As U.S. banks grapple with ways to help savers get comfortable with investing, one British bank has taken decisive action.
On Monday, Barclays Group kicked off a major advertising campaign around Britain touting a new subsidiary called B2, which will offer the mass market a guaranteed savings account linked to a stock mutual fund.
The move by Britain's third-largest bank is notable for its ambition and national scope. Similar products have been introduced in the United States, but on a limited scale-and with mixed results.
To be sure, there are big differences between the American and British markets. U.S. consumers are much more accustomed to buying mutual funds and other investments than their U.K. counterparts.
But like many American banks, Barclays is trying to preach the virtue of investing to people who think of themselves as savers. Barclays is out to help these consumers participate in the current run-up in the stock market, said Mark Bogard, a B2 managing director.
The chief selling point is a stock market guarantee. With Barclay's Advanced Savings Account, investors can participate in the stock market over three, five, or seven years with a guarantee that they will not lose their principal back.
Chase Manhattan Corp. is among the U.S. banks that have explored similar products. In 1992, Chase offered a certificate of deposit that carried government insurance and had a rate of return tied to the stock market. That account has since been discontinued.
"It was the first blush in trying to create a market-rated instrument for a traditional bank customer," said Kathleen McClave, president and chief executive officer of Furash & Co., Washington. Today the bull market has enticed traditional banking customers to go directly into mutual funds, she said.
"It is much more interesting for the U.S. banks today to offer their own stock funds to consumers versus some index-linked product," added Richard W. Spitler, managing vice president at First Manhattan Consulting Group.
But investors in Britain have a way to go before they are comfortable with directly investing in mutual funds, Mr. Bogard said. Only one in 20 people there owns a mutual fund, compared with one in three in the United States, he said.
Barclays designed its new offering to appeal to a population used to simple deposit accounts. It requires an initial deposit of only $810 or a commitment to deposit at least $81 a month.
To protect investors against loss, Barclays earmarks a portion of deposits-13.9% for a three-year account, for instance-to cover insurance and other risk management services.
The balance of the deposits are invested in a portfolio of 105 blue-chip British companies dubbed the B2 Stock Market Growth Fund. It is managed by Barclays Global Investors.
To promote the new account, Barclays has launched an intensive television, print, and billboard campaign. The bank is advertising in popular tabloids like The Sun as well as more conservative newspapers.
And to appeal people 25 and older the bank is using actor Richard E. Grant-known for roles in such movies as "Withnail and I," "The Player," and "L.A. Story"-in its TV spots.
Information on the account is also available through a toll-free number, Mr. Bogard said.
The B2 name is designed to capitalize on Barclays' strong brand identity, Mr. Bogard said. Though U.S. mutual fund companies have attempted to make inroads in Britain, Mr. Bogard said their success has been limited.
"Nobody's heard of Fidelity," he said. "If you stop a thousand Brits in the street, almost all of them will say it's a company that makes hi-fis."