Introduction

Start by placing a structured deposit in your preferred currency
If the Interest Rate Reference stays at or within the accrual range, you'll receive interest at a higher accrual in rate. But if it fixes outside the accrual range, then you'll earn interest at the accrual out rate.
At maturity, you'll receive 100% of your principal[@investment-irrahowdoesitwork].
Illustrative example
Product details | Interest payment |
Payout upon maturity |
---|---|---|
Deposit Currency: RMB Deposit amount: RMB1,000,000 Tenor: 1 year Interest Rate Reference Index: US Dollar 3-month LIBOR (3M LIBOR) Accrual range: 0.25% - 0.60% p.a. Accrual in rate: 0.70% p.a. Accrual out rate: 0.00% p.a. Interest period: Quarterly |
Interest payment for each interest period: Interest rate: Accrual in rate x (No of days 3M LIBOR stays at or within the Accrual Range) / Total number of days + Accrual out rate x (No of days 3M LIBOR stays outside the Accrual Range) / Total number of days |
100% of principal |
Product details |
Deposit Currency: RMB Deposit amount: RMB1,000,000 Tenor: 1 year Interest Rate Reference Index: US Dollar 3-month LIBOR (3M LIBOR) Accrual range: 0.25% - 0.60% p.a. Accrual in rate: 0.70% p.a. Accrual out rate: 0.00% p.a. Interest period: Quarterly |
---|---|
Interest payment |
Interest payment for each interest period: Interest rate: Accrual in rate x (No of days 3M LIBOR stays at or within the Accrual Range) / Total number of days + Accrual out rate x (No of days 3M LIBOR stays outside the Accrual Range) / Total number of days |
Payout upon maturity |
100% of principal |
Scenario 1
Best-case scenario
Quarterly interest period | Number of calendar days in the interest period |
Number of days on which LIBOR stayed at or within the accrual range |
Number of days on which LIBOR stayed outside the accrual range | Interest Payment |
---|---|---|---|---|
1 | 93 | 93 |
0 | RMB1,000,000 × [(0.70% ÷ 4) × (93 ÷ 93) + (0.00% ÷ 4) × (0 ÷ 93)] = RMB1,750.00 |
2 | 91 |
91 | 0 | RMB1,000,000 × [(0.70% ÷ 4) × (91/91) + (0.00% ÷ 4) × (0/91)] = RMB1,750.00 |
3 | 91 | 91 |
0 | RMB1,000,000 × [(0.70% ÷ 4) × (91 ÷ 91) + (0.00% ÷ 4) × (0 ÷ 91)] = RMB1,750.00 |
4 | 90 |
90 | 0 | RMB1,000,000 × [(0.70% ÷ 4) × (90/90) + (0.00% ÷ 4) × (0/90)] = RMB1,750.00 |
Quarterly interest period | 1 |
---|---|
Number of calendar days in the interest period |
93 |
Number of days on which LIBOR stayed at or within the accrual range |
93 |
Number of days on which LIBOR stayed outside the accrual range | 0 |
Interest Payment | RMB1,000,000 × [(0.70% ÷ 4) × (93 ÷ 93) + (0.00% ÷ 4) × (0 ÷ 93)] = RMB1,750.00 |
Quarterly interest period | 2 |
Number of calendar days in the interest period |
91 |
Number of days on which LIBOR stayed at or within the accrual range |
91 |
Number of days on which LIBOR stayed outside the accrual range | 0 |
Interest Payment | RMB1,000,000 × [(0.70% ÷ 4) × (91/91) + (0.00% ÷ 4) × (0/91)] = RMB1,750.00 |
Quarterly interest period | 3 |
Number of calendar days in the interest period |
91 |
Number of days on which LIBOR stayed at or within the accrual range |
91 |
Number of days on which LIBOR stayed outside the accrual range | 0 |
Interest Payment | RMB1,000,000 × [(0.70% ÷ 4) × (91 ÷ 91) + (0.00% ÷ 4) × (0 ÷ 91)] = RMB1,750.00 |
Quarterly interest period | 4 |
Number of calendar days in the interest period |
90 |
Number of days on which LIBOR stayed at or within the accrual range |
90 |
Number of days on which LIBOR stayed outside the accrual range | 0 |
Interest Payment | RMB1,000,000 × [(0.70% ÷ 4) × (90/90) + (0.00% ÷ 4) × (0/90)] = RMB1,750.00 |
The total interest earned would be RMB7,000 over the 1 year, at an effective interest rate of 0.70% p.a.
Scenario 2
Middle-of-the-road scenario
Quarterly interest period | Number of calendar days in the interest period |
Number of days on which LIBOR stayed at or within the accrual range |
Number of days on which LIBOR stayed outside the accrual range | Interest Payment |
---|---|---|---|---|
1 | 93 | 87 | 6 | RMB1,000,000 × [(0.70% ÷ 4) × (87 ÷ 93) + (0.00% ÷ 4) × (6 ÷ 93)] = RMB1,637.10 |
2 | 91 |
60 | 31 | RMB1,000,000 × [(0.70% ÷ 4) × (60 ÷ 91) + (0.00% ÷ 4) × (31 ÷ 91)] = RMB1,153.85 |
3 | 91 | 15 | 76 | RMB1,000,000 × [(0.70% ÷ 4) × (15 ÷ 91) + (0.00% ÷ 4) × (76 ÷ 91)] = RMB288.46 |
4 | 90 |
0 | 90 | RMB1,000,000 × [(0.70% ÷ 4) × (0 ÷ 90) + (0.00% ÷ 4) × (90 ÷ 90)] = RMB0.00 |
Quarterly interest period | 1 |
---|---|
Number of calendar days in the interest period |
93 |
Number of days on which LIBOR stayed at or within the accrual range |
87 |
Number of days on which LIBOR stayed outside the accrual range | 6 |
Interest Payment | RMB1,000,000 × [(0.70% ÷ 4) × (87 ÷ 93) + (0.00% ÷ 4) × (6 ÷ 93)] = RMB1,637.10 |
Quarterly interest period | 2 |
Number of calendar days in the interest period |
91 |
Number of days on which LIBOR stayed at or within the accrual range |
60 |
Number of days on which LIBOR stayed outside the accrual range | 31 |
Interest Payment | RMB1,000,000 × [(0.70% ÷ 4) × (60 ÷ 91) + (0.00% ÷ 4) × (31 ÷ 91)] = RMB1,153.85 |
Quarterly interest period | 3 |
Number of calendar days in the interest period |
91 |
Number of days on which LIBOR stayed at or within the accrual range |
15 |
Number of days on which LIBOR stayed outside the accrual range | 76 |
Interest Payment | RMB1,000,000 × [(0.70% ÷ 4) × (15 ÷ 91) + (0.00% ÷ 4) × (76 ÷ 91)] = RMB288.46 |
Quarterly interest period | 4 |
Number of calendar days in the interest period |
90 |
Number of days on which LIBOR stayed at or within the accrual range |
0 |
Number of days on which LIBOR stayed outside the accrual range | 90 |
Interest Payment | RMB1,000,000 × [(0.70% ÷ 4) × (0 ÷ 90) + (0.00% ÷ 4) × (90 ÷ 90)] = RMB0.00 |
The total interest earned would be RMB3,079.41 over the 1 year, at an effective interest rate of 0.31% p.a.
Scenario 3
Worst-case scenario
Quarterly interest period | Number of calendar days in the interest period |
Number of days on which LIBOR stayed at or within the accrual range |
Number of days on which LIBOR stayed outside the accrual range | Interest Payment |
---|---|---|---|---|
1 | 93 | 0 | 93 | RMB1,000,000 × [(0.70% ÷ 4) × (0 ÷ 93) + (0.00% ÷ 4) × (93 ÷ 93)] = RMB0 |
2 | 91 |
0 | 91 | RMB1,000,000 × [(0.70% ÷ 4) × (0 ÷ 91) + (0.00% ÷ 4) × (91 ÷ 91)] = RMB0 |
3 | 91 | 0 | 91 | RMB1,000,000 × [(0.70% ÷ 4) × (0 ÷ 91) + (0.00% ÷ 4) × (91 ÷ 91)] = RMB0 |
4 | 90 |
0 | 90 | RMB1,000,000 × [(0.70% ÷ 4) × (0 ÷ 90) + (0.00% ÷ 4) × (90 ÷ 90)] = RMB0 |
Quarterly interest period | 1 |
---|---|
Number of calendar days in the interest period |
93 |
Number of days on which LIBOR stayed at or within the accrual range |
0 |
Number of days on which LIBOR stayed outside the accrual range | 93 |
Interest Payment | RMB1,000,000 × [(0.70% ÷ 4) × (0 ÷ 93) + (0.00% ÷ 4) × (93 ÷ 93)] = RMB0 |
Quarterly interest period | 2 |
Number of calendar days in the interest period |
91 |
Number of days on which LIBOR stayed at or within the accrual range |
0 |
Number of days on which LIBOR stayed outside the accrual range | 91 |
Interest Payment | RMB1,000,000 × [(0.70% ÷ 4) × (0 ÷ 91) + (0.00% ÷ 4) × (91 ÷ 91)] = RMB0 |
Quarterly interest period | 3 |
Number of calendar days in the interest period |
91 |
Number of days on which LIBOR stayed at or within the accrual range |
0 |
Number of days on which LIBOR stayed outside the accrual range | 91 |
Interest Payment | RMB1,000,000 × [(0.70% ÷ 4) × (0 ÷ 91) + (0.00% ÷ 4) × (91 ÷ 91)] = RMB0 |
Quarterly interest period | 4 |
Number of calendar days in the interest period |
90 |
Number of days on which LIBOR stayed at or within the accrual range |
0 |
Number of days on which LIBOR stayed outside the accrual range | 90 |
Interest Payment | RMB1,000,000 × [(0.70% ÷ 4) × (0 ÷ 90) + (0.00% ÷ 4) × (90 ÷ 90)] = RMB0 |
The total interest earned would be RMB0 over the 1 year, at an effective interest rate of 0% p.a.
Scenario 4
Converting RMB to your home currency at maturity
Let's assume that the US dollar 3-month LIBOR stays outside the accrual range for every day during the interest period. That means there will be no interest payment throughout the investment tenor. We'll also assume that the initial spot price for RMB/HKD on the trade date is 1.2609 and that RMB/HKD depreciated by 0.06% during your investment tenor, resulting in RMB/HKD trading at 1.2601 on the maturity date. You then choose to convert your maturity amount from RMB back to your home currency of HKD.
In this scenario, the potential loss from the product could offset or even exceed the potential gain if your deposit currency (RMB) depreciates against your home currency (HKD).
So we would subtract the principal amount in HKD on the trade date from the principal amount in HKD at maturity:
(RMB1,000,000 × 1.2601) − (RMB1,000,000 × 1.2609) = −HKD800
This represents a loss of 0.06% of the principal amount in HKD.
Scenario 5
The Bank becomes insolvent or defaults on its obligations
Assuming that the Bank becomes insolvent during the tenor of this product or defaults on its obligations under this product, you can only claim as its unsecured creditor. You may get nothing back and suffer a total loss of your deposit amount.
If you redeem the product before its maturity, you may receive less than 100% of your initial investment amount. In the worst-case scenario, you may incur significant loss.
Return diagram

If the LIBOR stays between the accrual area (the highlighted area between 0.25% and 0.60% in this diagram), you'll receive interest at a higher accrual in rate. Otherwise, an accrual out rate will be applied to calculate the interest.
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