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About Investment Plans

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Investment Plans allow investors to access the performance of an underlying asset such as an index, commodity or single stock with some or all of their capital protected at Maturity. Through our extensive range of Capital Protection, Yield Enhancement and Growth Participation products, investors of all risk appetites can now access opportunities in rising, falling or flat markets. 

The performance of the Plan is generally dependent on the underlying asset chosen, to fulfil a specific objective. This may be to remain above a specific level each year, or simply to rise by the end of the Investment Term. Returns can be fixed, unlimited or leveraged depending on the product chosen. This means that investors have the opportunity to gain an attractive level of return in virtually any market conditions.


Choosing an Investment Plan

With such diversity of products available under the range of the Investment Plans, choosing the right one for your client will depend entirely on their investment objectives, view to risk and time horizon. The table below provides a quick introduction to the three main types but you will be able to find out more by reading the the Product Guide for the individual Investment Plan that you are looking at.

 

3 Broad categories of Structured Product

Capital Protection

Yield Enhancement

Growth Participation

Objective

Invest in the markets with the re-assurance that capital will be returned at Maturity.

The potential to generate a fixed level of return based on a specific investment scenario, ie. the underlying asset achieving a certain level on a certain date.

The potential to enhance returns from rising, falling or both rising and falling markets

Products

  • Capital protected
  • Autocalls
  • Synthetic Zero
  • Range Accrual
  • Accelerated Tracker
  • Bear Accelerator
  • Twin Win
  • Bonus
  • Recovery

How long is the Investment Term?

Investment Plans have a fixed Investment Term of approximately 6 years. Unlike a regular savings account, Investment Plans are designed to be held for the full Investment Term. Some Investment Plans, such as Autocalls, have the potential to mature early, in which case investors will receive their capital and returns (if any due) before the entire Investment Term has elapsed.

Investors can sell back their Plan before Maturity but they may get back less than their initial deposit, and they will be charged for an early withdrawal.


Why are Investment Plans popular?

Investment Plans offer a solution for investors who are looking for returns similar to investing in equities, but with the some degree of capital protection at Maturity.


What makes Societe Generale Investment Plans different?

As an alternative to a more traditional plan where investors can lose up to 100% of their investment if the Issuer were to default or become insolvent, Societe Generale Investment Plans are designed to mitigate Counterparty Risk through the use of Collateral whilst also diversifying Investment Risk.

Instead of being 100% exposed to SG Issuer as the Issuer of the Plan, or Societe Generale as the Guarantor, Counterparty Risk is mitigated by the introduction of a pool of Collateral Assets, which can be sold to recover the value of your client’s investment should the Issuer default or become insolvent.

In addition, the Plans are exposed to the equally weighted Investment Risk of 3 or 4 major UK or global institutions with UK Three / UK Four and Global Four Plans or the UK Government with UK Gilts Plans.


What impact does spreading investment risk across the UK Three or UK Four give to potential returns?

Let's then look at a UK Three Plan as an example.

The UK Three Plans not only aim to meet the diversification needs of investors, but also to exceed their expectations in terms of potential returns. We can demonstrate this by looking at the following product as an example, and showing the affect that the UK Three model has on the Potential Coupon

Product example: a SG Collateralized Investment Plan

Product Type Kick Out Plan
Securities Issuer SG Issuer
Guarantor Societe Generale
Counterparty Risk Mitigated through the use of a pool of Collateral Assets
Collateral Assets Gilts, Investment Grade Bonds and/or equities comprising the FTSE 100, the S&P 500, Nikkei 225, EuroStoxx 600, Hang Seng and SMI Index
Underlying Asset FTSE 100 Index
Investment Term Maximum 8 year
Potential Early Expiry Annual from year 2 of the Investment Term
Kick Out Levels 100% in years 2-8

 

Potential coupon payments based on the Plan above

  UK Three Plan Collateralised Plan
Diversified Investment Risk Spread equally across 3 major UK institutions (33.33% per institution) N/A
Potential Gross Coupon Payment 9.90% (not compounded) 8.25% (not compounded)

 Source: Societe Generale. Pricing as of August 20, 2018.

The risk / return tradeoff

The SG Collateralised Investment Plan would provide a potential annual Coupon Payment of 8.25%. The Counterparty Risk to Societe Generale has been mitigated by the introduction of a pool of Collateral Assets, and no further Investment Risk has been applied.

Conversely, the UK Three Plan provides a higher potential annual Coupon of 9.90%. The Counterparty Risk to Societe Generale has again been mitigated by the introduction of Collateral Assets. However, in addition, the UK Three Plan is equally exposed to the Investment Risk of three institutions,  which in the case of the above are Barclays PLC, Lloyds Banking Group PLC and HSBC Holdings PLC. As such, if any one of these institutions were to default or become insolvent, 33.33% of your client’s capital would be at risk at Maturity. Investors are compensated for this risk with an increased Potential Coupon.


Who are Investment Plans suitable for?

Investors are likely to have a medium to long term view on their investments. For instance investors may be looking for medium to long term growth or income in their portfolio and would place tax efficiency as an important consideration, or they may be prepared to forego interest payments in order to pursue the potential for higher returns.

 

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The information, services and products on this website are intended for use only by financial advisers (herein “Financial Advisers”) and are not aimed at or intended for use by retail investors or persons who are residents of any other jurisdiction, other than the United Kingdom.


PROFESSIONAL REGULATIONS

 

Societe Generale is a licensed French credit institution supervised by the Autorité de Contrôle Prudentiel et de Résolution, (“ACPR”: 4 place de Budapest CS 92459 75436 Paris Cedex 09), controlled by the Autorité des Marchés Financiers (“AMF”) and under the prudential supervision of the European Central Bank (ECB). In accordance to the provision of French Code Monétaire et Financier (Monetary and Financial Code), Societe Generale, as a credit institution licensed for the provision of investment services, is authorized to carry out all banking operations and provide all investment services except for the investment service of the operation of a multilateral trading facility (“MTF”) or an organized trading facility (“OTF”).

 


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Societe Generale shall make its best efforts to ensure that the information displayed on this website is accurate and up-to-date. Societe Generale reserves its right to amend the content of this website at any time, without prior notice. However, Societe Generale is not able to guarantee that the information herein is complete or that it will not be modified by a third party (malware). Societe Generale shall not be held liable for any difficulty or impossibility to access the website due to an internet connection problem.

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Further, Societe Generale shall not be held liable neither for the results of any factor beyond their control nor for any eventual loss or damage to the technical environment of the website users, including, but not limited to, hardware, software, or any other equipment used to access this website or use the services and/or the information herein.

 


INFORMATION ABOUT FINANCIAL INSTRUMENTS

 

The potentials information or material about financial instruments on this website are provided for general information purposes only and should not to be construed as a solicitation or an offer to buy or sell any financial instruments, or any substitute for any form of advice or recommendation with respect to such financial instruments.

Societe Generale accepts no liability for losses or damages which may be directly or indirectly sustained by any visitor to the website or other person who obtains access to the material on the website. 


Any person wishing to obtain information about Societe Generale products or services is requested to contact Societe Generale to obtain the regulatory information document (where applicable), and any other relevant information on the availability, terms and conditions, and prices.


The Plans described within this website are not suitable for everyone. Investors’ capital is at risk. Financial Advisers should not advise their clients to invest in these Plans unless they understand their nature and the extent of their exposure to risk.


The value of these Plans may be exposed to fluctuations in rates of exchange, and these may have an adverse effect on the value or price of the Plan. Information in the website on past performance cannot be relied upon as a guide to future performance. The value of these Plans can go down as well as up and investors may get back less than their initial investment.


This disclaimer cannot disclose all the risks and other significant aspects of the Plans. You should study the risk factors attached to these products that are disclosed below and throughout this website.


This website does not constitute an offer for sale of securities in the United States and the securities will not be registered under the U.S. Securities Act of 1933, as amended (the « Securities Act »). The securities may only be offered, sold, pledged or otherwise transferred in an “offshore transaction” (as defined under Regulation S) to or for the account or benefit of a Permitted Transferee.  A “Permitted Transferee” means any person who (a) is not a U.S. person as defined in Rule 902(k)(1) of Regulation S and (b) is not a person who comes within any definition of U.S. person for the purposes of the U.S. Commodity Exchange Act (CEA) or any rule of the U.S. Commodity Futures Trading Commission (CFTC Rule), guidance or order proposed or issued under the CEA (for the avoidance of doubt, any person who is not a “Non-United States person” defined under CFTC Rule 4.7(a)(1)(iv), but excluding, for purposes of subsection (D) thereof, the exception for qualified eligible persons who are not “Non-United States persons,” shall be considered a U.S. person) and (c) is not a "U.S. Person" for purposes of the final rules implementing the credit risk retention requirements of Section 15G of the U.S. Securities Exchange Act of 1934, as amended (the U.S. Risk Retention Rules) (a Risk Retention U.S. Person).  The securities are available only to, and may only be legally or beneficially owned at any time, by Permitted Transferees.

 

 

Key risks for Investment Plans

 

Capital is at risk and investors could lose some or all of their capital.


If SG Issuer and Societe Generale were to default or become insolvent, the products will terminate immediately. The amount that your client receives back for their investment will depend on i) the market value of their Investment at that time and on ii) the value of the collateral assets at the time of expiry and your client may receive back less than your initial investment.


Liquidity risk: Societe Generale aims to provide a secondary market for the products during the investment term. However, certain exceptional market circumstances may have a negative effect on the liquidity of the products, and even render the products entirely illiquid, which may make it impossible to sell the products and result in the partial or total loss of the invested amount. There is no liquid market on which these products can be easily traded, and this may have a material adverse effect on the price at which these products might be sold. Therefore, the investor may lose part or all of the invested amount.


As with all similar structured investments, in the event of Counterparty or Issuer insolvency your client will not have recourse to the Financial Services Compensation Scheme.


Market risk: The products may be subject to significant price movement at any time before maturity, which may in certain cases lead to the loss of your entire capital invested.

 

 

Key risks for Deposit Plans

 

If Societe Generale Hambros Bank Limited becomes insolvent or fails to repay the amounts due, you could lose some or all of your initial deposit and any gross return owed to you on the Plan maturity Date. As with any deposit, if the Deposit taker fails to pay or becomes insolvent you may be eligible to claim under the UK Financial Services Compensation Scheme (“FSCS”) up to the scheme limits. For further information visit www.fscs.org.uk


In order to provide the performance of a Deposit Plan, the Deposit taker will enter into a linked transaction with Societe Generale. In the event an ‘Extraordinary Event’ were to occur whereby for example, Societe Generale becomes insolvent, and the Deposit taker was unable to match the terms of the linked transaction with another provider, the Deposit taker may not be able to maintain the returns or income stipulated for a Deposit Plan. In such circumstances the income or return investors receive from a Deposit Plan may be less than the headline rate. The investor’s Counterparty Risk with Societe Generale relates only to the terms of the income or return which can be offered by a Deposit Plan. The solvency of Societe Generale has no effect on the actual deposit.


Market risk: The deposit Plans may be subject to significant price movement at any time before maturity. If you were to withdraw from the Plan early you could get back less than your initial deposit.

 

 

Suitability test

 

The purpose of the suitability test is to ensure that the products and services offered meet the client’s investment objectives. In addition, it ensures that the client shall be able financially to bear the risks of the investment (including any relevant loss of capital) and that the client has the necessary experience and knowledge to understand these risks. When providing personal recommendations in relation to these Plans each Financial Adviser is required to and must have undertaken a suitability test and must only recommend products and services that are in accordance with the results of the suitability test.


Please note that Societe Generale does not provide investment advice.

https://www.handbook.fca.org.uk/handbook/COBS/9/

 


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