Barclays Bank Ghana is offering comprehensive risk management products to its clientele to manage the price risk they may encounter in their line operation.

The risk management product, plain vanilla derivatives, is the standard version of a financial instrument that is specially designed to alter the components of a traditional financial instrument, resulting in a more complex security. At a seminar to introduce the product to some selected clientele of the bank, an international expert, Dr Mabouba Diagne, who is a Director and Co-head of Barclays Product Control Group at Absa Capital, highlighted the importance of the product to companies.

The Barclays risk management product, which would be launched before the end of this year, is to help corporate organisations manage the price risk inherent in their foreign currency, interest rate and commodity prices.

Dr Mabouba said interest rate and foreign could be volatile and that a floating rate allows the borrower to take advantage of falling interest rate but leaves the borrower exposed to rising rate which could severally affect the cost of debt.

However, the risk associated with the interest and foreign exchange rates could be hedged to reduce the risk of adverse price movements.

“The objective is not to make money but to reduce risk,” he said. And this would require clearly defining hedging policy, combined with knowledge of the underlying risks.

On benefits for managing such risk, he said, companies would be able to stabilize their earnings, secure minimum operating margin and increase the probability of meeting high priority capital expenditure.

Benjamin Debrah, Managing Director of Barclays Ghana, said financial markets since 2007 have been volatile due to the sub-prime mortgage induced crisis and the recent debt crisis in Europe. “…The negative effects of these price movements can be significant and can be the difference between a firm making sizeable profits and even a loss.”

He hinted that the Risk management products represent an important set of products that the Barclays franchise offers to its clients in other parts of the world.

The Barclays MD said last year, Barclays offered some of the risk management product to the government of Ghana for its oil hedging programme.

Mr Deberah noted that the product enabled the government to successfully manage the price risks in its crude oil import and export bill.

“This played an extremely important role in the macroeconomic stability that the country enjoyed last year.”

Barclays, he said, aims to be the best bank in the country with a view to offering its clients a diverse bouquet of products.

“We have been in Ghana for 95 years. We have always been here and have always offered our clients the best. We value your business and promise to build trusted partnership.”