Interest rate enhancement

From ACT Wiki
Jump to: navigation, search

A cash management practice that acts as a substitute for notional pooling in several European countries where tax or regulatory constraints limit the potential for cost-effective notional pooling.

As is the case for notional pooling, interest rate enhancement aims to view the account balances of a company or its subsidiaries as a whole for the purposes of interest calculation.

However, unlike notional pooling, there is no formal scheme set up to allow the systematic offsetting of the various participant’s credits and debits.

Also known as Interest rate netting or interest rate optimisation.

See also