Are you interested in investing with Citibank? Here are the answers to questions that you may have when opening an investment account with Citibank or when deciding to invest in an investment instrument that is currently available.
Usually, only tax-paying residents of the Czech Republic (czech tax residents), or persons with a long-term presence in the territory of the Czech Republic may invest with Citibank. For example, U.S. Persons cannot invest with Citibank. As a part of its investment advisory service, Citibank also requires that the client signs an up-to-date version of the Investment Account Agreement and provides a duly completed and signed up-to-date version of the Personal Investment Solution (profiling questionnaire).
The Personal Investment Worksheet form should be updated at least once a year, or after major changes in the facts related to the investor, which may affect his or her investment profile (e.g., loss of job, inheritance, etc.).
For investments in mutual funds or in collective investment securities denominated in CZK, the minimum investment amount is usually set at CZK 5,000, while in the case of mutual funds denominated in other currencies it is roughly the equivalent of CZK 25,000. For structured notes, the minimum amount for investment varies, but it is always indicated in the information sheet referring to the respective structured notes (the term-sheet/indicative conditions).
When dealing with structured products, you may encounter the following terms:
Underlying asset - any asset, security, index, currency basket or other financial or investment instrument that is the basis of the structured note, and on whose value the payment of a return (e.g., coupon) on structured notesdepends.
Liquidity of the structured note - provided by the issuer of such product. The issuer makes every effort to create a secondary market for trading in structured products where the structured note can be sold before its maturity date. It should be borne in mind that in such cases the current market price of the structured note can be below its nominal value, which means that the issuer does not protect the principal of the structured bond in the case of early redemption of structured bonds by the investor, so the investor may receive considerably less than the original amount he or she invested.
Credit risk - the risk of the issuer of the structured note or the guarantee provider, related to their ability to meet their obligations. This means that should the issuer and/or the guarantee provider become insolvent, the investor may not recover the principal invested.
Ratings used by Standard & Poor's provide an illustration of this concept:
AAA: Issuer's capacity to pay interest and repay principal is extremely strong.
AA: Issuer has a strong capacity to pay interest and repay principal and differs from the highest-rated issuers only in small degree.
A: Issuer has a strong capacity to pay interest and repay principal although it is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than debt in higher rated categories.
A-1: A short term obligation rated 'A-1' is rated in the highest category by Standard & Poor's. The obligor's capacity to meet its financial commitment on the obligation is strong.
Guarantee provider - unconditionally and irrevocably guarantees the payment of all amounts due related to the structured product. Should the issuer be unable to meet its obligations in connection with the structured note, the guarantee provider must meet obligations towards the holders of such note as if such obligations were his or her own.