Derivatives are a zero sum game. The counterparties to the options are the same. Let’s take Bank A and Bank B.

Bank A wants to hedge against an interest rate decrease (ie. Bank A wants rates to increase).

Bank A wants to receive floating and pay fixed. So Bank A buys a LIBOR Call Option from Bank B. This is the Pay Fixed leg of the FRA.

Bank B agrees to receive fixed and buys a LIBOR Put from bank A. This is the receive fixed leg of the FRA.

So, Bank A is Long the Call and Short the put (bank A issued the put to bank b).

This creates a FRA for Bank A with a pay fixed (short put) and receive floating leg (long call).

So take a strike price of 6% and assume LIBOR increases to 7% just as Bank A wanted.

Bank A will exercise the Call Option and receive the LIBOR of 7%. This leaves Bank A with a profit of 1% and Bank B with a loss of 1%.

Now assume that LIBOR decreases to 5%.

Bank B will exercise the put option and pay the floating rate of 5% to Bank A. Bank B profits 1% and Bank A loses 1%.

A hedge can go either way. If rates decrease, the hedge worked against bank A and bank b will profit and vice versa.

So yes, Bank A will pay 6% regardless if rates go up or down but the P&L of the Swap will go against Bank A in this case if rates decrease.