Structured Deposit

Structured Deposit refers to a structured investment product that consists of a time deposit (in the Deposit Currency) and buying an option over the Underlying Currency Pair. You select an Underlying Currency Pair and set your own tenor based on your own forecast for the foreign exchange market. The Bank will fix the Interest Rate and a Range at the time when the deal is made.

  • For European Range structure, you will receive higher interest rate (together with the Principal Amount in Deposit Currency) if the Underlying Currency Pair is trading within pre-determined Range at Expiry Time on Expiry Date. Otherwise, you will receive the minimum interest rate (together with the Principal Amount in Deposit Currency).
  • For European Bullish structure, you will receive higher interest rate (together with the Principal Amount in Deposit Currency) if the Underlying Currency Pair is trading at or above the Strike (pre-determined Range from at the Strike to ∞) at Expiry Time on Expiry Date. Otherwise, you will receive the minimum interest rate (together with the Principal Amount in Deposit Currency).
  • For European Bearish structure, you will receive higher interest rate (together with the Principal Amount in Deposit Currency) if the Underlying Currency Pair is trading at or below the Strike (pre-determined Range from 0 to at the Strike) at Expiry Time on Expiry Date. Otherwise, you will receive the minimum interest rate (together with the Principal Amount in Deposit Currency).

How does Structured Deposit work ?

You select Deposit Currency^ (e.g. HKD, USD, EUR, GBP, CAD, JPY, AUD, NZD, CHF or RMB, etc) , Underlying Currency Pair^ (a combination of any two of Deposit Currencies) , investment period ^ (1 month or above) and product type^ (European Range/ Bullish/ Bearish) based on your own forecast for the foreign exchange market. The Bank will fix the Interest Rate and a Range at the time when the deal is made. You will have a chance to receive higher potential return, depending on the movement of the exchange rate of the Underlying Currency Pair.

^subject to Bank’s availability

Illustration

Illustrative Example 1 : European Range 100% of Principal Protected Deposit

USDCNH European Range on RMB 100% of Principal Protected Deposit
Deposit Currency RMB
Underlying Currency Pair USDCNH
Principal Amount RMB $500,000
Trade Date 23 July 2014
Deposit Start Date 23 July 2014
Expiry Date and Time 23 July 2015, 11:15AM (Hong Kong Time)
Maturity Date 23 July 2015
Investment Period 12 months
Day Count Basis 360
Reference Spot Rate CNH per 1 USD spot currency exchange rate (USDCNH) in the global foreign exchange market, as determined by the Calculation Agent in good faith and in a commercially reasonable manner.
USDCNH Range Upper Barrier: 6.2491
Lower Barrier: 6.1491
Principal Amount and Interest Amount at maturity 6.10% p.a. if USDCNH Reference Spot Rate is trading strictly above the Lower Barrier and strictly below the Upper Barrier at Expiry Time on Expiry Date as determined by Calculation Agent.
Or
1.00% p.a. if USDCNH Reference Spot Rate is trading at or above the Upper Barrier, or at or below the Lower Barrier at Expiry Time on Expiry Date as determined by Calculation Agent.
Scenario 1: (THE BEST CASE)
USDCNH Reference Spot Rate trades within pre-determined range.
Scenario 2:(THE WORST CASE)
USDCNH Reference Spot Rate trades outsides pre-determined range.
Scenario 3*:
(INSOLVENT OR DEFAULTS ON OBLIGATIONS CASE)
USDCNH Reference Spot Rate at Expiry Time on Expiry Date 6.1600 6.1380 N/A
Return at maturity RMB $530,923.61 RMB $505,069.44 RMB $0
Net Gain / (Loss) RMB $30,923.61 RMB $5,069.44 (RMB $500,000)

Illustrative Example 2 : European Bearish 100% of Principal Protected Deposit

USDCNH European Bearish on RMB 100% of Principal Protected Deposit
Deposit Currency RMB
Underlying Currency Pair USDCNH
Principal Amount RMB $500,000
Trade Date 23 Feb 2015
Deposit Start Date 23 Feb 2015
Expiry Date and Time 23 Feb 2016, 11:15 AM (Hong Kong Time)
Maturity Date 23 Feb 2016
Investment Period 12 months
Day Count Basis 360
Reference Spot Rate CNH per 1 USD spot currency exchange rate (USDCNH) in the global foreign exchange market, as determined by the Calculation Agent in good faith and in a commercially reasonable manner.
USDCNH Strike Strike: 6.1920 (Pre-determined Range from 0 to at 6.1920)
Principal Amount and Interest Amount at maturity If USDCNH Reference Spot Rate is trading at or below the Strike at Expiry Time on Expiry Date as determined by Calculation Agent, 9.00% p.a. interest rate will be paid.
Or
If USDCNH Reference Spot Rate is trading above the Strike at Expiry Time on Expiry Date as determined by Calculation Agent, 1.00% p.a. interest rate will be paid.
Scenario 1:
(THE BEST CASE)
USDCNH Reference Spot Rate trades at or below the Strike
Scenario 2:
(THE WORST CASE)
USDCNH Reference Spot Rate trades above the Strike
Scenario 3*:
(INSOLVENT OR DEFAULTS ON OBLIGATIONS CASE)
USDCNH Reference Spot Rate at Expiry Time on Expiry Date 6.1750 6.2350 N/A
Return at maturity RMB $545,625.00 RMB $505,069.44 RMB $0
Net Gain / (Loss) RMB $45,625.00 RMB $5,069.44 (RMB $500,000)

Illustrative Example 3 : European Bullish 100% of Principal Protected Deposit

USDCNH European Bullish on RMB 100% of Principal Protected Deposit
Deposit Currency RMB
Underlying Currency Pair USDCNH
Principal Amount RMB $500,000
Trade Date 23 Feb 2015
Deposit Start Date 23 Feb 2015
Expiry Date and Time 23 Feb 2016, 11:15 AM (Hong Kong Time)
Maturity Date 23 Feb 2016
Investment Period 12 months
Day Count Basis 360
Reference Spot Rate CNH per 1 USD spot currency exchange rate (USDCNH) in the global foreign exchange market, as determined by the Calculation Agent in good faith and in a commercially reasonable manner.
USDCNH Strike Strike: 6.3220 (Pre-determined Range from at 6.3220 to ∞)
Principal Amount and Interest Amount at maturity If USDCNH Reference Spot Rate is trading at or above the Strike at Expiry Time on Expiry Date as determined by Calculation Agent, 6.05% p.a. interest rate will be paid.
Or
If USDCNH Reference Spot Rate is trading below the Strike at Expiry Time on Expiry Date as determined by Calculation Agent, 1.5% p.a. interest rate will be paid.
Scenario 1:
(THE BEST CASE)
USDCNH Reference Spot Rate trades at or above the Strike
Scenario 2:
(THE WORST CASE)
USDCNH Reference Spot Rate trades below the Strike
Scenario 3*:
(INSOLVENT OR DEFAULTS ON OBLIGATIONS CASE)
USDCNH Reference Spot Rate at Expiry Time on Expiry Date 6.3380 6.2730 N/A
Return at maturity RMB $530,670.14 RMB $507,604.17 RMB $0
Net Gain / (Loss) RMB $30,670.14 RMB $7,604.17 (RMB $500,000)

* Assuming that the Bank becomes insolvent during the tenor of this product or defaults on its obligations under this product, you can only claim as its unsecured creditor. You may suffer a total loss of your principal amount.

Minimum Investment Amount

The minimum investment amount for Structured Deposit is HKD50,000 (or its equivalent in any other foreign currency).

How to buy this product?

You can purchase this product by visiting any of our branches or Internet Banking.

Structured Deposit is NOT a protected deposit and is NOT protected by the Deposit Protection Scheme in Hong Kong.

Terms and Conditions apply.

Risk Disclosure

  • Not a time deposit – Principal Protected Deposit is NOT equivalent to, nor should it be treated as a substitute for, time deposit. It is NOT a protected deposit and is NOT protected by the Deposit Protection Scheme in Hong Kong.
  • Derivatives risk – Principal Protected Deposit is embedded with foreign exchange option(s). Option transactions involve risks. If the exchange rate of the underlying currency pair performs against expectation at Expiry Time on Expiry Date, you can only earn the minimum payout of the structure.
  • Limited potential gain – The maximum potential gain is limited to Interest Amount.
  • Maximum potential loss – You could lose all your investment amount if the Bank becomes insolvent or defaults on its obligations under this product.
  • Principal protection at maturity only – The principal protection feature is only applicable if this product is held to maturity. There is no principal protection when this product is early terminated by the Bank.
  • Not the same as buying the Underlying Currency Pair – Investing in Principal Protected Deposit is not the same as buying the Underlying Currency Pair directly.
  • Market risk – The return of Principal Protected Deposit is linked to the exchange rates of the Underlying Currency Pair. Movements in exchange rates can be unpredictable, sudden and drastic, and affected by complex political and economic factors.
  • Liquidity risk – Principal Protected Deposit is designed to be held till maturity. You do not have a right to request early termination of this product before maturity.
  • Credit risk of the Bank – Principal Protected Deposit is not secured by any collateral. When you invest in this product, you will be relying on the Bank’s creditworthiness. If the Bank becomes insolvent or defaults on its obligations under this product, you can only claim as an unsecured creditor of the Bank. In the worst case, you could suffer a total loss of your principal amount.
  • Currency Risk – If the Deposit Currency is not your home currency, and you choose to convert it back to your home currency upon maturity, you may make a gain or loss due to exchange rate fluctuations.
  • Risks of early termination by the Bank – the Bank has the right (but not the obligation) to terminate this product early upon occurrence of certain events. If this product is terminated by the Bank early, such adjustments or early termination events may negatively affect your return or loss under this product. Please refer to Master Terms and Conditions - Investment Products for details.

Risks relating to RMB – If you choose RMB as a Deposit Currency or Underlying Currency Pair includes RMB , then you should note the following:

  • The Chinese Renminbi is currently not freely convertible. Due to exchange controls and/or restrictions imposed on the convertibility or utilization of RMB which in turn is affected, amongst other things, the PRC government’s control, there is no guarantee that disruption in the transferability, convertibility or liquidity of RMB will not occur. There is thus a likelihood that you may not be able to convert the Chinese Renminbi received into other freely convertible currencies.
  • Should you decide to convert the Renminbi amount back into your home currency or vice versa, you should bear in mind the risk of exchange rate fluctuations that may cause a loss on conversion of Renminbi back into such other currency or vice versa.
  • If Underlying Currency Pair includes RMB, the relevant Reference Spot Rates will be quoted in offshore Renminbi (CNH) against alternate currency.

Important Information

The above risk disclosure statements cannot disclose all the risks involved. Before making investment decision, you should thoroughly study the offering documents, financial reports and relevant risk disclosure statements issued by the issuer of the investment product(s). Further you should consider your own circumstances including financial position, investment experience and objective to ensure the investment is suitable for your particular investment needs and risk tolerance capacity. You should seek independent financial and professional advice before trading or investment. This promotional material does not constitute an offer or solicitation for the purchase or sales of any investment products. This promotional material is issued by Industrial and Commercial Bank of China (Asia) Limited (the “Bank”) and the contents have not been reviewed by Securities and Futures Commission.