Standard Chartered Grindlays Launches New Dual Currency Deposit Offering

by Philip Morton, Investors Offshore.com

25 April 2003

International offshore financial institution, Standard Chartered Grindlays on Wednesday unveiled a new currency product designed to take into account differing attitudes to risk amongst international investors.

Known as 'Knock-In' dual currency deposits, the new product represents another step towards effective investment risk diversification.

Ordinary dual currency deposits offer clients the possibility to earn a higher rate of interest on their deposits, but the investment may be converted into another currency at maturity. The client chooses the target conversion rate and the currency that he is happy for his deposit to be repaid in. However, if a client would prefer to stay in the deposit currency, he will select a target conversion rate that he believes the deposit currency will not strengthen to.

According to the offshore bank, the new product differs from standard dual currency deposit vehicles: 'by allowing the client to reduce the likelihood of the deposit being converted into the alternate currency. Whereas previously this would have resulted in a lower interest rate yield, the Knock-In structure allows clients to enjoy a higher rate of interest. However, in the event of conversion, this will be at a less favourable exchange rate than with a standard DCD.'

Where an investment of this kind is to be set up on a bespoke basis, a minimum deposit of $200,000 is required, according to Standard Chartered Grindlays. However, the bank went on to reveal that smaller investments from $100,000 can be made where the product is offered to a group of investors.

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