Credit derivatives

VTB arranges deals with various types of credit derivatives, which help not only to redistribute and reduce client credit risk, but also to trade in that risk, or to transfer the risk from the credit derivative’s seller to the buyer.

One example of a credit derivative is a credit default swap — a financial swap agreement that the CDS seller will compensate the buyer in the event of a third party’s loan default. The buyer pays a periodical premium to the seller as stipulated by the agreement. In a credit event during the period of the credit default swap, the seller pays the buyer the compensation agreed. Each credit event is stipulated in the terms of the agreement — for example, the counterpart’s default.

Derivatives deals are arranged on the basis of an agreement between the client and the bank, given that the bank has a limit set for the client.

These deals can be concluded through remote banking as determined by the parties’ agreement: Reuters Dealing, Fax, Telex and BS-Client.