Investec Structured Products has expanded the UK5 concept introduced in February 2011 with the launch of a new range of structured plans featuring a new Global 4 option consisting of four financial institutions: Banco Santander, Commerzbank, Standard Chartered Bank and Royal Bank of Scotland (RBS).
The Global 4 was launched last week as a third collateral option to the FTSE100 Enhanced Kick-out Plan 44 to offer retail investors an additional choice of collateralised counterparty exposure.
The Global 4 option, said Investec, allows investors to diversify their portfolio by spreading their counterparty risk exposure across four financial institutions with global reach, and has been launched as an alternative investment choice for customers who may already have a holding in other Investec products or the firm’s UK5 collateral option.
“The new Global 4 as an alternative counterparty option on our Enhanced Kick-out Plan will offer customers even more choice when building portfolios of structured investments,” said Gary Dale, head of intermediary sales. “Our UK5 option has proved extremely popular since its launch in 2011 and it makes sense for us to continue to develop this further by adding alternative counterparties for those customers who may already be exposed to the current range.”
Dale added that research recently carried out by Investec indicates that customers viewed counterparty risk in a very similar way to market risk “so, with slightly higher pay-off profiles available from our Global 4, it will be interesting to see where customers choose to invest.”
The FTSE100 Enhanced Kick-out Plan 44 is a knock out structure that will pay 8% pa (not compounded) per period elapsed from the second anniversary onwards if the underlying index is above its strike level. In addition to the Global 4 the FTSE 100 Enhanced Kick-Out Plan 44 Investec is also marketing two other collateral options, Investec (9.75% pa) and UK 5 (7.5% pa).
UK five
Investec Structured Products launched the UK5 concept in February 2011 to reduce the risk of potential loss to client’s investment in the event that Investec Bank became insolvent by using an equally weighted pool of five UK banks, as bond providers with collateral being posted in the form of a portfolio of securities issued by each of the UK5 and/or cash and/or UK government debt (gilts) and held by an independent custodian (Deutsche Bank AG, London).
By collateralising their investments, retail investors are able to spread their credit exposure across multiple institutions and hold a single plan, avoiding the need to find multiple issuers of the same product with similar terms. Investec said that the concept was well received and has grown steadily in popularity ever since.
The collateralised concept, however, was introduced in 2009 by Morgan Stanley, which marketed the first three collateralised retail structured products in the UK market, FTSE Defensive Gilt-Backed Growth Plans, which sold £32.8m, and were protected by UK government bonds. The US investment bank did not follow up on this range.
Most recently, in August 2013, Société Générale brought to the UK market its first range of structured products using a pool of four UK financial services firms (Aviva, Barclays Bank, Lloyds TSB Bank, and RBS) as counterparty risk providers and Walker Crips Structured Investments as the plan manager.
The full Investec collection which includes four investment plans and four structured deposits will be open for subscription until 23 May 2014.
The FTSE100 Enhanced Kick-out Plan 44 will be available shortly in the UK database.
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