Investec Structured Products will begin offering collateralised investments from next year.
In January, it will launch a collateralised version of its FTSE 100 Enhanced Kick-Out and FTSE 100 Growth plans.
For these versions, the money raised will be paid to a trustee, who will buy the assets to back the plans. This means the money is ring fenced and will not be impacted should Investec default.
However, although the Growth plan will be collateralised by government bonds, the kick-out product will be backed by the assets of the UK's five biggest banks - HSBC, Santander, Barclays, RBS and Lloyds.
Head of intermediary sales Gary Dale says it makes more sense for capital-at-risk products to be collateralised by banks rather than government securities.
"If you are a gilt investor, you would not be buying a capital-at-risk structured investment. If you are buying these plans, then you understand the risks, so why pay more for the insurance," he says.
"Using gilts to back these plans would reduce the returns to the same level as a structured deposit, which is already subject to a government guarantee.
"However, the Growth plan is capital protected so it is more appropriate for it to be collateralised by gilts."
Dale says investors will have 20% exposure to each underlying bank. However, even if one bank defaults, the loss of capital could be less than one fifth because Investec would work with administrators to recover as much money as possible.
"This is about spreading risk efficiently. Why bank on one bank when you can rely on five?" Dale says.
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