Deposit Plus

Important Risk Warning

  • Deposit Plus is a structured investment product involving derivatives. The investment decision is yours but you should not invest in Deposit Plus unless the intermediary who sells it to you has explained to you that the product is suitable for you having regard to your financial situation, investment experience and investment objectives. Do not invest in it unless you fully understand and are willing to assume the risks associated with it. If you are in any doubt about the risks involved in the product, you may clarify with the intermediary or seek independent professional advice.
  • Deposit Plus is a structured investment product, which is NOT a protected deposit and is NOT protected by the Deposit Protection Scheme in Hong Kong.

Additional risks are disclosed in the section of "Risk Disclosure" below. Please refer to it for details.

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Features and benefits

Place your deposit for as low as HK$50,000 or equivalent with Business Internet Banking.

Choose two currencies1 – a deposit currency and a linked currency. Deposit Plus offers you with a variety of currency choices to suit your need for foreign currency. For example, you might consider the currency of the country which you purchase goods from or where you have local expenses.

Perfect for businesses that regularly convert funds from one currency to another and are seeking higher returns.

Choose your own deposit period, from one week to three months.

Earn a higher interest rate than a normal Hong Kong dollar or foreign currency time deposit if you are willing to risk conversion into another currency.

Enjoy the flexibility of fixing your deposit period and conversion rate or Deposit Plus interest rate.

How it works

The following example illustrates various scenarios* that determine the final redemption currency and your return:

Deposit currency Hong Kong Dollar (HKD)
Linked currency Australian Dollar (AUD)
Deposit placed on 13 November 2012
Deposit date 15 November 2012
Fixing date 27 November 2012
Maturity date 29 November 2012
Interest period 14 days
Conversion rate^ 8.1043
Deposit amount HK$50,000
Deposit Plus Interest rate 13.12%p.a.
Upon maturity If the AUD/HKD exchange rate is at or above 8.1043 at fixing, the principal and interest will be paid in HKD.
If the AUD/HKD exchange rate is below 8.1043 at fixing, the principal and interest will be paid in AUD.

^Based on indicative pricing quoted on 13 November 2012.


*The above scenarios are for reference only. Return depends upon the market conditions on the fixing date. &Interest = principal x interest rate p.a. x tenor (in number of days) / [365 days (if deposit currency is HKD, SGD or GBP) or 360 days (if deposit currency is other foreign currencies)].
§Assume the deposit is converted back to HKD upon maturity and the exchange rate equals to the rate upon fixing.
In this worst payout scenario, you will receive return or the linked currency the value of which may be worth substantially less than the original amount you invested (and in the extreme case could be worth nothing).

1For Deposit Plus that trade via HSBC Business Internet Banking, either the deposit currency or linked currency must be Renminbi, Hong Kong Dollar or US Dollar.

Default Scenario

If the Bank has become insolvent, you will become an unsecured creditor of the Bank and what you will receive in respect of the product will depend on the liquidation procedure applicable to companies incorporated in the jurisdiction of the Bank. Upon insolvency of the Bank, the market value (or the termination value) of the product will be substantially less than the principal amount and there is a risk that the product may become valueless.
In the worst case scenario, you may get nothing back and the potential maximum loss could be 100% of principal amount and no interest will be received.

Scenario Analysis Disclaimer

The above scenarios are provided for illustrative purposes only, and do not reflect a complete analysis of all possible gain and loss scenarios that may arise during any actual investment. No representation or warranty is made by the Bank that any scenario described above can be duplicated under real investment conditions. Actual results may vary from the results shown above, and variations may be material.

Risk Disclosure

The net return in relation to Deposit Plus will depend upon market conditions prevailing at the deposit fixing time on the deposit fixing date. You must be prepared to incur loss as a result of depreciation in the value of the currency paid. Such loss may offset the interest earned on the deposit and may even result in losses in the principal amount of the deposit. Investment involves risks.You should carefully consider whether any investment products or services mentioned herein are appropriate for you in view of your risk appetite, investment experience, objectives, financial resources and circumstances. If you have any concerns about this product, you should consult your professional financial advisers.

  • Not a time deposit - Deposit Plus 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 - Deposit Plus is embedded with FX option(s). Option transactions involve risks, especially when selling an option. Although the premium received from selling an option is fixed, you may sustain a loss well in excess of such premium amount, and your loss could be substantial.
  • Limited potential gain - The maximum potential gain is limited to the interest on the deposit.
  • Maximum potential loss - Deposit Plus is not principal protected. You must be prepared to incur loss as a result of depreciation in the value of the currency paid (if the deposit is converted to the linked currency at maturity). Such loss may offset the interest earned on the deposit and may even result in losses in the principal amount of the deposit.
  • Not the same as buying the linked currency - Investing in Deposit Plus is not the same as buying the linked currency directly.
  • Market risk - The net return of Deposit Plus will depend upon the exchange rate of the deposit currency against the linked currency prevailing at the deposit fixing time on the deposit fixing date. Movements in exchange rates can be unpredictable, sudden and drastic, and affected by complex political and economic factors.
  • Liquidity risk - Deposit Plus is designed to be held until maturity. You do not have a right to request early termination of this product before maturity.
  • Credit risk of the Bank - Deposit Plus 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 deposit principal.
  • Currency risk - If the deposit currency and/or linked currency is not your home currency, and you may make a gain or loss due to exchange rate fluctuations.

Specific Risks related to Deposit Plus with Renminbi as Deposit Currency or Linked Currency

  • Renminbi currency risk - Renminbi is subject to exchange rate risk and is currently not freely convertible and conversion of Renminbi through banks in Hong Kong is subject to certain restrictions. In case you receive Linked Currency instead of Deposit Currency at maturity and you want to convert the maturity proceed back to Deposit Currency, you will be bound by the prevailing Renminbi exchange conversion restrictions and it may happen that such exchange cannot be performed.
  • Credit risk of counterparties - Derivatives instruments are involved in Deposit Plus and you are exposed to the credit risk of counterparties being the issuers of derivative instruments. In case the derivatives counterparty defaults and the bank suffers loss accordingly, the default risk of the bank with respect to the Deposit Plus payments will increase.
  • Commitment to the full Deposit Period - Early redemption is not allowed. In case you need to redeem a Deposit Plus before maturity and the bank agrees, the redemption amount will be determined at sole discretion of the bank and you must be prepared that you may incur a significant loss of the deposit principal.
  • Liquidity risk - Deposit Plus is not transferrable. There is no secondary market for trading Deposit Plus.
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