Barclays Capital is the first bank to launch a "synthetic currency" that will allow companies with extensive overseas businesses to manage the cost of their borrowing in foreign currencies.
The bank's European Borrowing Unit (EBU) is based on a basket of the currencies of the G-10 group of industrial countries, which are the most traded currencies in the world.
Barclays will buy and sell currencies in the unit as each currency fluctuates to maintain a zero interest rate. The bank says companies will be able to use the EBU to reduce the cost of funding by controlling their exposure on foreign exchange borrowings.
"It is not aimed at the small and medium-sized business sector," said Ciaran Kane, head of treasury at Barclays Capital Ireland.
"It is aimed at very large companies which will have borrowings in more than one currency and which will be looking at borrowing in low-cost currencies such as the Japanese yen or Swiss franc."
Mr Kane said the unit was suited to companies with large foreign exchange borrowings who are dealing in transaction sizes of at least €20 million.
"If you borrow in the EBU, then your liability is based on that basket, and the bank will continue to optimise the basket and try to minimise foreign exchange risk."
Mr Kane said that the service could be used by large Irish-listed companies such as CRH, which has extensive overseas businesses. "Companies can use the EBU to restructure any existing borrowing no matter what currency it is in."
The unit was launched in the Republic this week and across Europe last week.
"Clients are always talking to us about optimising their funding costs on foreign exchange loans. EBU. . . is designed to do just that," said Tom McAleese, managing director of Barclays Bank Ireland.
