What is a repo?

A transaction of sales and repurchase of securities or a repo means a securities financing transaction whereby a client sells securities to the bank at an agreed price and buys the same securities back from the bank at a future date and at a price that has increased by the repo rate (interest). In the event of a repo, the securities are not purchased and sold at the market price of the securities, but at a lower price depending on the type of the specific securities. Should the market value of the securities fall during the repo, the bank has the right to request an additional collateral from the client and, upon failure to provide one, the bank is entitled terminate the repo.


  • Faster decision-making process in comparison with borrowing against another collateral
  • No additional costs due to the early termination
  • The currency of the sales price may differ from the trading currency of the security
  • Interest and dividends paid on the security during the repo are compensated for


  • The time given for the fulfilment of the claim for an additional collateral is usually relatively short and the failure to provide the additional collateral may result in the termination of the repo.
  • Upon the sales of the securities, the sales price might not cover the amount of the securities and repo rate (interest), in which case the client has to compensate for the missing amount.
  • If on the date of selling or buying back the securities, the client’s account does not hold the quantity of securities or funds agreed under the repo, the bank has the right to demand from the client a contractual penalty of up to 5% of the corresponding amount of sales or buying back.

Usual terms and conditions of a repo:

Initial sales price of the market value of securities Shares, ETFs,
fund units up to 50%,
bonds up to 90%
Threshold for additional collateral Depends on the specific securities and is determined by the bank
Minimum repoloan EUR 10,000
Interest rate Fixed
Fee for early termination None
Interest calculation on early termination On the basis of the actual number of days
Minimum interest expenses (repo rate) EUR 100
Expenses Interest expenses (repo rate);
Transaction fee 8 euros


LC&I Markets Estonia
+372 613 1631


  • What is the maximum deadline on a repo transaction?

    The maximum deadline on a repo transaction is six months. Following the expiry of the repo, the repo transaction can be extended for a new period.
  • Is the extension of repo subject to any fees?

    An agreement fee (8 euros) must be considered when a repo transaction is extended. The need to carry out an interim settlement of the repo rate depends on the client’s financial status, the extension period etc.
  • Who owns the title to the securities during a repo transaction?

    During a repo transaction the title to the securities belongs to the person who purchased the securities in the first half of the repo transaction. As the Bank usually buys securities taken as a guarantee from the client, the securities are in the ownership of the Bank and form part of the Bank’s assets during the repo transaction.
  • What happens when subscription rights are transferred to the holder of the securities during a repo transaction?

    If subscription rights are transferred to the holder of the securities (assuming the Bank is the holder) during a repo transaction, the Bank transfers the same quantity of said subscription rights to the client.
  • Who has the right to receive the interest and dividends paid on the securities during a repo transaction?

    The party that is the holder of the securities during a repo transaction has the right to receive interest and dividends. If the Bank is the holder of the securities during a repo transaction, the Bank will compensate the amount corresponding to the interest or dividends received to the client.
  • Are repo transactions subject to any taxes?

    Private clients who use the ‘ordinary’ system

    If the client is the seller of the securities in the first half of a repo transaction, the relevant sale is regarded as any sale of securities and the client may be obliged to declare the profit or have the right to declare the loss (depending on the price for which the security sold in the course of the repo transaction was previously purchased). It must also be kept in mind that a repo transaction does not have an effect on the acquisition price of the security, which means that if the client sells securities in the course of a repo transaction and buys them back later for a price that is higher by the repo rate, the initial sale price in the repo transaction is regarded as the acquisition price, not the repurchase price of the security.

    Private clients who use the ‘investment account’ system

    A repo transaction is a transaction permitted in the investment account system, where the securities forming the object of the repo transaction can be regarded as financial assets for the purposes of the Income Tax Act (e.g. if they are publicly offered or accepted for trading on the market of an EEA or OECD country). The sale and repurchase of a security can be regarded as transactions with financial assets, and payments to and from the investment account must not be declared.

    Corporate clients

    In the case of legal entities, a repo transaction can be regarded as an ordinary economic transaction that is not subject to special rules and not taxed at the moment it is carried out. Corporate clients become liable to tax only if profit is paid out in the form of dividends or if other payouts not connected with business are made.

    Please note: the Bank does not advise its clients on taxes. Please consult the Tax and Customs Board in order to clarify the exact taxation consequences that may result from repo transactions.

This is a general product description that might not explain any and all important features, incl. the risks, of the product. Swedbank has not assessed the relevancy of the product for you. Prior to entry in the transaction, consult with a competent advisor.