A Premium Account is a dual currency investment which provides potentially higher returns by taking advantage of currency exchange rate movements.

A Premium Account is a short-term, currency related investment solution. Potentially higher interest rates can be earned while you accept the possibility that at the maturity of the Premium Account, you may receive your principal and interest in either the base or the alternate currency, based on the choices you made at booking. This product is offered across a wide range of currencies.

With Premium Accounts you have the possibility to potentially earn higher interest rates compared to a Time Deposit through the flexible tenors ranging from 7 days to 90 days.

Is Citibank Premium Account for you?

When investing in a Citibank Premium Account timing, choice of currencies and your personal investment preferences are all crucial. You might find a Citibank Premium Account particularly suited to you:

  • If you are indifferent to the two currencies chosen.
    In other words, you are comfortable receiving your money in either the base or the alternate currency.
  • If you wish to hold on to a particular currency that is weakening.
    By investing in this currency in a Citibank Premium Account, you may earn a potentially higher interest, plus you may also have a chance of receiving your money back in the same currency.
  • If you have the view that the exchange rate between the two currencies you have chosen appears to be stable.
    In this case, the limited exchange rate movement between the currencies will help to improve your interest differential gains.

Follow these steps:

1. Select your Investment Parameters:

Your investment strategy is reflected in your selection of the following Investment Parameters.

  • 1. Decide on the currency pair for Premium Account Establishment
  • 2. Decide on the investment amount
  • 3. Select a tenure that you are comfortable with
  • 4. Choose a preferred exchange rate between the currencies as your strike rate
  1. Currency Pair comprises of the currency in which you will make available your investment amount (Base Currency)and a second currency which you are prepared to receive on maturity (Alternate Currency).
    • Choose your Base Currency and Alternate Currency from the wide range of currencies available for investing.
  1. Investment amount can start from as low as USD 25,000 or equivalent.
  2. Investment tenor is the period of your investment. You can select your tenor from 1 week to 3 months as shown below.
  • 1 week
  • 2 weeks
  • 3 weeks
  • 1 month
  • 2 months
  • 3 months
    • Please note that upon establishing your Premium Account successfully, the investment tenor is locked and cannot be altered till maturity.
    • Each Premium Account tenor has 4 important dates to note.
    • Transaction Date: The date you establish your Premium Account successfully.
    • Value Date: The date on which Citibank accepts the investment amount from you (usually by debiting your Citibank account) and the date from which you will start earning interest. This date is normally the same as the Transaction Date.
    • Expiry Date: The date Citibank determines whether to pay the proceeds of your investment in the Base Currency or the Alternate Currency. This is normally two business days before the Maturity Date.
    • Maturity Date: The date on which the proceeds of your investment is repaid.
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  1. Differential from Spot and Strike Rate
    • The Differential from Spot and Strike Rate determine the interest yield of your Premium Account.
    • Differential from Spot: The difference between Spot Rate of your Currency Pair at the time of investment and Strike Rate.
    • Spot Rate: The prevailing exchange rate for your selected Currency Pair.
    • Strike Rate: The predetermined exchange rate you choose. Your proceeds will be converted into your Alternate Currency at this rate on Expiry Date.
    • The greater the difference between Spot Rate on Transaction Date and the Strike Rate (in other words, the higher the Differential from Spot), the less likely you will receive your Alternate Currency upon maturity.

2. How to choose the Differential from Spot & Strike Rate?

  1. Interest yield has an inverse relation with the Differential from Spot. A lower Differential from Spot has a potentially higher potential interest yield.
Strike Rate (determined by you) Differential from Spot (determined by you) Interest Yield (computed by system)
Nearer to Prevailing Spot Rate Lower Differential from Spot Higher Interest Yield
Further from Prevailing Spot Rate Higher Differential from Spot Lower Interest Yield
  1. If you want to receive the returns of your investment in the same currency that you invested in (Base Currency), you may want to choose a higher Differential from Spot so there is a lower probability of getting converted into the Alternate Currency.
    • However, if you want to receive the investment in the Alternate Currency or are indifferent in receiving either currency, your strategy may be to place a smaller buffer (smaller Differential from Spot), thereby allowing you to earn a higher interest yield.
Differential from Spot (you choose) Probability of receiving your investment proceeds (principal+ interest) in the Base Currency (upon maturity) Probability of receiving your investment proceeds (principal+ interest) in the Alternate Currency (upon maturity)
Higher Higher Lower
Lower Lower Higher
  1. Do you prefer to hold the Base Currency or Alternate Currency upon maturity?
Preference Upon Maturity Differential from Spot Strike Price Tenor Interest Yield % Investment Strategy
Base Currency Higher Further from Prevailing Spot Rate Shorter Tenor Lower Interest Yield Conservative
Alternate Currency Lower Nearer to Prevailing Spot Rate Longer Tenor Higher Interest Yield Aggressive

To summarize overall, the selection of your Differential from Spot is dependent on your investment objective.

3. Currency determination and maturity

On the Expiry Date, which is usually one/two business days before the Maturity Date, Citibank at its sole and absolute discretion will determine whether the proceeds (principal + interest) of your investment will be repaid in the Base Currency or the Alternate Currency. This will depend on a comparison between the Strike Rate which you have selected and the prevailing Spot Rate for your Currency Pair on the Expiry Date. Your proceeds will be returned to you in the Base Currency if the Spot Rate on Expiry Date did not reach or exceed the Strike Rate previously determined by you at the start of the Premium Account.

For more information on Premium Accounts & Product Simulation please call your Relationship Professional at Citibank, or the Treasury desk on +971 4 604 4497 or +971 4 604 4743 during working hours : 9AM - 5PM, UAE time from Monday to Thursday.

Glossary

  • Alternate Currency: Means the currency in which we buy the Base Currency from you, in the event we choose to exercise the Currency Option
  • Base currency: Means the currency in which you agree to sell us the Currency Option and the currency in which the Initial Investment is made.
  • Currency Option: Means the right (but not the obligation) for Citibank NA, to convert your Initial Investment and Option Premium into the Alternate Currency at the Strike Rate at maturity.
  • Expiry Date: Means the date on which your Premium Account expires and the date on which we determine if the payment is made to you of the Initial Investment and Option Premium in either the Base or Alternative currency.
  • Maturity Date: Means the date on which your Premium Account matures and the date on which we pay you the Initial Investment and Option Premium.
  • Initial Investment: Means the initial principal sum invested by you and which we may buy back from you in the Alternate Currency (The minimum investment amount is US$25,000 or equivalent)
  • Option: An Option is a financial instrument that specifies a contract between two parties for a future transaction on an asset at a reference price. The buyer of the Option gains the right, but not the obligation, to engage in that transaction, while the seller incurs the corresponding obligation to fulfill the transaction. The underlying asset can be a stock, a bond, a currency or a future. In a Premium Account, Citibank NA. will buy a Currency Option from you.
  • Option Premium: Means the premium payable by us to you as consideration for you granting us the Currency Option.
  • Strike Rate: Means the pre-agreed exchange rate of one unit of the Base Currency into the Alternate Currency
  • Tenor: Means the period of time from when the Premium Account begins until the Maturity Date. The Tenor will normally range from one-week to three-months.

FAQ

Disclaimer

A Citibank Premium Account is a dual currency investment that involves a currency option which confers on the bank the right to repay the principal and interest earned at maturity in either the base currency or alternate currency. Part or all of the interest earned at maturity on the Citibank Premium Account represents the premium that the bank pays for the currency option.

By investing in a Citibank Premium Account, you are giving the bank the right to repay you at a future date in the alternate currency (instead of the base currency in which your initial investment was made), regardless of whether you wish to be repaid in the alternate currency at that time.

Unlike a traditional bank account, a Citibank Premium Account has an investment element and returns may vary. Citibank Premium Accounts are subject to a number of risks, including foreign exchange fluctuations, which may provide both opportunities and risks. You may experience a foreign exchange loss when you convert any alternate currency into the base currency, which may neutralize the interest earned at maturity and may even result in losses to the principal. It may happen if the alternate currency depreciates in value against the base currency and the interest earned at maturity will not compensate for the foreign exchange loss, which in that case will be incurred when the principal and premium received in the alternate currency are converted back into the base currency. Exchange controls may also apply to currencies your Citibank Premium Account is linked to. For more information on a Citibank Premium Account, you should carefully read the terms and conditions of the Citibank Premium Account.

You should note that a Citibank Premium Account is an investment product that should be held to maturity. Early withdrawal of a part of a Citibank Premium Account prior to the maturity date is not permitted. Early withdrawal of the whole of a Citibank Premium Account is permitted but strongly discouraged, because you will have to pay early termination charges as determined by the bank, and these charges will be deducted from the amount repaid under the Citibank Premium Account. You should also note that the bank may, at any time at its discretion, discharge its entire liability with respect to a Citibank Premium Account by paying you your principal and interest that has accrued in the base currency or a currency of the Bank's choice.

Investment products are not bank deposits or obligations or guaranteed by Citibank N.A., Citigroup Inc. or any of its affiliates or subsidiaries unless specifically stated. Investment products are not insured by government or governmental agencies. Investment and Treasury products are subject to Investment risk, including possible loss of principal amount invested. Past performance is not indicative of future results: prices can go up or down. Investors investing in investments and/or treasury products denominated in foreign (non-local) currency should be aware of the risk of exchange rate fluctuations that may cause loss of principal when foreign currency is converted to the investors home currency. Investment and Treasury products are not available to U.S. persons. All applications for investments and treasury products are subject to Terms and Conditions of the individual investment and Treasury products. Customer understands that it is his/her responsibility to seek legal and/or tax advice regarding the legal and tax consequences of his/her investment transactions. If customer changes residence, citizenship, nationality, or place of work, it is his/her responsibility to understand how his/her investment transactions are affected by such change and comply with all applicable laws and regulations as and when such becomes applicable. Customer understands that Citibank does not provide legal and/or tax advise and are not responsible for advising him/her on the laws pertaining to his/her transaction. Citibank UAE does not provide continuous monitoring of existing customer holdings.