Standard Chartered Bank yesterday launched a new investment, offering its customers alternative investment solutions in the form of bonds.
While SCB is the first bank in the country to introduce bonds as an investment product, it would not be the first to do so.
The Ministry of Finance has been issuing syariah-compliant Sukuk Al-Ijarah (a subset of bonds), targeted at local institutions, while other financial institutions are also exploring the market for possible sukuk issuances to the general public.
“We will have sukuk offerings for customers in Brunei,” revealed SCB Fixed Income and Cash Equity Business Head Roop Barua, adding that SCB’s sukuk will focus on individual customers, and not government institutions.
“What we have done is,” he said, “we have developed a franchise that allows us to bring what was – until now – very much an institutional product.”
Bonds are an investment option for those looking to diversify their investment portfolio with a product that carries lower risk than equities, unit trusts or foreign currency investments.
According to Barua, who introduced the new product to a group of SCB customers yesterday, bonds are simply “IOUs” issued by a borrower to raise funds.
“(Customers) would choose to invest in bonds because it is an enduring asset class… that has stood the test of time,” he added.
Other reasons to invest in bonds include returns that are higher than fixed deposits with a yield to maturity that is potentially more than 25 per cent on top of the affordable minimum investment amount.
Barua said bonds, as an investment product, is ideal for the recovering financial climate, especially Brunei, because of its simplicity.
“One of the things that was highlighted during the economic crisis… was people wanted simple, straightforward products which they had a better chance of evaluating or understanding the risk,” he said.
He also noted that the best time to invest is “when you need to diversify your investment, when interest rates are expected to flatten or decrease and when you want constant income”.
SCB Wealth Management General Manager Eng Siok Tin, meanwhile, said, “SCB is delighted to be the first in the market to offer bonds to our customers.
“We believe that planning for and building your wealth is only part of the equation to successful investing.
“It is also imperative to protect your wealth… Bonds offer an investment option (which carries) lower risks but still product fixed income.”
