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COUTTS STRATEGIC DEPOSIT

Higher returns without loss of principal

 

In Coutts’ MONACO premises, Monaco Actualité met for you Jean Claude Oswald, (branch manager).

 

Monaco Actualité: There are a number of new products on the market these months, amongst which your STRATEGIC DEPOSITS. Can you explain in a few words what exactly they are?

Jean Claude Oswald: Coutts Strategic Deposit are designed for those depositors who wish to achieve higher returns than may be earned from standard fixed-rate deposits, without the risk of loss of capital. In order to obtain return from your cash deposit, you normally need either to expose your capital to incremental risk or to lock your funds into a long term commitment. if you are pot prepared to choose either of these options, the return on your investment is unlikely to be spectacular. Particularly in a low interest rate environment, many investors are looking for ways to enhance the yields earned on fixed deposits without direct exposure to bond and equity markets, and the uncertainty associated with them. That is why COUTTS has created its strategic deposit programme for clients who wish to achieve higher returns than may be earned from standard fixed rate deposits, at the same time avoiding the risk of capital loss. Strategic Deposits aim to yield a return that exceed standard fixed-rate deposits by linking the interest earned on deposits to a strategic view of the moment in an underlying asset. As with any term deposit, the principal is secure, so if markets do not perform as anticipated, your full initial deposit is returned to you at maturity.

Monaco Actualité: What type of clients should be interested in these strategic Deposits?

J. C Oswald: Coutts offers three types Of strategic deposit:

Individual: based on Coutts' market view, these are tailor made strategic deposits for amount in excess of £1 000.000 or currency equivalent

Personal-view: based on your own market view, Coutts can tailor-make strategic deposits in any currency for amounts in excess of £1.000 000 or currency equivalent.

Group participation: based on Coutts' market view, these are strategic deposits issued on a regular basis for amounts over £50 000 or currency equivalent.

Monaco Actualité: Tell us about the key advantages of Coutts Strategic deposits?

J.C OSWALD: There are at minimum 6:

-Assurance of capital: Coutts Strategic Deposits offer the same security of capital as a standard fixed-rate deposit

- Low risk: Risk is limited to the potential interest foregone on a standard fixed-rate deposit.

-Potential increased return: Favourable market conditions should result in a return in excess of standard fixed-rate. deposits. In some cases it is possible to agree with Coutts a minimum interest rate. However, a strategic deposit structure that provides a minimum interest rate will reduce the maximum potential yield.

-Opportunity to take advantage of Coutts' market view: the rationale behind each Individual and Group Participation Strategic Deposit is based on Coutts' market view, formulated by Coutts team Of asset-class professionals.

-Participation in world wide markets: Coutts Strategic deposits allow depositors limited participation in movements in currency, equity, fixed income and commodity markets without exposure of capital to underlying downside market risk.

-Flexibility: With maturity terms generally of twelve months or less, Coutts Strategic Deposits need not tie up your capital for long periods of time.

In this example (which is for illustrative purpose only) the view, based on the historical close correlation between the US dollar and Sterling currencies, is that the relationship is unlike to change substantially over the term of the deposit. This Coutts Strategic Deposit pays a yield of 9% per annum if the US dollar/sterling exchange rate stays within the specific range of 1.4000~ 1.6500 over the term of the deposit. If at any time the US Dollar/ Sterling exchange rate moves of this range then the strategic deposit pays the minimum agreed interest rate of 2% per annum on the maturity date.

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