies the need of customers to mitigate the risk in foreign exchange rate by fixing the future foreign exchange rate.
Procedures: The customer opens a relevant account and enters into the Master Agreement on Foreign Exchange Wealth Management with ABC, and puts forward the transaction authorization and requirement. Then, ABC offers a solution and a quotation for the forward foreign exchange transaction. After accepting the solution and quotation, the customer submits to ABC the Letter of Authorization for Foreign Exchange Wealth Management. When the transaction is closed, ABC and the customer sign the Customer Transaction Confirmation.
3. Currency Swap
Under the Currency Swap, the customer and ABC exchange the interest for the equal amount of principals denominated in two different currencies, and exchange the principal at the beginning and the end of the period, in order to control medium and long-term foreign exchange rate risks and to change the currencies of the asset or liability.  
The Currency Swap helps the customer to control the potential foreign exchange rate risks arising from currency mismatch of assets and liabilities and to get higher returns on assets by issuing debts with a lower interest rate.
Procedures: The customer signs with ABC the Master Agreement on Foreign Exchange Wealth Management and makes a request to ABC for currency swap. Then ABC offers a solution and a quotation for the currency swap. After accepting the solution, the customer submits to ABC the Letter of Authorization for Foreign Exchange Wealth Management. When the transaction is closed, ABC and the customer sign the Customer Transaction Confirmation.

Interest Rate Risk Management
1. Forward Rate Agreement (FRA)
Under the FRA, the customer and ABC agree to borrow/lend a certain amount of nominal principal with the agreed interest rate during a specified period commencing from a future time. The principal can be denominated in RMB or in a foreign currency.
The FRA helps customers to avoid the increase in the costs of future liabilities or decrease in returns on assets due to the volatility of the interest rate.
Procedures: The customer signs with ABC the Master Agreement for Wealth Management and makes a request for the FRA. Then, ABC offers an FRA solution and a quotation. After accepting the solution, the customer submits the Authorization Form for Wealth Management to ABC. When the transaction is closed, ABC and the customer sign the Customer Transaction Confirmation.
2. Interest Rate Swap
Under the Interest Rate Swap, the customer and ABC agree to exchange the interest rate structure for the equal amount of principal in the same currency during a future period. The principal can be denominated in RMB or a foreign currency.
It changes the interest rate structure of assets or liabilities and therefore helps customers to reduce the costs of liabilities or to improve the returns on assets. This product is designed for customers with long-term interest rate risks.
Procedures: Please refer to the procedures for the Forward Rate Agreement.

Note: Please contact your local branch for detailed information about the service.

Customer Service Center : 95599

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