The FTSE 5 Quarterly Kick-Out Plan 2 and FTSE 5 Quarterly Defensive Plan are both based on the performance of five leading FTSE100 shares, namely BHP Billiton, GlaxoSmithKline, HSBC, Royal Dutch Shell and Tesco.
They both have a five-year and two-week term though they differ in their payout rates.
Payout rates
The former will pay 5% at its first quarterly measurement date as long as each of the five shares is at or above 95% of its opening level. If this rolls over into quarter two, the plan will then pay out 10% assuming the same criteria are met, and so on until maturity when a potential 100% return could be paid.
The Defensive Plan will pay 3.5% per quarter if the closing prices of all five shares are at least 85% of their respective opening levels on any measurement date.
The first measurement date is 6 June 2012, nine months after the start date. If the plan matures on that date, investors will receive 10.5%. From this date onwards, the measurement date is quarterly.
If not, the plan continues into quarterly measurements where if the criteria are matched on the first quarterly measurement date it will pay investors 14%. The plan will continue until all five shares are at or above 85% of their opening levels when a 70% return could be paid at maturity.
Capital protection
If one of the shares is below 85% but above 50% of its opening level on the final measurement date investors receive 100% of their capital back with no growth payment.
For both plans, capital is at risk at maturity if the plan has not matured early and the worst performing share is more than 50% below its opening level.
The opening levels for the Kick-Out plan will be their price at the close of play on 19 August, 2011, with their final levels being the end of business on 19 August, 2016. The maturity date is 2 September that year.
The Defensive Plan will have its opening levels set at close of business on 2 September, 2011, with final levels as at the end of play on 2 September, 2016, and it matures on 16 September, 2016.
RBS will issue the securities.
