Banking on a Win Has New Meaning For Spain Soccer Fans, Argentaria Links Dividend On Three-Year Deposit To Clubs' Final Standings

By Robert S Duncan

26 September 1995

The Wall Street Journal Europe

In the ever-maddening scramble to entice new clients, one of Spain's biggest banks is turning to soccer.

State-run Argentaria Corp. Bancaria de Espana is launching a three-year deposit with a dividend determined by the standings of Spain's first division soccer teams.

Through its telephone banking subsidiary, Banco Directo, Argentaria is marketing Deposito Campeon, or Champion Deposit. With a minimum three-year deposit of 200,000 pesetas ($1,600), investors can have a financial as well as sporting interest in the nation's favorite sport.

"In Europe there have been partial packages similar to the Deposito Campeon, but there has never been anything as complete as our package," says Jose Luis Altolaguirre, advisory general director at Banco Directo.

Perhaps not suprisingly, the market's reaction has been guarded.

"It certainly makes things a bit more interesting," says a London banking analyst who didn't want to be identified. "I suppose that this product will do quite well, but it all depends upon the propensity that one has to gambling."

If that's the only criterion for success, then Argentaria's new product shouldn't have any problem. Spaniards spend more per-head on gambling than most nationalities.

"Now, tell me again, they're linking this deposit's dividends to football standings," is the typical response to most first queries. Yet, despite its rather bizarre concept that brings an initial chuckle to many, most at least find the Argentaria product refreshing.

"I guess the best analogy that I can think of," says a London analyst, "is that it's similar to some of these new products like stock-indexed deposits or some other funds guaranteeing a certain dividend. If anything it shows that Argentaria is being very innovative."

Mr. Altolaguirre believes the market may soon realize that Champion Deposit is no laughing matter. "It's still too early to tell, but for now it seems that the initial reaction has been very good." He adds that if demand is strong enough the bank will offer the new product through its branch network.

The guidelines of the Champion Deposit are suprisingly simple. Here's how it works.

After making the initial deposit, the client chooses one of the 22 Spanish first division football teams and selects one of three options relating to how he or she believes that team will be ranked at the end of the session. Those options are as follows:

-- League champion, which if correct is worth a 13% return;

-- Finish in either second, third or fourth standing, which gives an 11% return;

-- Remain in the first division, guaranteeing an 8% return. (Teams that finish the season at the bottom of the standings are sent down to the second division.)

And just so that everyone knows that Argentaria plays fair ball, the bank guarantees a 4% return if the client's bets fall through. By comparison the average return on a regular three-year deposit is 10%.

Also, the bets, or options, are locked in for the three-year term of the deposit.

"The thing to remember," says Banco Directo's Mr. Altolaguirre, "is that you have to take into account what is going to happen over the next three years."

The subscription period for the Champion Deposit lasts until Oct. 20 and the first dividend will be paid in November 1996.