Bristol & West, a U.K. bank owned by the Bank of Ireland, plans to purchase call options on four stock indices to structure two global guaranteed equity funds. Mark Mears, group product manager in Bristol, U.K., said the firm will choose a counterparty to provide the options after the investment period on the products closes today. Until that time, investors receive 4% interest.
The bank will purchase zero-coupon bonds and buy at-the-money call options on the Standard & Poor's 500, the Swiss Market Index, the FTSE 100 and the Nikkei 225. The strike price is determined by the value of the indices 15 days after the close of the funds, said Laurence Sanders, treasury retail liaison advisor to Bristol & West at the Bank of Ireland in Bristol. Its five-year fund, called the Global Guaranteed Equity Bond, offers investors 70% upside of the average growth of the four indices. Its seven-year investment fund, called the Global Balanced Guaranteed Equity Bond, offers investors 90% of the upside of the average growth of the four indices plus an option for the investor to allocate up to half of the initial investment to a one-year savings account that pays 61Ž2% interest.
Bristol & West will shop the guaranteed funds to potential counterparties through the Bank of Ireland and base its decision on competitive pricing.
