Contract Currency Changeover (TR-LO)

Contract Currency Changeover (TR-LO)

Purpose

Within the Loans component, the transaction currency (in other words, the currency valid for the customer relationship) is referred to as the contract currency.

With the contract currency changeover, you convert the loans managed in the currency you want to convert (such as DEM) to the euro.

In the dual currency phase (from 01/01/1999), the borrower can choose whether the loan is managed in the original currency or in euros.

In this dual currency phase, you need to differentiate between individual and mass loans processing. Mass processing is supported from Release 4.5B.

You can change over the contract currency either before or after the local currency changeover.

In the Loans application menu, the following functions are available for the contract currency changeover:

Menu

Function

Portfolio ® Contract currency ®

Convert to euro

Portfolio ® Contract currency ®

Reset

The following examples look at four different scenarios for the contract currency changeover:

1: Contract currency changeover of local currency loans after the local currency changeover

LC and CC = DEM before 01/01/1999

LC changeover on 04/18/1999 as at 01/01/1999 (start of fiscal year)

CC changeover on 02/15/2001

LC = Local currency

CC = Contract currency

FC = Foreign currency (participating currency)

1. Before the local currency changeover (04/18/1999) from DEM to EUR, the loans are managed as local currency loans.

2. In the period between the local currency changeover and the contract currency changeover (04/18/1999 to 02/15/2001), the loans which were originally local currency loans are managed as foreign currency loans.

3. After the contract currency changeover (02/15/2001), the original local currency loans are changed back to local currency loans.

2: Contract currency changeover of foreign currency loans after the local currency changeover

LC ¹ CC

LC = DEM / CC = FRF before 01/01/1999

LC changeover on 04/18/1999 as at 01/01/1999 (start of fiscal year)

CC changeover on 11/18/2001

LC = Local currency

CC = Contract currency

FC = Foreign currency (participating currency)

1. Before the local currency changeover (04/18/1999) from DEM to EUR, the loans are managed as foreign currency loans.

2. In the period between the local currency changeover and the contract currency changeover (04/18/1999 to 11/18/2000), the loans are still managed as foreign currency loans.

3. After the contract currency changeover (11/18/2000), the loans which were originally foreign currency loans are managed as local currency loans. This only applies for foreign currencies which are participating currencies in EMU.

3: Contract currency changeover of local currency loans before the local currency changeover

LC and CC = DEM before 01/01/1999

LC changeover on 03/15/2001 as at 01/01/2001 (start of fiscal year)

CC changeover on 01/05/1999

LC = Local currency

CC = Contract currency

FC = Foreign currency (participating currency)

1. Before the contract currency changeover (5.1.1999) from DEM to EUR, the loans are managed as local currency loans.

2. In the period between the contract currency changeover and the local currency changeover (01/05/1999 to 03/15/2001), the converted loans (as well as new euro loans) are managed as foreign currency loans.

3. After the local currency changeover (03/15/2001), the loans are managed as local currency loans again.

4: Contract currency changeover of foreign currency loans before the local currency changeover

LC ¹ CC

LC = DEM / CC = FRF before 01/01/1999

LC changeover on 03/15/2001 as at 01/01/2001 (start of fiscal year)

CC changeover on 10/12/1999

LC = Local currency

CC = Contract currency

FC = Foreign currency (participating currency)

1. Before the contract currency changeover (10/12/1999) from DEM to EUR, the loans are managed as foreign currency loans.

2. In the period between the contract currency changeover and the local currency changeover (10/12/1999 to 03/15/2001), the loans are still managed as foreign currency loans.

3. After the local currency changeover (03/15/2001), all the euro loans are managed as local currency loans.

You can also convert the contract currency from a participating EMU currency to the euro if the local currency is not a participating currency.

Features

The changeover involves three steps:

· Preparation activities (general activities and activities per loan contract)

- Here, you ensure that all the prerequisites for the changeover have been fulfilled.

· Conversion

- Each contract is converted to the euro individually.

· Cleanup activities

- Check log

- Perform balance sheet transfer

Constraints

The system does not offer a general contract currency conversion function (for example, from USD to FRF). It only supports the changeover of a currency participating in EMU to the euro (according to the settings in Customizing).

Additional Functions

Reset:

You can only reset the changeover directly after the changeover has been carried out. This function is only permitted if no postings have been made since the changeover, or if any such postings have been reversed.

There is no mass processing function for the reset.

Before the contract currency changeover, the cash flow amounts are saved to backup tables. If the contract currency changeover is reset, the system uses the amounts from these backup tables. You only need to deal with postings made after the contract currency changeover manually. These need to be reversed, translated and then re-posted. Any postings generated automatically during the contract currency changeover do not need to be reversed manually.

- To reset a contract currency changeover you have already made, choose Loans ® Portfolio ® Contract currency ® Reset.

- Enter the selection and control parameters.

- To reset the changeover, choose Execute.

If an overpayment has already been cleared automatically (reversal indicator 3) since the contract was changed over to the euro, the changeover can no longer be reset. The reset program checks for this and, if necessary, rejects the contract.

Correspondence:

This function allows dual display of currencies in special correspondence documents (such as Payment notification: Dual currency).

The function module for currency translation in correspondence is EMUL_ALTERNATE_CURR_FOR_SCRIPT.

The following sections describe the preparation activities, the conversion process and the cleanup activities required for the contract currency changeover to the euro.

Menu	Function
Portfolio ® Contract currency ®	Convert to euro
Portfolio ® Contract currency ®	Reset