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New Protected Equity Bond offered through Nationwide

21st February 2011 Print

Nationwide Building Society has launched a new Protected Equity Bond.  The new Bond, available as both deposit and ISA options, pays a minimum 7% gross return (1.13% gross AER), plus the potential for further stock market linked capital growth at the end of six years.  Customers who invest in the Protected Equity Bond will also have the opportunity to take out a one or three year Combination Savings Bond paying up to 3.25% and 4.10% gross p.a./AER.

Protected Equity Bond (PEB)

Minimum return:  7% gross (1.13% gross AER) at the end of six years.

Maximum potential return:  Customers can receive 100% of any capital growth in the following three indices, FTSE 100 Index, DJ EURO STOXX 50 Index and S&P 500 Index, subject to final year averaging, up to a maximum of 50% of their original investment amount (equivalent to 6.99% gross AER);

Whether they are a first time or experienced investor, the PEB may be an ideal solution for those customers who are attracted by the potential rewards of investing in the stock markets, but are worried about the associated risks.  This is because the Plan is designed to return their original investment in full at maturity, protecting their investment if the stock markets have fallen in value.  However, because their money is not invested directly in the stock market, they won't benefit from any dividend income which they could have received if they'd invested directly in shares or investment funds.

The new Protected Equity Bond is the Stock Market Linked Savings Bond 8 provided by Legal & General (L&G).

The previous Protected Equity Bond available through Nationwide was withdrawn on Saturday 19 February 2011.

Cash ISA option

Nationwide offers access to a variety of products designed to help customers try to make the most of their full ISA allowance.  The Protected Equity Bond is one of those and is available as both a deposit plan and as a cash ISA.

Customers may also transfer-in their previous years' cash ISAs, including those held with other providers, without it counting towards their current year ISA allowance, which means that these savings can also benefit from the potential for stock market linked capital growth.  ISA transfer applications need to be received by 15 April 2011.

Back-to-back ISA option

With the end of the current tax year fast approaching, there isn't much time left for consumers to make full use of their annual ISA allowance.

This latest Protected Equity Bond spans the current and new tax year as it is available from 21 February 2011 to 30 April 2011.  So, any customers applying for the new Protected Equity Bond between 21 February 2011 and 5 April 2011 will be given the opportunity to invest both the 2010/11 and 2011/12 subscriptions at the same time.  This will save time for customers and make it easier them to use their entire ISA allowance.

Combination Savings Bond

Customers who invest in the Protected Equity Bond will also be given the opportunity to take out an exclusive one-year Combination Savings Bond, paying up to a competitive rate of 3.25% gross p.a./AER, and an exclusive three-year Combination Savings Bond, also paying up to a competitive rate - 4.10% gross p.a./AER.

It could help savers who want to make the most of their money in the current low interest rate environment.  Both products must be opened at the same time.  The minimum investment for the Combination Savings Bond is £3,000 (or £3,600 if a Protected Equity Bond ISA is purchased) and the same amount or more must be invested in a six-year Protected Equity Bond.

Robin Bailey, Nationwide's director for savings and investments, said:  "The continuing uncertainty in the stock market makes many would-be investors wary.  That's why we offer access to the Protected Equity Bond, as it combines the potential returns associated with stocks and shares with the same security as any other bank or building society account customers have.   This is because - unlike some stock market linked investments - the PEB is designed to protect customers from any negative stock market movements.  It's also designed to return your capital plus a minimum 7% gross - 1.13% gross AER - after six years, as well as a potential growth rate of up to 50% of your original investment when held to maturity.

"What's more, we're also able to offer the Protected Equity Bond as an ISA plan, which could be useful for those people who are trying to use up their annual ISA allowance before 5 April 2011.  Customers with cash ISAs from other providers can also transfer their balance to a Protected Equity Bond.

"Combine that with the Combination Savings Bonds, which pay generous returns and provide a fixed interest rate, and it really demonstrates Nationwide's commitment to its savings customers."