Cater Allen, the private bank owned by Santander, has launched a five year structured product linked to the FTSE 100.

It offers the potential for an income paid every year for five years, with an annual return that would be equivalent to 6.5 per cent of the initial investment.

The plan guarantees to return the initial investment at maturity and any further return is determined by comparing the initial index level of the FTSE 100 with the level at the annual observation dates. The initial measurement date will be on 12 April 2010.

If the index is higher than the initial level at the annual observation date, income is paid that year. Therefore, if £20,000 was invested at the outset and the index was higher in all of the following five years (than the initial level), an annual income payment of £1,300 would be triggered each year.

The deadline for investment in the new launch is 26 March 2010 and the minimum investment level is £7,200, the maximum is £1 million.

Fernando Gasca, senior investment strategist at Cater Allen, said the product offers the potential for a rate of return that is three per cent higher than the expected dividend yield of the FTSE 100.

He added, ‘With the FTSE at a comparatively low level against two years ago, investors have the chance to exploit this to their advantage.’