A structured deposit in Singapore is a capital-protected or principal-at-risk bank product that combines a traditional deposit with a financial derivative, offering returns linked to an underlying asset such as interest rates, equities, currencies, or indices. Unlike plain fixed deposits, returns are not guaranteed. Not financial advice.
Structured deposits are offered by major Singapore banks (DBS, OCBC, UOB) and are popular among investors seeking higher potential returns than standard fixed deposits while maintaining a degree of capital protection.
Table of Contents
- What Is a Structured Deposit?
- How Structured Deposits Work
- Types in Singapore
- SDIC Protection
- Structured Deposits vs Fixed Deposits vs SSBs
- Key Risks
- FAQ
What Is a Structured Deposit?
A structured deposit is a deposit product — your money is held by the bank — but the return is not a fixed interest rate. Returns are linked to the performance of an underlying reference: an equity index (STI, S&P 500), a foreign exchange rate (USD/SGD), interest rates (SORA), or commodity prices. The bank uses part of the deposit proceeds to buy options or derivatives that generate the market-linked payoff.
How Structured Deposits Work
A typical structure: the bank takes your SGD 100,000 for a 3-year term. It uses SGD 85,000 to buy a zero-coupon bond that grows to SGD 100,000 at maturity (protecting principal). The remaining SGD 15,000 buys call options on an index. If the index rises, the options generate a return. If not, they expire worthless and you receive only your principal back — effectively losing to inflation. “Principal-at-risk” structures accept some downside for higher potential returns.
Types of Structured Deposits in Singapore
Equity-Linked Deposits: Returns linked to stock indices. Minimum investment typically SGD 50,000–100,000 at major banks. Interest Rate-Linked Deposits: Returns tied to SORA or other benchmarks. Dual Currency Investments (DCI): You commit SGD and are exposed to conversion at a pre-agreed rate if the foreign currency moves unfavourably. Popular for short-term yield enhancement but carries significant currency risk.
SDIC Protection: Is Your Principal Safe?
SDIC insures deposits up to SGD 100,000 per depositor per bank. Most bank-issued structured deposits that qualify as “deposits” under the Deposit Insurance Act are covered — but only the principal, not potential interest. If the structured deposit is issued as a note, it may NOT be SDIC-protected. Always verify product classification before investing.
Structured Deposits vs Fixed Deposits vs SSBs
Fixed deposits offer guaranteed returns (3–4% p.a. at DBS as at Q1 2026) with full SDIC protection. Singapore Savings Bonds (SSBs) offer government-guaranteed step-up returns with monthly liquidity. Structured deposits offer potentially higher but uncertain returns. For most retail investors seeking safe, predictable returns, fixed deposits and SSBs are more appropriate at Q1 2026 rates.
Key Risks
(1) Opportunity cost — zero return above principal while markets rise; (2) Illiquidity — fixed terms with early withdrawal penalties; (3) Counterparty risk — exposure to issuing bank solvency; (4) Complexity — payoff formulas can be difficult to understand and compare.