BANKERS eager to retain deposits have found a solution to satisfy depositors' growing appetites for investment without letting the money drain away from the bank. The solution is simple - to provide investment-linked deposit products that enhance the rate of return for depositors. Hongkong Chinese Bank (HKCB) plans to launch an innovative deposit product which hedges large fixed deposits with Hang Seng Index futures for higher interest rate returns. The bank said the product would provide a minimum interest rate of one per cent. But if bullish sentiment returns next year, depositors will be able to earn maximum interest of 20 per cent per annum. The return is calculated on the basis of the percentage difference in the settlement prices of the Hang Seng Index futures contract over a one-year period. 'Hedged index-linked deposits provide the investment protection for our deposit customers who can take advantage of a buoyant stock market while being safeguarded from any plunges in share prices,' said Chang Te-cheng, managing director and chief executive of Hongkong Chinese Bank. He said the product offered an alternative to direct share investment. The downside risk for depositors is the difference between receiving one per cent interest and seven per cent as in ordinary one-year fixed bulk deposits. The minimum cash required is $1 million. Starting from December 16, the product will expire on the same date next year. The interest rate will be 40 per cent of the percentage increase in the settlement price of the Hang Seng Index futures contract during the deposit period between the starting date and the interest rate-fixing date, which is set four trading days before the maturity date. If, on the interest-fixing date, the index plunges below the level of the starting date, the depositor will be guaranteed one per cent interest. Hongkong Chinese Bank is not the first to lure depositors with speculative bait. Po Sang Bank, part of the Bank of China Group, launched option-linked deposits in September. With a minimum of $500,000 - or multiples of that sum - fixed for at least one month, depositors can choose to use the interest earned to buy an option on a foreign currency. The leverage can be as high as 95 per cent. By speculating on the movement of the foreign currency's exchange rates, the depositors, if they guess the trend correctly, can profit from the rate change. The maximum loss for the depositor is the interest amount or the option premium, because he will become the buyer of an option.