Ex Bradford & Bingley Guaranteed Equity Bond

Traveller11

Our B&B Guaranteed Equity Bond now taken over by Santander came up after 5 Years for cashing in this month.

The Bond was the second half of a B&B 'Guaranteed Combi Bond' taken out in November 2005 for which the first part paid a guaranteed 7% after 12 months and the second part was linked into the FTSE100.

Whilst we all remember the 'disaster' in 2009 on the Stock Exchange surprisingly the FTSE100 has come back and is now higher that it was in 2005 when we took out the Bond.

However even though the Bond has grown Santander have currently got no information on the interest that this Bond has produced?

In 2005 the FTSE100 for us stood at a level of '5531'.
In 2010 when we came to surrender on the due date the Bond the FTSE100 stood at '5871'.

A 340 difference which to me says we should have had an Interest Payment.

At this point in time Santander cannot find any information or Interest on this Investment!!! :mad::mad:

If you like us have got or had one of these B&B Bonds then you need to query it if you got no more back then what you put in.

dunstonh

A 340 difference which to me says we should have had an Interest Payment.

At this point in time Santander cannot find any information or Interest on this Investment!!!

These products dont pay interest apart from a very small amount for those that invest before the strike date and a nominal interest rate is added for that period. The "combi" part if that is what you are referring to is something separate. So, they are probably giving you a technically correct answer based on a misunderstanding of what you are asking (or what you are expecting as an answer)

atypical

Sounds you like you're talking about the account described here:
"it invests half customers' capital in a one-year fixed-term bond paying 7.00 per cent gross per annum and the remainder in a five-year guaranteed equity bond yielding 110 per cent of the growth of the FTSE 100 index"

5531 to 5871 is an increase of 6.15%. You should expect around 6.77% which over 5 years equates to ~1.31% annually.

Traveller11

dunstonh wrote: »

These products dont pay interest apart from a very small amount for those that invest before the strike date and a nominal interest rate is added for that period. The "combi" part if that is what you are referring to is something separate. So, they are probably giving you a technically correct answer based on a misunderstanding of what you are asking (or what you are expecting as an answer)

Suggest you read the next response from 'atypical' which concurs with the Ex B&B Employee that I have just spoken to.

Traveller11

atypical wrote: »

Sounds you like you're talking about the account described here:
"it invests half customers' capital in a one-year fixed-term bond paying 7.00 per cent gross per annum and the remainder in a five-year guaranteed equity bond yielding 110 per cent of the growth of the FTSE 100 index"

5531 to 5871 is an increase of 6.15%. You should expect around 6.77% which over 5 years equates to ~1.31% annually.

Quite correct and the Ex B&B Employee who could recall the details is now investigating on our behalf as he also is concerned that any more of these Bonds that are maturing now will also have the same 'Santander problem' in that they cannot find the interest that the Bond has made!

jimjames

I think these figures highlight why these kind of products seem such poor value. The annual return of 1.3% compares very badly to a savings account but also badly against shares in that time. If you had actually been invested in the FTSE 100 itself you would have got approx 3% per year in dividends (I believe 3.4% at present) plus the 1.3% increase in growth, so approx 4.3% pa, a total of over 20% rather than 6.7%.

Admittedly you would have had the rollercoaster ride in the meantime but if you still can be in positive territory despite the events of the last 3 years it shows what can be achieved.

atypical

Traveller11 wrote: »

Suggest you read the next response from 'atypical' which concurs with the Ex B&B Employee that I have just spoken to.

dunstonh isn't wrong (and is far more knowledgeable than me!). It is not 'interest' in the same sense as what you get from a savings account.

If you were calling and asking what interest would be paid it's likely the person on the other end thought you were talking about a savings account and thus couldn't find any details.

dunstonh

Suggest you read the next response from 'atypical' which concurs with the Ex B&B Employee that I have just spoken to.

As atypical says above, it is not interest. The interest element applies only on the combi part of the product (the bit they bribe you with with the cross subsidised interest rate) or if you are an early investor and get some interest prior to the strike date. The actual return you get will not be interest. Hence if you ask them what interest it has then the answer is zero.

Mikeyorks

Traveller11 wrote: »

..... as he also is concerned that any more of these Bonds that are maturing now will also have the same 'Santander problem' in that they cannot find the interest that the Bond has made!

Curious that you should spend money on a product .... yet not have a reasonable idea how it works?

As you have the startup figure for the FTSE (presumably supplied by B&B) should you not have the paperwork to go with it? Which normally describes in excruciating detail exactly how the final figure is calculated.
And I will be surprised if it's the FTSE close on a specific date ..... as most of these GEBs average the final figure over several months? If it's over the final 6 months ...... there won't be any growth as the average (calculated daily - normally) close figure will be less than your start figure of 5531. So you will simply get the original investment back + any interest accrued from the date of your deposit to the start of the 5 year term.

opinions4u

Mikeyorks wrote: »

Curious that you should spend money on a product .... yet not have a reasonable idea how it works?

As you have the startup figure for the FTSE (presumably supplied by B&B) should you not have the paperwork to go with it? Which normally describes in excruciating detail exactly how the final figure is calculated.
And I will be surprised if it's the FTSE close on a specific date ..... as most of these GEBs average the final figure over several months? If it's over the final 6 months ...... there won't be any growth as the average (calculated daily - normally) close figure will be less than your start figure of 5531. So you will simply get the original investment back + any interest accrued from the date of your deposit to the start of the 5 year term.

The bolded bit says it all.

Don't start spending your modest gains yet - they may be a little bit less than modest.

jimjames

opinions4u wrote: »

The bolded bit says it all.

Don't start spending your modest gains yet - they may be a little bit less than modest.

Another bolded bit to sum it up...

Most use a process called 'averaging' to figure out how much you get paid at the end of the bond's term, something that means (as the blurb from Britannia puts it) that in some cases the 'end value' (which sets how much you finally get paid) may be lower than the starting value, 'even though the FTSE 100 level at the end of the term may be higher than the start value'. Not very encouraging, is it?