Nationwide Building Society has launched a new five year bond that guarantees a return on capital and at least ten per cent growth.

The Guaranteed Equity Bond (GEB) has growth linked to the FTSE 100, Nikkei 225 and DJ EuroSTOXX 50 indices and offers up to 50 per cent of growth in any of the indices, equivalent to 69 per cent before tax to basic and higher rate tax payers.

Managing director of Nationwide unit trust managers, Clive Parkinson praised the bond as an ideal opportunity for people to invest in the stock market, while still having the security of a return of capital as well as guaranteed growth.

“We have linked the bond to three indices which provide customers with increased exposure to overseas markets and the potential to benefit from the performance of a wider range of companies,” he added.

The August 0.25 per cent cut in interest rates resulted in quick reductions in savings interest rates across the banking sector, and some analysts criticised banks for not making swift reciprocal cuts to mortgages and loans.

City analysts forecast another drop in rates before Christmas, which would mean further bad news for savers.

Speaking to the Financial Times, Stephen Nickell, a member of the Bank of England’s Monetary Policy Committee (MPC) commented on concerns that the current measures would not boost the economy as forecasted, and prompt further interest rate cuts.

“What happens to interest rates in the future depends very much on whether that forecast pans out,” he said.






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