Sectors Cashback

Sector Cashback (the ‘Account’) is a four and a quarter year structured deposit which offers two distinct options, ‘Option 1’ where returns are linked to the performance of the ‘RBS Environmental Strategy Index’ or ‘Option 2’ where returns are linked to the performance of the ‘RBS UK Balanced Sector Index’.

If you hold your Sectors Cashback account for the full four and a quarter year term, your funds are fully capital protected, no matter what the performance of the underlying business sectors has been.

30% of the funds will be placed in a three and a quarter year Fixed Rate Account

• 10% of the deposit will be repaid on 23rd January 2012 with a fixed rate of 5% gross. 3.98% AER
• 10% of the deposit will be repaid on 21st January 2013 with a fixed rate of 10% gross. 4.33% AER
• 10% of the deposit will be repaid on 21st January 2014 with a fixed rate of 15% gross. 4.39% AER

70% of the deposit is placed into a four and a quarter year Index Linked Account with any potential returns based on the performance of the ‘RBS Environmental Strategy Index’ (12 months averaging)

30% of the funds will be placed in a three and a quarter year Fixed Rate Account

• 10% of the deposit will be repaid on 23rd January 2012 with a fixed rate of 5% gross. 3.98% AER
• 10% of the deposit will be repaid on 21st January 2013 with a fixed rate of 10% gross. 4.33% AER
• 10% of the deposit will be repaid on 21st January 2014 with a fixed rate of 15% gross. 4.39% AER

70% of the deposit is placed into a four and a quarter year Index Linked Account with any potential returns based on the performance of the ‘RBS UK Balanced Sector Index’ (12 months averaging)

Download a brochure (PDF 693 KB).

The minimum deposit is £10,000. This £10,000 can be split any way you like between the two options. For example, £3,000 can be placed into Option 1 – Environmental and the remaining £7,000 can be placed into Option 2 – UK Market. Within each Option, this will be split between the Fixed Rate Deposit and the Index Linked Deposit.

Whichever option you choose, your deposit is fully capital protected so long as you hold the deposit for the full four and a quarter year term. There are a number of risks that you need to consider when deciding whether the Sectors Cashback account is right for you.

The final date for applications is 1st October 2010. The offer may close early if it is fully subscribed.

The ‘RBS Environmental Strategy Index’ which was launched in June 2009 by GBM (Global Banking & Markets).

The ‘RBS Environmental Strategy Index’ is an index made up of a selection of up to 40 global companies which represent the 4 ‘Environmental’ business sectors;

• Wind
• Solar
• Waste
• Blue Energy (Water, Hydroelectricity & Geothermal)

The index aims to provide a benchmark by which to measure the development of some of the most important ‘Environmental’ business sectors. It is made up of the 40 largest companies that generate revenue from ‘Environmental’ sectors.

Find out more about the ‘RBS Environmental Index’

The ‘RBS UK Balanced Sector Index’ is composed of 8 industry sectors. These are:

• Basic materials
• Consumer goods
• Consumer services
• Financials
• Healthcare & Industrials
• Oil and gas
• Technology
• Utilities

To be eligible for inclusion in this index, companies must be listed in the UK and have a Market Capitalisation of greater then £1 bn and a 3 month average daily value traded of £5 million.

Find out more about the ‘RBS UK Balanced Sector Index’

• What is Sectors Cashback?
• Could I lose my money?
• How do I open an Account?
• What is the minimum deposit amount?
• Can I add to my Account?
• Can I close the Account early?
• Will I pay any charges?
• What updates will I receive to track the performance of my Account?
• What risks do I need to consider before opening an account?
• What about tax?
• What happens to my funds between the date on which my Account is opened and the Start Date of the four and a quarter year term?
• What happens if the RBS Environmental Strategy Index or the RBS UK Balanced Sector Index underperform?
• Is the Account right for me?

What is Sectors Cashback?

A standing order is a way of paying someone at regular intervals without you having to do anything – other than make sure the money is in your account.

Standing orders are always for a fixed amount. If the amount changes each time, you’ll need to set up a Direct Debit instead.

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Could I lose my money?

The Account is designed to return your Fixed Rate Deposit on the specified Fixed Rate Maturity Dates and your Index Linked Deposit on the Final Maturity Date, irrespective of the performance of the Relevant Index. However, you could still lose some, or all, of your Deposit if the Bank defaults or goes bankrupt .

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How do I open an Account?

Simply complete the application form. Your account, along with Structured Deposit Cash Management Account (SDCMA) in the same name will be opened once the application has been returned together with the required documentation

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What is the minimum deposit amount?

The minimum deposit amount is GBP 10,000.

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Can I add to my Account?

No. You cannot add to or amend your Account after the Closing Date for applications.

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Can I close the Account early?

The Account is designed to have a four and a quarter year term from the Start Date and we can only ensure your Deposit is protected if the funds remain in the Account for the Term, though you are always subject to the counterparty risk of the Bank. There is no ‘cooling off period’ A request to close your Account prior to maturity will only be permitted at the Bank’s discretion and may mean that you receive less than your Deposit. Should you wish to close your Account during the Term you will receive the Redemption Value of your Deposit less an administrative charge of £250. An estimate of the Redemption Value can be provided upon request and you will be given the opportunity to withdraw your instruction to close the Account should you wish to do so. The Redemption Value includes any accrued interest due on the Fixed Rate Deposit. If all of or a portion of the Fixed Rate Deposit has already been repaid, the Redemption Value is based on the remaining portion of any Fixed Rate Deposit and the Index Linked Deposit.

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Will I pay any charges?

All costs are already factored into the Account, so there are no additional fees or charges to pay providing you do not close your Account before the end of the Term.

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What updates will I receive to track the performance of my Account?

You will receive an initial confirmation that you Account has been opened. We will then send you annual updates on the performance of your Account. A separate communication will also be forwarded to you approximately six weeks prior to maturity of your Account.

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What risks do I need to consider before opening an account?

It is important that you consider the following before deciding whether the Account is right for you.

• The Account has a fixed term of four and a quarter years from the Start Date and is not suitable if you need access to your money or require regular income. If you need to close your Account before the Final Maturity Date, you may not receive back the full Deposit. Partial withdrawals from the Account are not permitted in any circumstances. There is no ‘cooling off’ period for you to change you mind and get your money back once your application has been accepted.
• The use of the word ‘protected’ in relation to this Account refers only to our obligation to repay your Deposit at maturity, however, if the Bank defaults or goes bankrupt, then you may lose some, or all, or your Deposit. The Account is not guaranteed by any third party.
• As your Account is held in the Isle of Man, in the event of the Bank failing or becoming insolvent, you would not be afforded protection from the UK’s Financial Services Compensation Scheme. Your Account and the SDCMA will be opened and maintained in the Isle of Man. As a result, you may be afforded the protection of the Isle of Man Deposit Compensation Scheme as set out in the Compensation of Depositors Regulations 2008.
• Funds deposited in the Account are not invested directly into the shares of the underlying listed companies. Instead, your funds are held in a deposit account with the Bank with returns at maturity linked to the performance of the Relevant Index. As you do not invest directly in shares, you will not receive any dividend payments.
• Although your Deposit is protected if the Account is held until maturity (subject to the risks described above) the return from the Account may not be as much as if you had invested in a traditional deposit account.
• Inflation may reduce the purchasing power of your Deposit by the time the Account matures.
• Each Relevant Index is exposed to equity markets. Prospective investors should understand that investments in instruments relating to equity markets may be negatively affected by global economic, financial and political developments, and that such development, among other things, may have a material effect on the performance of the each Relevant Index. The RBS Environmental Strategy Index may be exposed to emerging markets. Investing in emerging markets involves certain risks and considerations not typically associated with investing in other more established economies or securities markets. Such considerations include, but are not limited to: higher volatility and less liquidity in securities markets, political and economic uncertainty, different accounting and reporting standards and a higher degree of government involvement in the economy.
• Further, the performance of the RBS Environmental Strategy Index is dependent on equity securities of companies which derive a significant level of revenues from certain environmental industries. Global financial, economic and political developments may have a greater impact on environmental industries than other sectors within global equity markets. In addition, environmental industries may be positively or negatively impacted by the pace of global technological developments, government environmental/sustainability policies and changes in public opinion.

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What about tax?

• It is your responsibility to declare all income and returns to the appropriate tax authorities. If you are in any doubt as to your own personal tax liability we strongly recommend that you take appropriate independent tax advice before applying.
• The Bank is not able to advise on any subsequent changes in legislation that may affect the Account or your return from it.
• The statements above are not intended to be, nor should they be regarded as, legal or tax advice. Tax treatment depends on individual circumstances and may be subject to change. You should consult your own tax advisors to obtain advice about your particular tax treatment in relation to the Account

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What happens to my funds between the date on which my Account is opened and the Start Date of the four and a quarter year term?

Your funds will be placed on deposit with the Bank in a client bank account separate from our own money until the Start Date and will earn interest at 0.05% below the Bank of England Base Rate, provided that interest will not be less than 0.05%. Any interest earned prior to the Start Date will be added to your Deposit. You must ensure that there are cleared funds in your Account by 14th October 2010.

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What happens if the RBS Environmental Strategy Index or the RBS UK Balanced Sector Index underperform?

Whatever the performance of the RBS Environmental Strategy Index or the RBS UK Balanced Sector Index during the Term of your Deposit, your Deposit is protected against any falls in the Relevant Index by the Bank, providing you don’t close the Account before the Term. However, note that you are subject to counterparty risk: if the Bank defaults or goes bankrupt you may lose some, or all, of your original Deposit.

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Is the Account right for me?

This Account may be right for you if:

• You’re happy to hold your Deposit for the full four and a quarter years.
• You’re looking for the potential to receive a return after four and a quarter years that is dependent on the performance of either the RBS Environmental Strategy Index or the RBS UK Balanced Sector Index.
• You are happy to receive back portions of your Deposit with a fixed rate of interest.

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