Nanyang Commercial Bank (NCB) and Chiyu Banking Corporation have resumed their offerings of equity-linked deposits, following a nearly two-year hiatus.
The pair recently received authorisation from the Hong Kong Securities and Futures Commission for NCB’s Equity Linked Deposit (put option) and Chiyu Bank’s Equity Linked Deposit (put option), which have similar structures.
The products are linked to the performance of a single share that is selected by the issuers and have embedded put options over the linked stock. Both products feature reverse convertible payoffs, which means investors will receive a number of the reference stocks at the end of the investment if the final closing price of the linked stock is below the strike price. Otherwise, the investor will receive a cash settlement of the principle amount. Regardless of the outcome, the coupon will be settled in cash.
Neither products offer tranches with investment terms of longer than six months. The minimum principle amount for each tranche is HKD100,000 ($12,820).
Chiyu’s last retail equity-linked deposit offer struck on 31 August 2010 while NCB’s retail offerings have been FX rate-linked or gold-linked products. NCB is a subsidiary of the Bank of China group and had its last equity-linked deposit striking on 31 July 2010.