Mobile Digipass for Android, second pension pillar investment plan, and other autumn innovations

Riga, Latvia, September 21, 2017, 09:57 / Banking

Payment card offer optimization, financing of goods exported from Ukraine, letter of credit financing, LEI for legal entities to make financial instruments transactions, New Hanza Capital bond issue, new issues of ABLV Bank bonds, management of funds allocated to second pension pillar, and mobile Digipass for Android — these are only some of the innovations in our products and services, which have been introduced or will be implemented within a month for our clients’ convenience.

1. Payment Card Offer Optimization

To ensure clearer positioning of card products, from 1 December 2017 we will optimize our payment card offer. In future, we will issue VISA payment cards only. Thus, it will be easier for clients to choose the card of the class corresponding to their needs, and we will be able to pay even more attention to improvement of our payment card services.

Moreover, we will switch to issuing credit cards only, and therefore VISA Classic or VISA Business will be offered instead of Cirrus, Maestro, and VISA Electron debit cards. As far as Mastercard Classic, Business, Gold, Gold Business, and American Express Platinum and Centurion cards are concerned, we will offer the clients the possibility to obtain corresponding VISA cards instead of those.

To improve our offer, amendments to the payment card rates and charges will become effective on 1 December 2017. In future, receipt of SMS and e-mail notifications and PIN code unblocking will be ensured free of charge for all cards. Moreover, fees for purchases made using Classic and Business cards will be also cancelled, and currency conversion fee if transaction currency differs from the card account currency will be changed to 2.5% for all cards. The fee for replacement or urgent production of any card will be equal to EUR 30. 

2. Financing of Goods Exported from Ukraine

Considering the clients’ demand and the importance of Ukrainian market for further development of trade finance, we began offering transactional commodity trade finance involving the goods exported from Ukraine and stored at the territory of Ukrainian ports for a short time.

Ukraine is one of the major grain products exporting countries in the world, and therefore grains and grain products have been included in the range of financed goods. The range of ABLV financed goods exported from Ukraine includes metal industry products as well.

3. Letter of Credit Financing

Under export of goods, clients might need immediate payment for dispatch of the goods before the payment is made by the buyer's bank, and having assessed the demand for this, we developed the conditions of letter of credit confirmation. By confirming a letter of credit, the bank undertakes the insolvency risk of the buyer’s bank.

Further, if our clients opt for letter of credit confirmation, they will be able to receive payment for the batch of goods from the bank directly, before the payment is made by the buyer’s bank, provided the appropriate documents about the goods dispatch are submitted to ABLV.

Moreover, there were financing conditions developed for the clients enabling the buyers of their products to choose deferred payment conditions when making the respective letter of credit, namely:

  • short-term loan for financing the letter of credit, where the interest will be paid by the seller of goods (client of ABLV);
  • financing (discounting) of the letter of credit issuing bank, where the interest will be paid by the buyer.

4. LEI for Companies to Make Transactions in All Financial Instruments

According to new legislative requirements of the European Union, legal entities will need LEI (Legal Entity Identifier) for transactions in financial instruments, regardless the residence of those legal entities.

From 1 November 2017, this requirement will be applicable to transactions in derivative financial instruments and FORWARD transactions, whereas from 3 January 2018 — to transactions in any financial instruments, including stocks, bonds, etc.

LEI can be obtained through the offices of special certified registration authorities. This is a unique alphanumerical code consisting of 20 symbols, used as identifier of each legal entity that appears to be a financial market player as one of the transaction parties.

For the convenience of our clients, we offer LEI registration to all our clients–companies on their behalf, without additional power of attorney needed. LEI registration procedure can take up to two weeks.

From 1 November 2017, we will introduce the fee for brokerage cash account maintenance applicable to legal entities, which will be equal to EUR 10 per month. The fee covers LEI registration and further annual maintenance.

5. Opening of Individual Clients’ Financial Instruments Accounts with Central Depositories

Improving our securities custody service, from October this year we will offer the opportunity to open individual financial instruments accounts with central depositories (CSD) to our clients.

Individual accounts will be of interest for institutional clients, which have many financial instruments. Those accounts ensure additional safety of holding the clients’ assets, and their management will be easier.

The fee for opening an individual account with the central depository is EUR 12 000, and the fee for financial instruments custody is a standard one, as set forth in the effective rates and charges.

New service becomes available due to merger of all Baltic central depositories, including Latvian Central Depository, which we are a participant of, into a single Nasdaq CSD SE. This depository has acquired the status of central securities depository (CSD). Therefore, this will be the first depository in Europe operating within the framework of CSD Regulation. Our second cooperation partner — Euroclear Bank SA/NV — is also supposed to acquire CSD status soon.

6. Reorganization of Mutual Fund ABLV High Yield CIS Bond Fund

Following the assessment of performance of open-end mutual funds managed by ABLV Asset Management, IPAS and the situation in financial markets, the decision on reorganization of corporate bond fund ABLV High Yield CIS Bond Fund has been made.

The fund was established in June 2007 for the sake of offering the investors the opportunity to make diversified investments in the debt securities (denominated in USD) issued or guaranteed by the commercial companies registered in the CIS states, those securities having relatively high expected return.

In January 2012, the fund was split into two subfunds — ABLV High Yield CIS USD Bond Fund and ABLV High Yield CIS RUB Bond Fund — so that investors could make investments in Russian roubles as well. Both subfunds share the same investment policy and management principles. Since January 2012, the share value of both subfunds has grown by more than 30%, and their annualized return since inception exceeds 5%.

However, unfavourable taxation regime applicable to the securities of the Russian issuers denominated in Russian roubles (up to 30% tax on interest income) preclude expected return of ABLV High Yield CIS RUB Bond Fund from meeting the investors’ interests in terms of the risk-return ratio. Also, this subfund was less popular among the investors because of quite unpredictable and drastic fluctuations in the rate of Russian rouble against the USD and EUR. Therefore, the decision on terminating the operations of this subfund was made, enabling the fund manager to use the resources more efficiently, entirely focusing on the USD subfund management.

Following the permission given by the Financial and Capital Market Commission, the liquidation of ABLV High Yield CIS RUB Bond Fund will be started on 27 September 2017, and the same is planned to be completed by the end of December. Given the beginning of liquidation, redemption of the investment certificates of ABLV High Yield CIS RUB Bond Fund will be stopped from 27 September 2017.

Distribution of the liquidation revenues to the subfund investors will be performed after all property of the subfund is sold, and the investors’ claims will be satisfied in monetary form. Should you have any questions, please call +371 6700 2777.

7. Issue of New Hanza Capital bonds

Given the development of its property portfolio and the growing transaction amounts, commercial property investment company New Hanza Capital decided to launch bond issue programme for the sake of acquiring new investors and raising additional capital for implementation of the company’s business plans. New Hanza Capital bond issues are supposed to be performed on a regular basis — once a year, in autumn.

The size of the first bond issue is planned to be EUR 10 million. Subscription to the bonds was started on 18 September 2017, and it will last till 6 October 2017. Following the issue, the bonds are supposed to be admitted to Nasdaq Riga regulated market, and therefore those will be available to wide range of investors in the secondary market. Parameters of the issue:

  • Coupon bond issue of EUR 10 000 000
    (issue name: NHC FXD EUR 161022; ISIN: LV0000802312)
    The issue size is EUR 10 000 000.The number of bonds is 10 000. The face value of one bond is EUR 1 000. The annual interest rate is fixed: 4.9% with coupon payment twice a year. Initial placement price: 100% of the face value. The issue date is 16 October 2017, and the maturity date is 16 October 2022. The issuer may exercise the call option starting from the third year.

The bond issue is arranged by ABLV Bank, which made the necessary documents under the bond issue and will also perform initial placement of the bonds. Having accrued the experience and knowledge of debt securities issuing, from 2016 we offer the issue arrangement service to the clients and our cooperation partners.

New Hanza Capital, AS was established in 2006. The objective of its operations is investing own funds and funds of third parties in commercial properties, reaching sustainable increase in the rent income and ensuring long-term growth in the property value and capital. The largest shareholder of New Hanza Capital, AS is ABLV Bank, AS, which holds 88% of the company’s shares. The company’s portfolio of commercial properties includes airBaltic central office in Riga airport, logistics centre in Ķekava municipality, and other properties.

8. New Issues of ABLV Bank Bonds

We continue the bond issue programme launched in 2011, under which we have performed 43 public bond issues so far, their total face value equalling EUR 1.4 billion. Under the Seventh Bond Offer Programme, we will perform three new issues of the bonds in October this year, and those will be admitted to the regulated market — Nasdaq Riga Baltic Bond List.

Parameters of the issues are stated below.

  • Coupon bond issue of USD 75 000 000
    (issue name: ABLV FXD USD 271019; ISIN: LV0000802320)
    The issue size is USD 75 000 000. The number of bonds is 75 000. The face value of one bond is USD 1 000. The annual interest rate is fixed: 2.15% with coupon payment twice a year. Initial placement price: 100% of the face value. The issue date is 27 October 2017, and the maturity date is 27 October 2019.
  • Coupon bond issue of EUR 20 000 000
    (issue name: ABLV FXD EUR 271019; ISIN: LV0000802338)
    The issue size is EUR 20 000 000. The number of bonds is 20 000. The face value of one bond is EUR 1 000. The annual interest rate is fixed: 0.95% with coupon payment twice a year. Initial placement price: 100% of the face value. The issue date is 27 October 2017, and the maturity date is 27 October 2019.
  • Discount bond issue of EUR 25 000 000 for the sake of raising subordinated capital
    (issue name: ABLV SUB EUR 271027; ISIN: LV0000802346)
    The issue size is EUR 25 000 000. The number of bonds is 250 000. The face value of one bond is EUR 100. Initial placement price: 83.047% of the face value. The issue date is 27 October 2017, and the maturity date is 27 October 2027. The bank may redeem these bonds before maturity starting from 27 October 2022.
    Annual interest rate of subordinated bonds:
    • from 27 October 2017 till 27 October 2022 — fixed discount rate of 3.75%;
    • from 28 October 2022 till 27 October 2027 — fixed coupon rate of 3.75% with coupon payment twice a year.

The subscription to the abovementioned bond issues begins on 21 September 2017 and will last until 23 October.

9. Entering into Pension Capital Management

Our subsidiary ABLV Asset Management, IPAS will offer to all residents of Latvia a new 2nd pension pillar investment plan, ABLV Active Investment Plan, as of 2 October. Its manager is the Deputy Chairman of the Board of ABLV Asset Management, IPAS Jevgenijs Gžibovskis, who has more than 15-year experience of managing various investment portfolios and funds, including ABLV Emerging Markets USD Bond Fund and ABLV Emerging Markets EUR Bond Fund management during last 10 years.

Active strategy has been chosen for our second pension pillar investment plan, which enables the return exceeding the inflation level. According to this strategy, the objective of ABLV Active Investment Plan is to preserve and increase the value of contributions made to the investment plan in the long term, by making investments in the financial and capital market. To achieve the objective, at least half of the investment plan funds will be invested in fixed-income financial instruments and term deposits with credit institutions, which ensure stable increase in the investment plan value, protecting it against short-term fluctuations. To gain higher return in the long term, the other part of the investment plan funds may be invested in capital securities and other financial instruments equivalent in terms of risk, as well as invested in venture capital market and alternative investment funds.

It should be noted that at the moment of launching ABLV Active Investment Plan its administrative costs will be among the lowest ones on the market. The management fee of ABLV Active Investment Plan will be 0.72% p.a. Moreover, no performance fee (charged for capital increase) will be applied to the plan at least until the end of 2019.

Applications for participation in ABLV Active Investment Plan can be submitted via www.latvija.lv starting from 2 October this year. At the said portal, it will be also possible to obtain information about the second pension pillar investments — the account statement provided to the participants of the State Funded Pension Scheme.

10. Authentication at latvija.lv Portal

Given our engagement in managing the investments of the second pension pillar, as well as to ensure convenient use of other services provided by Latvian state and local authorities, our Internetbank users having Latvian identity numbers will be able to perform authentication at www.latvija.lv portal via ABLV Bank Internetbank.

From 2 October this year, ABLV logo and link to our Internetbank start page will appear on authentication page of www.latvija.lv portal. Also, there will be new section ‘E-services’ added to our Internetbank, containing the subsection 'Partners', in which links to the most useful services of www.latvija.lv will be provided, including, for example, the application for changing the second pillar plan and other applications to the State Social Insurance Agency of Latvia, residential address declaration, etc.

11. Mobile Digipass for Android

Developing the remote account management tools, we have made mobile Digipass for devices with Android operating system. The application has been made considering the peculiarities of using Android, and it has self-intuitive design. To satisfy the needs of each client and make the application easy to use in different light conditions, two high-contrast versions have been developed, switching between which is possible on any application screen.

Mobile Digipass ensures the highest safety level and convenience of use. It can be acquired in the Internetbank and then activated on the mobile device. Internet connection on the mobile device is required just to activate the mobile Digipass, which can be further used without Internet. One mobile Digipass acquired can be activated and used on several mobile devices simultaneously (including iPhone, iPad, and different smart devices with Android operating system).

Mobile Digipass for Android will be available from 9 October this year, when the possibility to download our application ABLV Mobile Digipass will become active in Google Play store.

We wish you a fruitful autumn!