As the BANKER predicted two issues ago, upcoming taxation changes will force banks to establish safe havens for their customers to other bank products, for which Finance Minister Simeon Dyankov has not thought yet, but will have no time to tax next year. The banks, however, also had no time to invent new products, but rather focused advertising on existing products, which proved ideal for escaping from Dyankov.
At the counters of DSK appeared prospectus actually protecting half of the sums on the deposits from the new Dyankov-driven tax on interests – DSK Opportunity which was awarded the prize Combined Financial Product for 2011. This is a modern investment product, a combination of medium and short-term investment tool. Fifty percent of the amount is invested in a fixed-term deposit, yields on which will pay the Dyankov tax. The remaining half of the money goes to insurance Groupama Protect, which in the medium term carries 100% guaranteed payment of the single premium paid at the end of the insurance coverage and an opportunity for additional income. The net insurance premium here is invested in the structured bond, and its issuer is OTP BANK. The index, on which the bond issue is structured is the German index DAX, which includes the shares of Deutsche Telekom, Allianz, Bayer, Siemens, Lufthansa, Daimler and others. This money Dyankov cannot taxed, and they are tax-deductible – up to 10% of the sum, so the effect is doubled. Product Campaign of DSK for option will be running until 15 December 2012.
Billboards showed the existence of Alpha Deposit Advance but with updated rates. Prompting its goal, Alfa Bank wrote: designed for individuals who want to earn interest immediately rather than at the end of the period. At the day of the maturity, the earnings cannot be taxes, bank experts say, because it is paid at the beginning, explained financiers. Interest rates range from 5% annual interest rate for three month deposits in BGN up to 5.75% for the one-year ones. For deposits in euros the figures are 4.75 and 5.00 respectively. Upon early termination of the deposit by the depositor, the bank deducts from the principal, the already paid interest.
Bank Allianz Bulgaria also offers a deposit with an advance payment of the interest. The interest rate for the entire period up until maturity is calculated and transferred to the account at the opening day of the deposit. The minimum amount is 1000 currency units. The bank offers a number of bonuses such as a free checking account to transfer the interest, a free debit card, a credit card or a Smart Wallet package with a pre-approved limit of 80% of the deposit amount, an overdraft secured by the deposit, and no fees for withdrawals at maturity.
ProCredit Bank offers deposit ProAvans where customers can withdraw interest from their deposit at the time of its submission.
FIB launched a deposit Golden Years for citizens having become eligible for a pension, which prtects pensioners from the Dyankov tax. The client chooses among all currencies in which the bank operates deposits for a period of one to 12 months. Interest can be paid in advance. The product comes with free international Maestro card in the currency of the deposit to transfer the interest to.
UniCredit Bulbank created a ROKADA deposit – a term deposit of three, six or 12 months, again paying the interest for the entire term of the deposit in advance, on its opening. Advance interest payable can be used by the customer immediately or transferred to another account.
Bankers now apply an easy way to hide people’s deposits from taxation. They call it a hidden deposit. Funds entrusted to the bank, are not touched, just change shape: they become money in a mutual fund. It is part of the bank’s financial group, so it does not lose funds. If the fund is of a type Money Markets, it basically invests in bank deposits. This way the risk does not increase and the yield can get even greater than that of the deposit, because of the winning from scale of the fund and other less riskier but higher-yielding investments.
