Banks hit on 鈥榤urky鈥 deals
Print Edition
THE gap between the maximum expected rate of return banks offer on structured financial products is often far higher than the actual yield, the Shanghai Consumer Rights Protection Commission warned yesterday.
A study by the commission and the Shanghai Normal University’s School of Finance and Business of 627 products sold by 17 banks found one third of the products yielded the minimum return offered.
A stocks-linked investment sold by OCBC Bank offered an annual return of 0-18 percent — but the actual yield was zero, the commission said.
Structured financial products are market-linked investments based on derivatives and the return usually depends on the performance of associated assets such as bonds, options, stocks and funds.
The study found a Bank of Jiangsu investment that offered an expected return of between 1.5 and 18.5 percent, yielded just 1.5 percent.
The commission said customers were often misled and there was a lack of clarity, making it hard for them take informed decisions.
“The products have very complex financial structures which investors can hardly understand, particularly seniors,” said Yang Baohua, a proessor at the School of Finance and Business, who took part in the study.
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