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Structured Deposits

I. Description
The structured deposit refers to a financial product with certain risks. The investors place their legal funds in RMB or foreign currencies into ICBC, and ICBC embeds financial derivative tools (including but not limited to forward, swap, option and futures) into them based on regular deposits to link the investor’s income to interest rate, exchange rate, stock price, commodity price, credit, indicators and other financial or non-financial underlying assets.
According to the type of currency, the structured deposit of ICBC is divided into foreign currency structured deposit and RMB structured deposit. The foreign currency structured deposit refers to those with the principal in foreign convertible currencies, such as USD, EUR, AUD, GBP, JYE and HKD. The RMB structured deposit refers to those with the principal in RMB.
2. Target Customers
The product is applicable to legal person customers duly registered in the People’s Republic of China (excluding Hong Kong, Macau and Taiwan) with ample fund, the wish of obtaining high capital return, certain financial market analysis capability and appropriate ability to withstand risks.

II. Functional Features
The product is the most common investment derivative that can be pegged to multiple indices (such as interest rate, exchange rate, share, commodity and credit), has an expected yield higher than that of time deposit and can meet diversified needs of customers.

III. ICBC Advantages
1. Based on the target customer, it is divided into two major categories: general product targeting at SME legal person customers and exclusive product targeting at big legal person customers.
2. Multiple choices: ICBC product can be pegged to multiple indices (such as interest rate, exchange rate and commodity). Meanwhile, ICBC provides the structured deposits with minimum yield and all or part of principles guaranteed.
3. Customized design: the product is flexible to meet customers’ different needs through combination of deposit date, amount, term and pegging indices.

IV. Service Channels and Time
Legal person customers meeting access conditions may apply to corresponding sub-branches or branches during business hours.

V. Operation Guide
1. Customer assessment: to apply for structured deposit business, customers need to firstly accept ICBC’s product suitability assessment. ICBC classifies customers based on information and materials submitted by them. Only those confirmed suitable for structured deposit through risk assessment are allowed to apply for structured deposit business.
2. Designated fund account: if settlement accounts have been opened at ICBC, customers need to designate an account for fund transaction. If no settlement account is opened at ICBC, they need to open a settlement account for fund transaction.
3. Signing the agreement: the customer that has been assessment by ICBC and designated a transaction account can sign relevant business agreement with ICBC and then conduct structured deposit business.

VI. Business Case
Product name: legal person RMB structured deposit pegged to exchange rate
Principal currency: RMB
Term of deposit: 1 month
Principal guarantee: 100% (held-to-maturity)
Type of income: Non-principal-guaranteed
Pegging indicator: USD/JPY middle rate published on the Reuters TKFE page at 3:00 pm (Tokyo)
Target range: 116.65 > pegged indicator >102.65
Observation mechanism: daily observation during the observation period, and determine the number of days on which the pegged underlying assets is within the target range based on the underlying assets performance.
Expected yield: expected annualized rate on return = 1.05% + 1.55% * N/M, both 1.05% and 1.55% are annualized rate on return. N is the number of days on which the pegged underlying assets is within the target range. M is the number of days of the observation period. The expected minimize annualized rate on return that can be obtained by customers is 1.05%, and the expected maximum annualized rate on return is 2.60%.
Risk disclosure:
(1) The product is pegged to exchange rate. If USD/JPY price is outside the observation range during the observation period, customers will obtain low yield. If such price is always outside the range during the observation period, customers can only obtain minimum annualized yield which may be lower than the deposit interest rate of the same period;
(2) Customers need to hold the product to maturity and cannot withdraw structured deposits in advance;
(3) ICBC won’t assume any responsibility for any losses arising from force majeure and accidents.

VII. Risk Prompt
Main risks facing customers: early withdrawal is not allowed during the product duration (liquidity risk), expected yield may not be achieved upon maturity (market risk), and ICBC terminates the product early.

Note: The information given on this page is for reference only. See the announcements and rules of local outlets for details.

Global Market