HSBC mulls launch of further 'front-loaded' Isas

'Front-loading' is a technique which allows funds to be raised immediately via capital markets and given to the chosen charity on the back of the strength of government pledges. This means that charities do not have to wait long periods of time for contributions to reach them.

The first ethical investment of this kind launched by HSBC earlier this week. This follows a government rule change on Isas last December, which extended the investments which could be included in an Isa to cover securities issued by multilateral development organisations.

In light of this, investors are being offered access to HSBC’s new Vaccine Investment Isa and Vaccine Investment Plan through an initiative run by The World Bank, the GAVI Alliance and the International Finance Facility on Immunisation (IFFIm).

The collaboration allows IFFIm to provide immediate funding to GAVI, a partnership which supports efforts to boost immunisation and access to health systems services and allows retail investors to help vaccinate children in 72 of the world's poorest countries.

The HSBC Isa aims to raise £50m and is targeting more than 3 million investors.

For those who have used their Isa allowance, or are not entitled to one, HSBC is also offering the Vaccine Investment Plan, with savers able to invest between £1,000 and £999,999.

HSBC chairman of debt finance and advisory Robert Gray said investors into the Isa were essentially buying into government backed bonds which had a triple-A rating and that the investment offers a "watertight credit structure" in an environment where people are worried about the quality of investments in the retail space.

He also that said the "frontloading" model where the funds have been pledged by the government in advance, is an investment technique that has so far only also been utilised in Japan but sees this as a possible are of growth for HSBC.

"We are looking at using this instrument for other applications."

"There could be other areas that the technique of frontloading could be used such as education or water but just following the same structure. No reason why this couldn’t also be offered to UK retail investors," he said.

Meanwhile, chairman of the IFFIm Alan Gillespie, is also in discussions with other European banks that are keen to roll out similar front-loaded Isa investments.

"We are working with a bank in Paris to do a similar thing at the moment in euros. I’m also keen to roll out similar projects to the vaccination project, such as health service systems and infrastructure."

The money people invest in the new HSBC Isa will be used to support the group's vaccination programme now, with money that has been pledged to the group from international governments used to repay people's initial investments along with the fixed return in five years' time.