In the past few years, top-tier investment banks largely shunned the retail market and the clamour from small customers for alternatives to their fixed-deposit accounts which were paying them close to zero interest. The big-leaguers stuck instead to providing products and services for their wealthy private and institutional clients, leaving others to test the retail market with structured products such as guaranteed funds, equity-linked notes (ELN), or, more recently and more controversially, warrants. Lately, however, some seem to be having second thoughts and UBS and Deutsche Bank are among two of the most noticeable new participants in the race to capture shares of the retail structured product market. And it looks like there are more on the way. This week, US financial services giant Merrill Lynch introduced its second retail ELN to the market in a little more than five months. According to Kenneth Liu Kwok-wah, a vice-president of strategic solutions group for the Asia-Pacific at Merrill, the Hong Kong dollar equity-linked notes, launched in April, were well received by investors and raised about $500 million. Their latest product, termed Giant Notes, will target an issue size between $280 million and $300 million with subscription running from this week until the end of the month. Both notes were jointly issued with Cheung Kong (Holdings). Mr Liu said the biggest kicker of the latest issue, which has a relatively low minimum subscription amount of $50,000, is its profit lock-in mechanism, a rare feature among retail structured products. The notes are tied to the performance of three blue-chip stocks - HSBC Holdings, Hang Seng Bank and China Petroleum & Chemical Corp (Sinopec). Mr Liu explained it was essential that underlying stocks must be 'those that investors will find comfortable to own' in case the price of one of them fell below 80 per cent of the original set price - a scenario that will result in investors taking the stocks instead of their invested principle. But while most investors probably will not complain too much about taking HSBC and Hang Seng stock, the same may not hold true for Sinopec given the volatility in oil prices lately. novices put to test When guaranteed funds first became popular in Hong Kong about four or five years ago, many carried tenures of five years or longer - which means we will see a handful reaching maturity either this year or next. At a lunch meeting yesterday, newly elected Hong Kong Investment Funds Association chairman Elisabeth Scott pointed out that it would be interesting to see whether the capital redeemed would continue to stay in the fund market. Some observers believed that with interest rates coming back to more normal levels, those who bought guaranteed funds but had now grown dismayed after having their money tied up for such a prolonged period were likely to go back to bank deposits. This may suit medium and small-sized banks that have been trying to lure more depositors to provide a bigger source of low-cost funds to meet the growth in loan demand. However, bankers from larger lenders told Money Week that they had been pushing staff to avoid such a scenario from unfolding. 'It has taken us so much effort in the last few years to educate those who've never invested about what they can do with their money, and you can clearly see the result of that from the growth in fee income in the industry,' said one banker. 'The last thing we want is to have to do this all over again. There are many other structured products out there with shorter tenures that they can choose from and we are making sure that our sales people are aware of that.' Till death us do part Here's a contender for the headline of the year award for press releases in the banking industry. Bank of East Asia this week announced it had joined up with property agency Midland Realty in a plan that would 'provide a breakthrough 40-year fixed amount mortgage'. Why did this groundbreaking change fail to make its way to the front page? Well, it turns out that the maximum tenure is still, urgh, 30 years. The 40-year limit applies only when increased interest rates lead to a larger monthly instalment in an existing mortgage.