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Procedure documentationEditing the Interest Reimbursement Group Box

 

In the Interest Reimbursement group box on the Calculation tab page, you edit the fields for a condition that belong to amount category 105090 Interest Reimbursement.

In this group box you can define a share of the used margin of a reference condition type or a fixed or variable interest rate as a replacement for the used margin of a reference condition type. This percentage rate is used on the compensated debit/credit share of an account participating in a cross-currency combined settlement to give the customer this interest as a benefit.

You can define different interest reimbursements for each account participating in a combined statement and also for each condition type such as credit interest or debit interest.

You can define the interest reimbursement as simple interest or as multiple interest amounts in tiers, depending on the amount limits. You can link the tiers to amount limits, that is to upper limits (up to and including this limit) or the lower limit (from and including this limit). If the hedged item balance of a reference condition type is under the lower limit of the first tier or over the upper limit of the last tier, then no interest rate is used.

Depending on the settings you make, different screens are available in certain fields when you edit interest reimbursement.

Note Note

The dependency of these fields is described in the documentation for amount category 105090 Interest Reimbursement.

End of the note.

Procedure

You can make the following settings:

Define basic interest reimbursement data

  1. In the Condition Form field, you can enter the use for the condition.

  2. You can enter a payment currency that differs from the condition currency.

    For more information about the dependencies of currencies in conditions, see Currencies in Conditions.

  3. Check the reference condition type.

    The interest reimbursement always refers to the interest calculation of the hedged item, for example, the credit interest of the account. You create the relationship of the condition of the hedged item in condition type Customizing using the reference condition type.

Interest Reimbursement Category: Bid/Offer Spread

  1. If you want to define a share of the used margin of the reference condition type as the basis for calculation of the reimbursement amount, enter the value Bid/Offer Spread in the Interest Reimbursement Category field.

    The used margin of the reference condition type corresponds to the markup or markdown. If the value of the markdown in the reference condition type is greater than that of the reference interest rate, the used margin is reduced to the value of the reference interest rate. You do this because the minimum interest rate of an interest condition is zero.

    Example Example

    The reference interest rate is 0.5%.

    The margin used is 1%.

    This results in a reimbursement interest rate of 0.5%.

    End of the example.

    If you use the bid/offer spread, the reference condition type supplies all parameter necessary for interest calculation, for example, the interest calculation method and the interest calculation type.

  2. In the Tiered/Interval field, enter whether you want to use tiered, interval, or combined tiered and interval calculation.

Specify simple interest reimbursement

A simple interest reimbursement consists of only one condition item and does not have tiers or intervals. If you want to specify simple interest reimbursement, edit the following fields:

  1. In the Tiers/Interval field, enter the value No Tiered or Interval Calculation.

  2. Enter a percentage rate or an interest reference.

  3. You can enter absolute or relative markups or markdowns that refer to the reference interest rate.

    Example Example

    The three-month EURIBOR is 4.733 % on 11/03/2008.

    • You want to define an absolute markup of 2 % on the reference interest rate, so you enter 2.0. The system calculates the following interest rate: 4.733 + 2.0 = 6.733 %.

    • You want to define an absolute markdown of 2 % on the reference interest rate, so you enter -2.0. The system calculates the following interest rate: 4.733 - 2.0 = 2.733 %.

    • You want to define a relative markdown of 10 % of the reference interest rate, so you enter 90. The system calculates the following interest rate: 4.733 * 0.9 = 4.2597 %.

    • You want to define a relative markup of 10 % of the reference interest rate, so you enter 110. The system calculates the following interest rate: 4.733 * 11. = 5.2063 %.

    End of the example.

  4. You can enter a minimum and a maximum interest that the system uses if the reference interest rate is greater or lesser than the minimum or maximum interest rate.

  5. You can use a formula to calculate the percentage.

    For more information, see Formula Editor for Financial Mathematics.

Specify tiered, interval, or combined tiered and interval calculation

If you want to specify tiered, interval, or combined tiered and interval calculation, edit the following fields:

  1. In the Tiers/Interval field, enter the value Tiered Calculation, Interval Calculation, or Combined.

    The system displays the Upper/Lower Limit field and the screen for tiered calculation, interval calculation, or combined tiered and interval calculation.

    • If you enter the value Upper Limit in the Upper/Lower Limit field, you can enter values as upper limits on the screen for tiered, interval, or combined tiered and interval calculation. The tier or interval is then valid up to this value.

    • If you enter the value Lower Limit in the Upper/Lower Limit field, you can enter values as lower limits on the screen for tiered, interval, or combined tiered and interval calculation. The tier or interval is then valid from this value.

  2. You can enter values in the following fields on the screen for tiered, interval, or combined tiered and interval calculation:

    • Percentage rate

    • Interest Reference

    • Absolute/Relative Markup/Markdown for Reference Interest Rate

    • Markup/Markdown Reference Interest Rate

    • Minimum Interest Rate

    • Maximum Interest Rate

    • Formula with formula description

    The fields for each tier or interval are the same as those used to specify a simple interest rate. For more information about the exact entries, see Specify Simple Interest Reimbursement for interest reimbursement category Bid/Offer Spread.

Interest reimbursement category for fixed spread

  1. If you want to define a fixed interest rate as the basis for calculation of the reimbursement amount, enter the value Fixed Spread in the Interest Reimbursement Category field.

  2. Enter an interest calculation method.

    When you have chosen the value actW / 252 in the Interest Calculation Method field, enter an interest calendar.

    For more information, see Interest Calculation Method.

  3. Use the Rounding Category and Rounding Unit fields to control how the system rounds the resulting amounts for interest reimbursement.

    For more information, see Rounding Numerical Values.

  4. You can choose a time unit for the interest rate.

    You use this to define which time unit is used to interpret an interest rate, for example, annual, quarterly, or monthly

  5. In the Interest Calculation field, enter whether you want to use linear or exponential interest calculation.

    If you enter the value Exponential, specify an interest settlement frequency.

    For more information, see Interest Calculation.

  6. In the Tiered/Interval field, enter whether you want to use tiered, interval, or combined tiered and interval calculation.

Specify simple interest reimbursement

A simple interest reimbursement consists of only one condition item and does not have tiers or intervals. If you want to specify simple interest reimbursement, edit the following fields:

  1. In the Tiers/Interval field, enter the value No Tiered or Interval Calculation.

  2. Enter an interest rate for interest reimbursement.

Specify tiered, interval, or combined tiered and interval calculation

If you want to specify tiered, interval, or combined tiered and interval calculation, edit the following fields:

  1. In the Tiers/Interval field, enter the value Tiered Calculation, Interval Calculation, or Combined.

    The system displays the Upper/Lower Limit field and the screen area for tiered calculation, interval calculation, or combined tiered and interval calculation.

    • If you enter the value Upper Limit in the Upper/Lower Limit field, you can enter values as upper limits on the screen for tiered, interval, or combined tiered and interval calculation. The tier or interval is then valid up to this value.

    • If you enter the value Lower Limit in the Upper/Lower Limit field, you can enter values as lower limits on the screen for tiered, interval, or combined tiered and interval calculation. The tier or interval is then valid from this value.

  2. You can enter an interest rate in the following fields on the screen for tiered, interval, or combined tiered and interval calculation for each tier or interval:

Interest reimbursement category: Fixed Spread

  1. If you want to define a variable interest rate as the basis for calculation of the reimbursement amount, enter the value Variable Spread in the Interest Reimbursement Category field.

  2. Enter an interest calculation method.

    When you have chosen the value actW / 252 in the Interest Calculation Method field, enter an interest calendar.

  3. Use the Rounding Category and Rounding Unit fields to control how the system rounds the resulting amounts for interest reimbursement.

  4. You can choose a time unit for the interest rate.

    You use this to define which time unit is used to interpret an interest rate, for example, annual, quarterly, or monthly

  5. In the Interest Calculation field, enter whether you want to use linear or exponential interest calculation.

    If you enter the value Exponential, specify an interest settlement frequency.

  6. In the Tiered/Interval field, enter whether you want to use tiered, interval, or combined tiered and interval calculation.

Specify simple interest reimbursement

A simple interest reimbursement consists of only one condition item and does not have tiers or intervals. If you want to specify simple interest reimbursement, edit the following fields:

  1. In the Tiers/Interval field, enter the value No Tiered or Interval Calculation.

  2. Enter an interest reference.

  3. You can enter absolute or relative markups or markdowns that refer to the reference interest rate.

    Example Example

    The three-month EURIBOR is 4.733 % on 11/03/2008.

    • You want to define an absolute markup of 2 % on the reference interest rate, so you enter 2.0. The system calculates the following interest rate: 4.733 + 2.0 = 6.733 %.

    • You want to define an absolute markdown of 2 % on the reference interest rate, so you enter -2.0. The system calculates the following interest rate: 4.733 - 2.0 = 2.733 %.

    • You want to define a relative markdown of 10 % of the reference interest rate, so you enter 90. The system calculates the following interest rate: 4.733 * 0.9 = 4.2597 %.

    • You want to define a relative markup of 10 % of the reference interest rate, so you enter 110. The system calculates the following interest rate: 4.733 * 1.1 = 5.2063 %.

    End of the example.

  4. You can enter a minimum and a maximum interest that the system uses if the reference interest rate is greater or lesser than the minimum or maximum interest rate.

  5. You can use a formula to calculate the percentage.

Specify tiered, interval, or combined tiered and interval calculation

If you want to specify tiered, interval, or combined tiered and interval calculation, edit the following fields:

  1. In the Tiers/Interval field, enter the value Tiered Calculation, Interval Calculation, or Combined.

    The system displays the Upper/Lower Limit field and the screen for tiered calculation, interval calculation, or combined tiered and interval calculation.

    • If you enter the value Upper Limit in the Upper/Lower Limit field, you can enter values as upper limits on the screen for tiered, interval, or combined tiered and interval calculation. The tier or interval is then valid up to this value.

    • If you enter the value Lower Limit in the Upper/Lower Limit field, you can enter values as lower limits on the screen for tiered, interval, or combined tiered and interval calculation. The tier or interval is then valid from this value.

  2. You can enter values in the following fields on the screen for tiered, interval, or combined tiered and interval calculation:

    • Interest Reference

    • Absolute/Relative Markup/Markdown for Reference Interest Rate

    • Markup/Markdown Reference Interest Rate

    • Minimum Interest Rate

    • Maximum Interest Rate

    • Formula with formula description

    The fields for each tier or interval are the same as those used to specify a simple interest rate. For more information about the exact entries, see Specify Simple Interest Reimbursement for interest reimbursement category Variable Spread.

Result

You have defined an interest reimbursement condition.

More Information

Amount Category 105090 Interest Reimbursement

Editing the Calculation Tab Page