Products guarantee returns

The precipitous decline in the interest rates of savings accounts, which has left most depositors actually losing money – since interest rates are now below the inflation rate – has led banks to present a whole array of new products guaranteeing a return on depositors’ money. These products are certainly not for everyone. Almost invariably, there is a minimum amount one has to invest. As a result, the guaranteed capital investment products, as they are called, have a tendency to benefit the already well-off. The latest offers in the market come from National Bank of Greece, the country’s largest, and will be available to the public next week, from Monday to Friday. The first offer is a three-year investment product dubbed by the bank a «mixed inflation-protecting portfolio.» The mixed portfolio is half index-linked to the Athens Stock Exchange’s blue chip index (the FTSE/ASE-20) and half linked to the 10-year bond maturing on May 20, 2013, with a coupon of 4.60 percent. The product guarantees the initial investment plus an increase equal to average inflation in the eurozone. Should the portfolio show returns higher than the guaranteed minimum, investors will get 35 percent of these extra gains. This particular offer is part of a new breed of more complex products found in other eurozone countries as well. The «Double Rise» investment product is based both on the FTSE/ASE-20 and the exchange rate between the dollar and the euro. Its duration is six months, from February 17 to August 8, 2003. If, during this period, the euro appreciates further and the FTSE/ASE-20 increases, investors will receive an annualized return of 5.50 percent. If this does not happen, the minimum guaranteed return on the invested capital is 0.50 percent. «Monthly rise» is based on the euro/dollar rate. It lasts for a year, to February 13, 2004. If, after each month, the euro appreciates, investors will get an annualized return of 4 percent; if not, the monthly rate of return is 0.50 percent. For all products, the minimum amount to be invested is 14,500 euros.