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4521
Fall in guaranteed savings
statistikk
2007-12-07T10:00:00.000Z
Banking and financial markets
en
orbofbm, Financial corporations, balance sheet, banks, mortgage companies, finance companies, state lending institutions, loans, deposits, financing, mortgages, bonds, commercial papers, shares, ownership interest, assets, liabilities, foreign banks, borrowers, balancesFinancial institutions and other financial corporations, Banking and financial markets
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Financial corporations, balance sheet, October 2007

As from 2016 the statistics is published with Banks and mortgage companies.

Content

Published:

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Fall in guaranteed savings

Preliminary figures for October show a decrease in investments in index-linked bonds and deposits with index-linked yield. The use of loans to finance such investments also decreased, but is still high.

Banks. Guaranteed index-linked bonds and deposits with index-linked yield, and loans to finance these products. December 2005 - October 2007

Norwegian bank figures for customer investments in so-called guaranteed savings, also called structured products, show total investments amounting to NOK 36 billion to end-October. This is a decrease of NOK 9.6 billion from October last year and a decrease of nearly NOK 3 billion from last month.

Loans to finance investments in guaranteed savings also decreased. At the end of October, such loans amounted to NOK 30 billion, a decrease of NOK 3.7 billion from October 2006 and NOK 1.9 billion from last month.

Decrease in deposits and bonds

Index-linked bonds and deposits with index-linked yield are the most popular types of guaranteed savings offered by the banks. At the end of October, these products amounted to NOK 28 billion and NOK 8 billion respectively. This is the lowest level of deposits with index-linked yield since March 2006. The deposits have fallen by NOK 3.1 billion from October 2006 and NOK 2.1 billion from September this year. Furthermore, index-linked bonds have fallen by NOK 6.5 billion from October last year and NOK 700 million from September this year.

Banks. "Guaranteed" index-linked bonds and deposits with index-linked yield, and loans to finance these products. December 2005-October 2007
Month Deposits with
index-linked
yield 		    Index-linked
bonds 		Total Loans to finance Loan financing share
    Deposits with
index-linked
yield 		    Index-linked
bonds 		    Total     Total     Deposits with
index-linked
yield 		    Index-linked
bonds1
2005:12     25 570 21 100     46 670 8 302 9 054     17 356 37 32 43
2006:01 26 056 20 989 47 045 12 533 16 049 28 582 61 48 76
2006:02 26 283 20 907 47 190 12 940 15 774 28 714 61 49 75
2006:03 27 475 20 877 48 352 13 718 16 812 30 530 63 50 81
2006:04 28 926 18 347 47 273 14 441 16 513 30 954 65 50 90
2006:05 29 776 18 350 48 126 15 504 16 596 32 100 67 52 90
2006:06 30 398 17 959 48 357 16 408 16 974 33 382 69 54 95
2006:07 30 382 16 822 47 204 16 396 16 715 33 111 70 54 99
2006:08 30 123 16 829 46 952 16 541 16 595 33 136 71 55 99
2006:09 30 733 15 759 46 492 17 186 16 652 33 838 73 56  106
2006:10 30 997 14 753 45 750 17 336 16 509 33 845 74 56  112
2006:11 31 242 14 021 45 263 17 256 16 041 33 297 74 55  114
2006:12 32 548 13 262 45 810 18 054 15 969 34 023 74 55  120
2007:01 30 066 13 112 43 178 16 213 15 935 32 148 74 54  122
2007:02 30 572 13 267 43 839 16 809 15 870 32 679 75 55  120
2007:03 31 317 12 741 44 058 17 410 15 512 32 922 75 56  122
2007:04 32 082 12 382 44 464 17 715 15 063 32 778 74 55  122
2007:05 32 606 11 541 44 147 18 678 14 441 33 119 75 57  125
2007:06 30 965 11 212 42 177 17 475 14 313 31 788 75 56  128
2007:07 30 912 10 882 41 794 18 270 14 125 32 395 78 59  130
2007:08 30 692 10 934 41 626 18 183 14 024 32 207 77 59  128
2007:09 30 033 8 986 39 019 18 303 13 725 32 028 82 61  153
2007:10 27 884 8 277 36 161 17 098 13 030 30 128 83 61  157
1  Only Norwegian banks are included. For the index-linked loans, the part financed by loans exceeds 100 per cent. The reason for this is
that foreign-owned (subsidiary or branch) banks in Norway give loans to finance index-linked bonds offered by other parts of the
corporation. This may be the case for Nordea (subsidiary of foreign-owned bank) or Fokus and Handelsbanken (branches of foreign-
owned banks.

Large share of deposits financed by loans

A proportionately large share of investments in guaranteed savings are financed by loans. The share was 83 per cent in October, but the figure may be misleading as some of the loans are provided by foreign banks with a subsidiary or branch in Norway and used to finance index-linked bonds offered by other parts of the corporation. This means that only the loans are included in the accounts, not the bonds in which the loans are invested.

The share of deposits with index-linked yield financed by loans gives a more accurate picture of the share of investments in guaranteed savings financed by loans. The share was 61 per cent at the end of October, which is the highest figure since December 2005, when the statistics were first published. The share is unchanged from September, but has increased by 5 percentage points since October 2006.

There is reason to believe that the recent negative media coverage of guaranteed savings, especially linked to the risk involved when such investments are financed by loans, has affected the demand for the products. It is also likely that this will impact the development of investments in guaranteed savings and the use of loans to finance such products in the future.

What are guaranteed savings?

Banks offer a wide variety of so-called guaranteed savings or structured products. The main types are deposits with index-linked yield and index-linked bonds. The yield of the products is fully or partly linked to an index - often a share index listed on the stock exchange. The customer is usually guaranteed the nominal value of the investment and a yield linked to the index if the index has a positive development. Investments in such products are often financed by loans.