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Document received from HSBC BANK PLC

DOCUMENT DETAILS

Your entity:
Kuveyt Turk Katilim Bankasi Anonim Sirketi
Counterparty Account:
HSBC
Counterparty Entity:
HSBC BANK PLC
Document type:
EuroSTR Amendment Agreement
Comment:
<span style="font-size:18pt;">Transition of your existing collateral agreements
to €STR+8.5bps </span><span style="font-size:16pt;"><br><br></span><span
style="font-size:11pt;">Dear client,<br><br>As you may already know, the Euro
Overnight Index Average rate (EONIA) has been modified in 2019 and progressively
replaced by a new benchmark rate called Euro Short Term Rate (€STR).
<br><br>Since 2 October 2019, EONIA’s value has been modified to be equal to
€STR’s value plus 8.5 basis points (0.085%), a spread decided by the European
Central Bank (ECB). The European Money Market Institute (EMMI) will stop
publishing EONIA on 3 January 2022.<br><br>The working group on euro risk-free
rates, for which the European Central Bank (ECB) provides the secretariat, has
published a comprehensive paper</span><span
style="font-size:11pt;"><sup>*</sup></span><span style="font-size:11pt;"> that
defines detailed best practice and recommendations related to the transition
from EONIA to €STR. <br><br>Based on our current data, you have a live credit
support agreement with HSBC referencing EONIA as the interest rate. Whilst we
understand that ongoing industry and regulatory discussions on a potential
legislative solution aim to facilitate the transition away from EONIA, the
details of this solution are yet to be confirmed.<br><br>This communication
introduces the options HSBC is offering to replace references to EONIA with €STR
in your existing collateral agreements ahead of EONIA’s cessation, to avoid any
disruption to our trading relationship. If you have already amended your HSBC
CSA or are currently in discussions with us about doing so, you may disregard
this communication.<br></span><span style="font-size:13pt;"><br>Adhering to the
ISDA EONIA CSA Protocol<br></span><span style="font-size:11pt;"><br>The
International Swaps and Derivatives Association (ISDA) has published a protocol
under which references to “EONIA” in existing Credit Support Agreements (CSA)
between adhering counterparties will be considered as a reference to “€STR plus
8.5 basis points”, from 3 January 2022 onwards. <br><br>This straightforward
solution to transition CSAs from EONIA to €STR will ensure impacted contracts
will remain economically equivalent.<br><br>ISDA requires that each Adhering
Party pay a fee of U.S. $500 to ISDA for adherence to the
protocol.<br><br></span><span style="font-size:13pt;">The HSBC EONIA CSA
bilateral Amendment Agreement</span><span style="font-size:11pt;"><br><br>We
understand that clients may not wish to adhere to the ISDA EONIA CSA Protocol or
may not want to rely on a legislative solution to transition their CSAs.
<br><br>For those clients, HSBC has drafted a bilateral Amendment Agreement
whereby any reference to EONIA in your existing CSAs with us will be deemed a
reference to “Modified €STR”, i.e. €STR plus 8.5 basis points, in line with the
expected terms of the ISDA EONIA CSA Protocol.<br><br></span><span
style="font-size:13pt;">Next steps</span><span
style="font-size:11pt;"><br><br>Please reply to this email by 30 September 2021
to notify us if you intend to adhere to the ISDA EONIA CSA Protocol or, should
you not intend to adhere, to return the attached HSBC EONIA CSA bilateral
Amendment Agreement dated and signed at benchmarks.enquiries@hsbc.com or via the
ISDA Create platform. <br><br>Please contact us using the aforementioned email
address should you wish to discuss the Amendment Agreement terms with our
team.<br><br>Kind regards<br>HSBC IBOR transition client support
team<br></span><span style="font-size:16pt;"><br></span><span
style="font-size:11pt;"><sup>*</sup></span><span
style="font-size:11pt;">www.ecb.europa.eu/pub/pdf/other/ecb.wgeurorfr_impacttransitioneoniaeurostrcashderivativesproducts~d917dffb84.en.pdf?form=MY01SV&amp;OCID=MY01SV</span><span
style="font-size:16pt;"><br></span>
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