By Gabriel Chen

The mood is now for dollars - and sense.

Many banks that once actively sold complex structured products now woo customers with products that are less risky and easier to grasp - though the returns may be lower.

It is back to basics for investors who are choosing safety, having seen assets mauled by the global financial crisis.

Hence, plain-vanilla products - from endowments (long-term regular savings plans with built-in life insurance) to monthly savings plans - are back in favour.

While 'core offerings' such as fixed deposits are not new, they were sometimes viewed by investors as 'poorer cousins' of structured products.

The latter entered the mass market in 1999 and generally offered higher returns than, say, fixed deposits.

Depending on the complexity of the structured products, they could yield returns from 1 per cent a year to a fixed first-year payout of 10 per cent.

In 2007, an estimated $3 billion worth of structured products were sold here, including High Notes, Pinnacle Notes, Jubilee Notes and Minibonds.

But the market for these instruments plunged after the Sept 15 bankruptcy of United States investment bank Lehman Brothers, triggering an uproar about how investors were allegedly mis-sold products linked to it, and protest rallies at Speakers' Corner.

The total issue size of Minibonds in Singapore, for example, was $508 million, of which $375 million was sold to about 8,000 retail investors through nine distributors.

Maybank, which sold Minibonds, is not marketing structured products for now. 'We'll now focus on bancassurance and deposits,' said Ms Helen Neo, Maybank Singapore's head of consumer banking.

'We're offering attractive deposit interest rates when customers take up insurance products with us,' she added, noting that given the current downturn, it is prudent for people to be sufficiently insured.

With insurance bundling, time deposits give a yield of 6.88 per cent per annum for three months.

Other bankers said they are also seeing a rise in demand for lower-risk products such as time deposits and monthly savings accounts, and lower demand for aggressive equity funds.

Standard Chartered Bank has enjoyed a double-digit rise in savings and fixed-deposit accounts since last June.

Since the second half of last year, it has also seen 'strong interest' in regular investment savings plans, said Ms Janice Poon, its general manager of wealth management.

HSBC plans to launch a new product tomorrow called Guaranteed Saver Plus. The single-premium endowment plan offers a guaranteed return of up to 2.5 per cent per annum over its five-year tenor.

But structured products have not completely gone away.

One version called structured deposit - albeit with capital protection upon maturity - is on tap at United Overseas Bank (UOB) and DBS Bank.

Unlike exotic structured products such as Morgan Stanley Pinnacle Notes and Lehman Minibonds, the products - the UOB Wealth Deposit Series 10 and POSB Invest Step-Up Account - appear to be less obtuse and with no links to complex financial instruments such as credit default swaps.

The UOB wealth series is a four-year-and-11-month structured deposit linked to a basket of five Singapore blue-chip shares. Requiring a minimum investment of $5,000, it offers guaranteed payouts annually and a possible bonus at the end of the tenor.

POSB Invest Step-Up Account is a 41/2-year Singdollar interest-

linked structured deposit that offers payout rates that increase every year. A minimum investment of $5,000 is needed.

Mr Rajan Raju, head of consumer banking at DBS, notes that there are still takers for structured deposits. 'Some of our customers will put part of their portfolio into this kind of structures where they can earn a higher return,' he said.

At least one bank has found a creative way to drum up business linked to spending.

OCBC has launched a scheme that helps people earn money when they use either their credit or debit card.

This SmartChange feature is so popular that the bank has seen a threefold rise in sign-ups since the pilot was launched through its debit-card holder base in May 2007 (see sidebar).

Still, for some, the million-dollar question remains. Can banks be trusted to keep their money safe?

Mr Raju said DBS is stable and credible. It had drawn flak for the way it arranged and sold the High Notes 5 structured product linked to Lehman Brothers.

'If I look at Singapore, to be fair, the average man in the street looks at the bank for deposits, the simple loan products, and he trusts the bank for that,' he said.

This article was first published in The Straits Times on January 11, 2009.