By Gabriel Chen

The structured products industry is dead. On the retail front, consumers are shunning these risky and complex instruments which dangle higher returns than bank deposits, while banks have stopped selling them.

And on the institutional front, bankers say that business is still alive but 'struggling'. Flows from funds and private banks into these products have also dried up.

The retail sale side looks even gloomier. 'If you ask relationship managers whether you can buy structured products today, they'll just tell you, 'No, sorry',' said a 32-year-old wealth manager who wants to be known only as Mr Chia. 'Nobody is selling them.'

Not that anyone is buying either. 'I bought into Minibonds thinking they operated like bonds, but they were more complicated than that,' said 57-year-old investor S.C. Yong, who ploughed $50,000 into instruments linked to the now bankrupt US investment bank Lehman Brothers.

'There's a sense of being cheated. I'm disappointed with the regulatory framework, and I won't ever touch structured products again, not even with a 10-foot pole.'

The market for these products plunged following the Sept 15 bankruptcy of Lehman Brothers and the subsequent uproar about how investors had been allegedly mis-sold products linked to it.

Just last year, an estimated $3 billion worth of such products were sold in Singapore. Among them were exotic structures like High Notes, Pinnacle Notes, Jubilee Notes and Minibonds.

Experts estimate that across Asia, US$200 billion (S$300 billion) to US$250 billion worth of products were transacted last year.

Numbers released by the Monetary Authority of Singapore show that big money was sucked into these products by investors here, who included retirees and the lowly educated. For instance, the total issue size of the Minibond programme was $508 million, of which $375 million was sold to about 8,000 retail investors through nine distributors.

Today, sales have plummeted to near-zero. The last publicised structured product was the All Weather Booster Notes arranged by Merrill Lynch issued on Sept 20.

The Sunday Times asked several banks whether they are still selling structured products.

Maybank said it is not 'marketing' them for the time being. DBS said the only structured products it offers now are structured deposits, which are principal-protected. An OCBC spokesman said all banks, including itself, are 'reviewing the sales process and the types of structured products that they will sell in the future'.

These complex instruments made their way to the mass market here in 1999 and not only fuelled an era of growth for the banks and brokerages which distributed them, but also spawned the creation of thousands of jobs for traders, structurers and the relationship managers who sold them.

'In terms of volume, structured products were the most-sold products every year,' said Mr Leong Sze Hian, president of the Society of Financial Service Professionals.

After the Asian financial crisis from 1997 to 1998, Asian investors began looking for other wealth management options.

Stocks were beaten down, and investors sought new ways to grow their wealth. But what really pushed them into the direction of structured products was practical necessity - deposit rates were almost negligible.

In the aftermath of the technology bubble bust in 2000, US interest rates were cut to boost the world's largest economy. Singapore's deposit rates tumbled in tandem. In early 2003, for example, POSB savings and passbook account-holders got 0.125 per cent for the first $50,000. Today, Singdollar deposits at banks yield at least 0.25 per cent.