OREANDA-NEWS. November 11, 2010. Bank SNORAS offers a new investment instrument – the two-year deposit certificates whose interest rates will depend on the annual inflation level in Lithuania. Their annual interest rate will be calculated by adding the additional 3 per cent return to the annual inflation expressed in per cent, while the minimum interest per year will reach at least 5 per cent. The inflation linked deposit certificate can be acquired in all subdivisions of Bank SNORAS, whereas an extra fee is not applicable for the acquisition, reported the press-centre of Bank SNORAS.

“The growing inflation is usually associated with devaluation of savings or funds in general. Therefore, we decided to offer deposit certificates whose value would only increase during the growth of inflation. We are seeking to show that even in the presence of a changeable economic situation, while saving and rationally planning finances, it is possible to gain a considerable return. Our new offered deposit certificate is designated for people who seek to earn larger interest, however, don’t want to assume high risk while investing,” states Remigijus Bartaska, the director of AB Bank SNORAS Investment Business Division.

The interest rates of the new AB Bank SNORAS offered deposit certificate linked to inflation will be fixed twice, after the first and second year of the deposit certificate validity expires. The annual interest rate of such deposit certificate will be calculated by adding the additional 3 per cent return to the annual inflation expressed in per cent. According to R. Bartaska, if during the first year of the deposit certificate validity the inflation is, for example, 1.5 per cent, then, by adding the additional 3 per cent annual return, the interest rate will seek at least their minimum norm – 5 per cent. And if during the second year of the deposit certificate validity the inflation is 3 per cent, then, by adding the additional 3 per cent annual return, the annual interest rate of the deposit certificate for this year will seek 6 per cent. It means that the investor will gain the total of 11 per cent interest for the two-year deposit certificate.

If the annual inflation in Lithuania is less than 2 per cent, the minimum interest rates of the new deposit certificate per year, nevertheless, will not drop below 5 per cent, i.e. 10 per cent for the two-year deposit certificate. The established maximum paid out annual interest norm for such deposit certificate is 8 per cent, i.e. 16 per cent of interest for the two-year deposit certificate.

To calculate the interest rates of the inflation linked deposit certificate, two annual inflation values announced by the Lithuanian Department of Statistics are used. The first year inflation value will be fixed after a year passes since the deposit certificate effective date, and the second year inflation value is established on the deposit certificate redemption day.

The minimum sum of the inflation linked deposit certificate is 100 Litas. The deposit certificate can be given as a gift or be transferred to another person or company in some other way. The inflation linked deposit certificate is not insured by the deposit insurance.