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AIB feels secure

Allied Irish Bank Offshore has established the secure combination bond, which combines a fixed-rate high-interest account with a guaranteed equity bond.

The bond is available in sterling and euros. Investors place 80 per cent of their capital in the guaranteed equity bond element and the rest goes into the high-interest account element. Investors have the choice of a one-year fixed rate account paying 8 per cent gross or a two-year fixed-rate account paying 5.35 per cent gross a year.

The guaranteed equity bond element is linked to the S&P 500, FTSE Eurotop 100 and Nikkei 300 indices. Investors get all of the average growth in these indices up to 50 per cent and capital is returned regardless of the movement in the indices.

To calculate the returns, the closing level of each index is measured on May 14, 2003 and an average is produced. This is compared with an average taken during the last six months of the term. Any growth will be capped at 50 per cent and no growth in the indices means investors will get back only their original capital.

This product is similar to Barclays Private Clients International&#39s HI-ILDA 5, but HI-ILDA 5 caps returns at either 50 per cent or 60 per cent, depending on the currency chosen. HI-ILDA 5 is linked to either the FTSE 100 or S&P 500 indices for five years, so the secure combination bond would be more suitable for people who want geographical diversification.

HI-ILDA 5&#39s high-interest account element offers 7 per cent gross for one year, which is lower than the secure combination bond, and it does not offer a two-year fixed-rate option. However, the secure combination account does not allow withdrawals, whereas HI-ILDA 5 does.

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