The deal to sell RBS' Asian businesses to Standard Chartered is looking a little shaky, and to be honest, I wouldn't buy either business on principle because of their willingness to fleece the naive Asians through what they call dual currency deposits, supposedly a source of high returns to investors, but in reality a scam from the derivatives trading floor.
I have never been a fan of retail structured products from UK banks. A typical scheme of 10 years ago was a share based investment with a guaranteed return of capital. 70% of your investment went back on deposit to secure the capital while the rest went in a tracker, and you were charged a fee on the whole amount.
The DCD which has been around for a while goes to another level of deviousness by offering suspiciously high rates of interest whilst embedding a currency option effectively written by the depsitor to the bank. The way it works is as follows: You deposit say $50,000 in one currency with the bank and nominate an alternate currency, usually quite weakly correlated, such as NZ$ and EUR. The deposit earns what appears to be a high rate of interest over a month, but at the end of the term the principal and accrued interest may be repaid in the original or the alternate currency, at the bank's option.
And guess what, at maturity the bank always chooses the currency that costs them the least, or in other words earns you the least. If you stop and think about it, the extra loss probably wipes out the extra interest earned on the deposit. In fact if you think a litle bit harder, you will realise that the bank is only doing this because on average, even after all the cost of the added complexity, it is making more money on the DCD than on conventional deposits.
In Europe the DCD is rarely seen, but in Asia it is surprisingly popular, but then so is gambling. Contrary to what Standard Chartered, RBS, HSBC, Citibank and all the other banks between the Gulf and Australia who push these things may say, they aren't sold to sophisticated investors.
Almost by definition, they are sold to people who don't understand the risks, or if they do, can't quantify them. They might be able to tell that 8% is a better rate of interest than 6%, but they probably have no idea whether over one month that interest differential is an adequate premium for a one month currency option. If a sophisticated investor really wanted exposure to the currency risks, they would probably have bought a different product.